Meta just agreed to one of the most significant changes we’ve seen to how children are allowed to use social media.

As part of a landmark settlement with nearly every U.S. state, Meta agreed to pay as much as $18 billion and make major changes to Facebook and Instagram for users under 18. The states had accused Meta of designing features that encouraged compulsive use among children and teens and failing to adequately protect younger users. Meta denied wrongdoing, and the agreement still requires court approval.

The most interesting part may not be the $18 billion, it’s the restrictions.

Teens will have a two-hour daily limit

Users under 18 will automatically be limited to two hours per day across Facebook and Instagram combined.

Meta will also start warning teens much earlier, with prompts after periods of continuous use and as they approach their daily limit.

Parents can change the restriction, but the default will now be dramatically more limiting than the virtually unlimited scrolling teens have been used to.

Instagram is getting a bedtime

For users under 18, Facebook and Instagram will be blocked by default between midnight and 6 a.m.

There’s also a new School Mode. Most push notifications will be muted between 8 a.m. and 3 p.m. during the school year, making it harder for Instagram to pull teenagers back into the app throughout the school day.

Likes will be hidden

Meta will also hide like and reaction counts from minors by default, including on their own posts and posts from other people.

That may sound like a small change, but it removes one of social media’s most obvious forms of instant validation and comparison.

Meta is also restricting certain cosmetic-surgery and extreme-makeup filters for younger users.

Parents get more control over the algorithm

Parents will have stronger supervision tools, including the ability to require their child to use a non-personalized feed instead of one chosen by Meta’s recommendation algorithm.

They can also turn off features like autoplay, which are designed to keep users moving from one piece of content directly into the next.

Meta is also strengthening its age-verification systems so teenagers can’t as easily bypass the restrictions simply by entering an older birthday.

The rules could get even stricter

One of the most unusual parts of the settlement is that Meta is effectively trying to pressure TikTok and YouTube into doing the same thing.

Roughly 30% of Meta’s potential payment is conditional on TikTok and YouTube adopting similar safeguards and making comparable financial commitments.

If competitors follow, some of Meta’s restrictions could become even tougher.

In other words, this isn’t just a settlement about Instagram.

It could help create a new standard for how children use social media in America.

And Wall Street barely flinched

You might assume an $18 billion settlement would be terrible news for Meta’s stock.

Instead, Meta shares actually rose about 1% around the announcement.

The reason is that investors had been preparing for something potentially much worse.

The states had initially pursued penalties that could theoretically have reached roughly $1.4 trillion, so an agreement of up to $18 billion, spread over 10 years, with billions of it conditional, was viewed as a relatively manageable outcome for a company of Meta’s size.

Perhaps even more important, the settlement doesn’t disrupt Meta’s advertising business. Personalized feeds and targeted advertising, which are central to how Facebook and Instagram make money, remain largely intact. Meta generated more than $60 billion in profit last year, making the annual cost of the settlement relatively small compared with its earnings power.

So Wall Street’s reaction was essentially: $18 billion sounds enormous, but compared with what Meta could have faced, investors may consider this a win.

For parents, the bigger story is what comes next.

For years, much of the responsibility for controlling kids’ social-media use fell on families. This settlement shifts at least some of that responsibility back onto the platforms themselves.

And if TikTok and YouTube eventually adopt similar rules, the way an entire generation uses social media could look very different.

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If the Lakers Were a Stock, Would You Buy It?

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Josh Kushner and Bob Iger just agreed to buy the Los Angeles Lakers at a valuation of $12.5 billion, which would set a record for a U.S. professional sports franchise.¹ But forget for a moment that we’re talking about the Lakers. Imagine they were a publicly traded company. You could open your brokerage account tomorrow, type in “LAL” and buy the stock. Would you?

I’m not sure I would, at least not at this price.

Forbes estimates the Lakers generated about $551 million in revenue and $170 million in operating income for the 2024 to 2025 season.² At a $12.5 billion valuation, the buyers are paying roughly 22 times annual revenue and 74 times operating income. That’s expensive by almost any measure.

