July 13, 2026
Welcome back. Stock market lore maintains that markets ‘always do the unexpected,’ and catch most people off guard when they make big moves in either direction. Perhaps this is the simple explanation for this year’s impressive strength which we’ve enjoyed in the face of so much drama and controversy.
Despite heightened uncertainty in geopolitics, mixed signals on the economy, and persistent inflation, stocks keep shrugging off worries to make new highs. Even the more recent rise of interest rates in the US and Japan hasn’t derailed the optimists. This last outcome is the most impressive to me, as rising rates have been responsible for so many market pullbacks over time.
When pension funds and huge institutional investors can buy top rated bonds yielding 4-5%, many of them will, happy to forgo potentially higher yet less reliable stock market returns. This causes a gigantic shift, with money leaving stocks to buy these more attractive bonds, which often pushes stock markets lower. Yet not this time – so far.
We’re obviously happy with the stock market growth we’ve benefited from, and in doing my homework I still am finding fewer buys than usual. Our cash weightings are much higher than normal, and patience remains the watchword for now.
Should 2026 surprise us even further by conforming to the pattern of an average year, this and next month will be slow as investors take summer holidays and spend some of their recent market gains. I’m not expecting that outcome in the months ahead, but it would catch investors off guard once again, making it a plausible alternative outcome.
Our so wonderfully dedicated assistant Yuki has very recently gone on medical leave, and unfortunately, we’re not sure if or when she will be back. We are awaiting further information and will know more later this month.
For now, all our thoughts are with Yuki and her family, and Charlie and I have also been passing along kind words from many of you as well.
Philip
July’s Articles
The odds. Anyone who’s placed a sports bet or bought lottery tickets has probably contemplated their chances. Over the past few years, gambling options have grown, aided by social media and our phones, and this growth carries risks for those unable to calculate their odds.
We also see odds used throughout society, often via various marketing channels to convince us of something. “Driving to the airport is more hazardous than the flight you’re about to take,” is one classic example.
Life definitely is random and very unusual events happen daily, which perhaps explains our interest in the odds. Despite our familiarity with this reality, in some categories we actually aren’t very good at understanding the odds and then making appropriate choices.
As you’ll read in the article linked below by Ted Lamade of the Collab Fund, there are two sides to this reality. Being aware of how odds are presented to us is a helpful start, as is knowledge of history and how people have traditionally responded to similar events in the past.
Investors should pay extra attention to the odds as they make decisions about how and where to invest their capital. Knowing what you don’t know – or aren’t good at – is surprisingly useful for an investor, as this humility should steer us away from less certain investments.
As you’ll read, we can never have all the information and get ‘perfect’ odds – we do have to act despite some uncertainty, but anything which helps us narrow the unknown is valuable.
https://collabfund.com/blog/our-achilles-heel/
Warren Buffett’s longtime investment partner at Berkshire Hathaway was Charlie Munger, one of the wisest and more underappreciated investors of the past century.
Mr Munger was the smarter of the two, and right up until his death in late 2023, his sharp wisdom and strong opinions captured investors. ‘Charlie’ never backed away from direct and often unflattering observations, frequently playing the ‘bad cop’ to Buffett’s folksy demeanor.
Munger also ran his own much smaller conglomerate for many years, with far smaller annual general meetings than Berkshire famously had, but these gatherings always contained important lessons. Readers of his Wesco Financial annual meeting letters, and reports, will come away smarter and with useful perspective.
As you’ll read in the article linked below by Advisor Analyst, Munger’s investment ‘fame’ paled next to Buffett’s, but it is no less worthwhile.
Some of Munger's observations are closer to philosophy than any other discipline, and he espoused being well read across many fields to improve one’s investing skills.