It gets even more interesting when you consider that the Lakers were valued at approximately $10 billion just last year, when Mark Walter acquired control from the Buss family.¹ Now they’re being sold at $12.5 billion. That’s a 25% increase, or $2.5 billion, in roughly a year. If this were a stock that had just risen 25% and was already extremely expensive compared with its profits, I’d probably hesitate.

But here’s where I start to understand the price. The NBA recently began new 11 year media agreements with Disney, NBCUniversal and Amazon worth more than $76 billion.³ That’s roughly $6.9 billion per year and represents an enormous increase in the value of the NBA’s media rights.

Even better, people are actually watching. During the first season under the new agreements, national NBA viewership increased 35%, reaching its highest average audience in 13 years. Fans watched more than 920 million hours of NBA games, up 25% from the previous season.⁴ So Kushner and Iger aren’t simply hoping basketball becomes more valuable. The value of broadcasting NBA games has already increased dramatically, and the new agreements run through the 2035 to 2036 season.

Then there’s something money can’t easily buy: scarcity. There are only 30 NBA teams, and there is only one Los Angeles Lakers. You can raise billions of dollars and start another technology company. You cannot create another Lakers with their 17 championships, history, global fan base and association with players like Magic Johnson, Kobe Bryant and LeBron James.

There’s also an argument that the Lakers aren’t making as much money as they could. Forbes estimates that the Golden State Warriors generated approximately $880 million in revenue and $409 million in operating income, compared with $551 million and $170 million for the Lakers.⁵ That’s a huge difference considering the strength of the Lakers brand.

And look at who’s buying them. Kushner built Thrive Capital investing in high growth companies, while Iger spent decades running Disney and figuring out how to make money from some of the world’s most valuable brands. They had actually been exploring the possibility of buying a future NBA expansion team in Las Vegas before the Lakers became available.¹ If they can generate more revenue from sponsorships, media, international fans and premium experiences, the Lakers could eventually become a much more profitable business.

But that still doesn’t necessarily make $12.5 billion a good investment. Let’s say the Lakers eventually become worth $25 billion. Kushner and Iger would double their money, which sounds great. But if it takes 15 years to get there, doubling their money works out to less than 5% per year. That’s why the price you pay matters.

So, if the Lakers were a publicly traded stock at a $12.5 billion valuation, I probably wouldn’t buy it today. I love the business, the scarcity, the growth in NBA media revenue and the possibility that the Lakers could make significantly more money in the future. I just don’t love the price.

But Kushner and Iger have one consideration that a normal stock investor doesn’t have. If I don’t buy a stock today, I can probably buy it tomorrow. If they passed on the Lakers, they might never get another opportunity.

Sources

1. “A Blockbuster $12.5B Deal as Josh Kushner and Bob Iger Agree to Buy the Lakers”​
Associated Press, August 12, 2026
https://apnews.com/article/d5058bb845d87873e23e270a6bb9be9f​

2. “Los Angeles Lakers”​
Forbes, October 2025
https://www.forbes.com/teams/los-angeles-lakers/​

3. “NBA Signs New 11 Year Media Agreements With The Walt Disney Company, NBCUniversal and Amazon Prime Video”​
NBA, July 24, 2024
https://www.nba.com/news/nba-media-agreements-2024​

4. “NBA Regular Season Delivers Most Watched Season in Years”​
NBA, 2026
https://www.nba.com/news/nba-regular-season-2025-26-most-viewers-24-years​

5. “The NBA’s Most Valuable Teams 2025”​
Forbes, October 23, 2025
https://www.forbes.com/sites/justinteitelbaum/2025/10/23/the-most-valuable-nba-teams-2025/​

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America’s Emergency Oil Reserve Is Running Low. Should Investors Be Worried?

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The U.S. Strategic Petroleum Reserve (SPR), America’s emergency stockpile of crude oil, has fallen to its lowest level since 1983 after the federal government released millions of barrels to help stabilize energy prices and offset supply disruptions caused by conflict in the Middle East.

Think of the SPR as the country’s emergency savings account for oil. It was created after the 1973-1974 Arab oil embargo to provide a strategic cushion during major energy crises. At its peak in 2009, the reserve held more than 726 million barrels of crude oil. Today, that figure has fallen to roughly 311 million barrels.

The recent drawdowns are part of a coordinated effort with international allies to ease pressure on global energy markets. By increasing the supply of oil available to refiners, governments hope to prevent sharp spikes in gasoline and diesel prices that can weigh on consumers, businesses, and economic growth.

In the short term, these releases can be effective. Additional supply often helps calm markets and reduces price volatility during periods of geopolitical uncertainty.

The tradeoff is that the United States now has a much smaller emergency buffer than it has had in more than four decades. If another major supply disruption were to occur before the reserve is rebuilt, policymakers would have fewer tools available to respond quickly.

That doesn’t necessarily mean oil prices are destined to rise. The United States remains one of the world’s largest oil producers, and private production plays a much larger role in meeting domestic demand than it did decades ago. Still, the SPR remains an important backstop during extraordinary events, and its historically low level serves as a reminder that geopolitical risks can have real consequences for energy markets.

For investors, this is another example of why it pays to look beyond the daily headlines. Events like these can create short-term volatility, but successful investing isn’t about reacting to every news cycle. It’s about understanding the broader trends shaping the economy and maintaining a disciplined, long-term strategy.

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Sources

1. U.S. Department of Energy. Strategic Petroleum Reserve Quick Facts.

2. U.S. Energy Information Administration. Strategic Petroleum Reserve releases and inventory data.

3. Reuters. U.S. emergency oil reserve falls to lowest level since 1983 amid coordinated release.

Is Nvidia Upside Over?

If you’ve been watching Nvidia lately, you might think its best days are behind it.

After an extraordinary run that made it one of the world’s most valuable companies, the stock has stumbled. Since reaching an all-time high in May, Nvidia has fallen roughly 16%, wiping out nearly $1 trillion in market value in less than two months. Through the first half of the year, the stock has significantly underperformed the broader market, trailing both the S&P 500 and the Nasdaq 100. Yet despite the selloff, Nvidia now trades at roughly 18 times forward earnings—its lowest valuation since before the AI boom began.^1

For many investors, that’s enough to conclude the AI trade is over. I think they’re looking at the wrong story. The question isn’t whether Nvidia is losing, but rather if it’s still winning enough to justify its long-term opportunity.

Success Creates Competition

One of the biggest mistakes investors make is assuming increased competition means a company is failing.

In reality, the opposite is often true.

Nvidia has become so dominant that virtually every major technology company is trying to build an alternative. Advanced Micro Devices continues investing heavily in AI accelerators. Amazon, Alphabet, and Microsoft are developing custom chips for portions of their AI workloads. Memory companies like Micron, Samsung, and SK Hynix have become major beneficiaries of the AI boom as demand for high-bandwidth memory continues to surge.

This isn’t happening because AI demand is slowing, it’s happening because AI demand is growing so quickly that everyone wants a piece of the opportunity.

Nvidia Still Owns the Market

Despite the headlines, Nvidia remains the clear industry leader.

Bloomberg Intelligence estimates the company controlled approximately 97% of the server GPU market last year, giving it an extraordinary lead in the hardware powering artificial intelligence.^2

That dominance isn’t just about chips. Nvidia has spent nearly two decades building CUDA, networking, software libraries, and developer tools that make its platform difficult to replace.

Could market share gradually decline?

Sure.

But investors often confuse “less dominant” with “no longer dominant.” Those are two very different things.

Even if Nvidia’s share eventually fell from 97% to 80%, it would still control one of the largest and fastest-growing technology markets in history.

The AI Market Is Expanding Faster Than the Competition

Here’s what many investors miss:

Nvidia doesn’t need to maintain today’s market share to continue growing.

Imagine owning 97% of a $100 billion market.

Now imagine owning 75% of a $1 trillion market. Even with a smaller slice, your business becomes dramatically larger.

That appears to be exactly what’s happening with AI infrastructure. Bloomberg Intelligence estimates hyperscale cloud providers will spend roughly $371 billion on capital expenditures this year alone, with sovereign AI initiatives and projects like Stargate potentially adding another $100 billion.^3

Every month brings new AI applications across healthcare, robotics, cybersecurity, autonomous vehicles, finance, and scientific research. The pie is expanding much faster than most investors appreciate.

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Great Companies Rarely Move in Straight Lines

History is filled with dominant companies that experienced painful corrections before creating enormous wealth for long-term investors.

Microsoft spent years going nowhere before becoming one of the biggest winners of the cloud computing era.

Amazon has endured multiple declines of more than 30% while rewarding patient shareholders over the long run.

Apple has repeatedly faced concerns about slowing growth and rising competition before finding its next wave of innovation.

Temporary stock weakness and permanent business deterioration are rarely the same thing.

The Bottom Line

Competition is here, but competition doesn’t necessarily signal the end of Nvidia’s story; it may mark the beginning of a much larger AI ecosystem.

As more companies build AI infrastructure, demand for computing power continues to rise. Nvidia remains the standard against which every other AI chip is measured. While competitors will almost certainly capture portions of this rapidly expanding market, Nvidia doesn’t need to own all of it to remain one of the world’s most important technology companies.

Sometimes the market mistakes a pause for an ending.

Years from now, investors may look back on this period not as the end of Nvidia’s run, but as another chapter in one of the defining technology stories of this decade.

Sources

1. Bloomberg, Nvidia’s $1 Trillion Slide Sends Valuation to Pre-AI Boom Levels (July 2026).
2. Bloomberg Intelligence, Nvidia’s GPU Dominance to Stay Intact in Data-Center (March 2024).
3. Bloomberg Intelligence, Generative AI Deep Dive (March 2025).
4. ​Nvidia Quarterly Report (Form 10-Q). Financial results for the latest reported fiscal quarter.

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I was going to call this article “Everybody Hates Kevin,” but that felt a little unfair.

Poor Kevin Warsh may have one of the toughest jobs in America right now.

When President Trump nominated him to lead the Federal Reserve earlier this year, most people thought they knew how the story would go. Inflation seemed to be cooling, economic growth was slowing, and investors were expecting interest rates to gradually come down. Given President Trump’s preference for lower rates, many assumed Warsh’s biggest challenge would be figuring out how quickly to start cutting them.¹

Instead, he walked into the exact opposite situation.

At this week’s Federal Reserve meeting, officials voted unanimously to keep interest rates where they are. More importantly, the Fed made it clear that inflation is still a problem and that they are not ready to declare victory yet.²

Inflation is still running above the Fed’s long-term target of 2%, and recent events around the world have made the outlook even murkier. Energy prices have moved higher, supply chains remain fragile, and policymakers are trying to figure out whether inflation, which appeared to be improving earlier this year, could start moving in the wrong direction again.³

At the same time, millions of Americans are feeling the effects of higher interest rates. Mortgage rates remain elevated. Borrowing is more expensive. Businesses and consumers alike would love some relief.⁴

If Warsh and the Fed lower rates too soon and inflation comes roaring back, they’ll be blamed for letting prices get out of control. If they keep rates high for too long and the economy slows down too much, they’ll be blamed for that too. Being Fed Chair isn’t about deciding what the economy looks like today. It’s about trying to predict what it will look like six, twelve, or eighteen months from now.⁵

What makes this situation especially interesting is how quickly expectations have changed. Just a few months ago, investors were debating how many rate cuts we’d get this year. Two? Three? Maybe even more?

Today, some investors are simply hoping rates don’t go higher.⁶ It’s a great reminder of how quickly the economic narrative can change. One unexpected event can ripple through the entire economy. A geopolitical conflict can affect energy prices. Higher energy prices can affect inflation. Inflation can affect interest rates. Interest rates can affect consumer spending, business investment, housing demand, and stock prices.

For investors, though, the bigger lesson has very little to do with Kevin Warsh. The lesson is that market expectations can change incredibly fast. At the beginning of the year, investors were confident that rates were headed lower. Today, many are preparing for the possibility that rates stay higher for longer. Six months from now, the conversation could be completely different again.⁸ That’s why successful investing requires a healthy dose of humility. Forecasts are rarely accurate enough to build a financial plan around. The future almost never unfolds exactly as experts predict, and markets have a habit of surprising even the smartest people in the room.

In many ways, Kevin Warsh faces the same challenge investors do: making decisions in a world where the facts are constantly changing and certainty is impossible.

Thank Me Later

The Federal Reserve’s outlook can change quickly because the economy can change quickly. Investors who anchor their financial decisions to a single prediction about interest rates, inflation, or economic growth often find themselves reacting to yesterday’s story. A better approach is to acknowledge uncertainty, prepare for multiple outcomes, and build a portfolio that doesn’t require perfect predictions to succeed. As always, our team at Maddahi Wealth is here to help our clients build financial plans that acknowledge this ever-changing economy.

Sources

¹ Federal Reserve Board; CME FedWatch Tool; Reuters reporting on market expectations following the 2026 presidential transition.

² Federal Open Market Committee Statement, June 2026; Summary of Economic Projections, Federal Reserve Board.

³ U.S. Bureau of Labor Statistics, Consumer Price Index Report (May 2026); U.S. Energy Information Administration.

⁴ Federal Reserve Board; Mortgage Bankers Association; National Association of Home Builders.

⁵ Congressional Research Service, “The Federal Reserve’s Dual Mandate”; Federal Reserve publications.

⁶ CME FedWatch Tool; Reuters market commentary; Wall Street Journal interest rate coverage.

⁷ Federal Reserve public remarks and communications, June 2026.

⁸ CME FedWatch Tool; Federal Reserve Summary of Economic Projections; Reuters market coverage.

SpaceX Filed Its S-1. Here’s What Happens Next.

After years of speculation, SpaceX has officially filed its S-1 registration statement, giving investors their first detailed look at the company’s financials and starting the final countdown toward what could become the largest IPO in history. Reports suggest SpaceX could seek a valuation of roughly $1.75 trillion and raise between $75 billion and $80 billion, potentially eclipsing every IPO that has come before it.¹

For investors, the filing itself is not the most important event.

The weeks between the S-1 filing and the first day of trading are where the real story unfolds.

Here is what to expect and what I will be watching closely.

First: The SEC Review Process

Even though the S-1 has been filed, the document is not final.

The SEC will review the filing and send comments back to the company. SpaceX will then respond through amended S-1 filings that provide additional disclosures, clarify risk factors, update financial information, and sometimes reveal changes to offering terms.²

For investors, these amendments are often more important than the initial filing because they reveal what regulators, bankers, and institutional investors are focusing on.

Pay particular attention to:

● Changes in risk disclosures

● Lockup provisions

● Share structure

● Insider ownership

● Use of proceeds

● Any revisions to financial guidance

Next Comes the Roadshow

The roadshow is where SpaceX executives and the underwriting banks begin meeting with institutional investors around the world.

Think of it as Wall Street’s due diligence process in real time.

Management will spend the next several weeks explaining:

● Starlink growth

● Launch economics

● Government contracts

● AI initiatives

● Starship development

● Future profitability

● Long-term capital requirements

The objective is not simply marketing. The objective is determining how much demand exists and at what valuation.

Reports indicate the roadshow could begin as early as June 4–8, with pricing potentially occurring around June 11.³

This phase often tells us more than any earnings report.

Watch for Changes in the Price Range

One of the most important signals during the roadshow is whether the proposed offering range changes.

If investor demand proves stronger than expected:

● The price range may be increased

● More shares may be offered

● The valuation could move higher

If demand is weaker:

● The range may be reduced

● The offering size could shrink

Historically, IPOs that raise their pricing range during the roadshow tend to indicate significant institutional demand.

For a company as closely followed as SpaceX, any upward revision would likely signal extraordinary demand from both institutions and retail investors.

The Index Inclusion Story Could Matter More Than Most People Realize

One of the most interesting aspects of this IPO is the possibility of rapid index inclusion.

Nasdaq recently implemented accelerated inclusion rules for certain large-cap IPOs. Under those rules, a company of SpaceX’s size could potentially qualify for Nasdaq-100 inclusion far sooner than many previous IPOs.⁴

Why does that matter?

Because index inclusion creates automatic buyers.

If SpaceX enters major indexes:

● Index funds must purchase shares

● ETFs tracking those indexes must purchase shares

● Passive investment vehicles become long-term shareholders

This demand has nothing to do with investor opinion. It is mechanical.

For a company potentially approaching a $2 trillion valuation, those flows could be enormous.

Many investors underestimate how much stock demand can be generated simply because a company becomes part of the indexes millions of Americans own through retirement accounts and ETFs.

The Lockup Provisions May Be More Important Than The IPO Price

Most investors focus on the valuation.

I am far more interested in the lockup terms.

Traditionally, IPO investors and insiders face a 180-day lockup period before shares can be sold. However, recent reporting suggests SpaceX may utilize a staggered release structure that could permit certain shareholders to sell portions of their holdings earlier following earnings reports while maintaining longer restrictions for key insiders. Elon Musk reportedly remains subject to a substantially longer lockup period.⁵

For existing shareholders, this section of the prospectus deserves careful attention because it determines when additional supply could enter the market.

Supply matters.

Even great companies can experience temporary pressure when large blocks of shares become eligible for sale.

Expect Volatility

Many investors assume successful IPOs move in a straight line higher.

History suggests otherwise.

The first several months after an IPO are often dominated by:

● Institutional positioning

● Analyst initiations

● Lockup discussions

● Valuation debates

● Earnings expectations

SpaceX may ultimately become one of the largest companies in the world, but that does not mean the stock will move smoothly during its first year as a public company.

In fact, the first year may be one of the most volatile periods in the company’s history as public investors attempt to determine the appropriate valuation for:

● Starlink

● Launch services

● Defense contracts

● Starship

● Future AI initiatives

Volatility should be expected, not feared.

What Investors Should Focus On

The headlines will focus on:

● Elon Musk

● The IPO valuation

● The first-day trading pop

I believe there are more important questions.

Is Starlink becoming the financial engine investors hope it is?

According to reports surrounding the filing, Starlink generated more than $11 billion in revenue in 2025 and is increasingly viewed as the company’s primary profit center.⁶

How much capital will Starship require?

The future opportunity is enormous, but so are the capital requirements. Investors should pay close attention to management commentary regarding future investment needs and timelines.

Can SpaceX expand beyond rockets and satellites?

The filing reportedly highlights investments in AI initiatives, orbital computing infrastructure, and next-generation communications systems.⁷

Whether these become meaningful profit centers remains one of the most important long-term questions for investors.

How quickly will passive money enter the stock?

Index inclusion could become one of the most powerful drivers of demand during the first year following the IPO.

The faster SpaceX qualifies for major indexes, the greater the amount of automatic buying pressure from passive funds.

The Bottom Line

The S-1 filing marks the beginning of the public phase of the IPO process—not the end of it.

Over the next several weeks, investors should pay less attention to daily headlines and more attention to:

● Roadshow feedback

● Pricing range revisions

● Index inclusion developments

● Lockup provisions

● Institutional demand

The IPO price will generate the most headlines.

The answers to those questions will likely have a much greater impact on where the stock trades one year from now.

For existing shareholders, this is no longer simply an investment story. It is a wealth planning event. The company that was once difficult to access in private markets is about to enter one of the most scrutinized periods of its history. The investors who focus on structure, liquidity, and long-term positioning rather than short-term price movements will likely make the best decisions during the transition.

Next Steps:

If you had the foresight, access, and conviction to invest in SpaceX before it became one of the most valuable private companies in the world, the upcoming IPO represents far more than a market event, it represents a balance sheet event.

The most successful investors recognize that the work is not finished when an asset appreciates.

If you would value a thoughtful partner to help you and your family navigate this transition, contact us at info@maddahiwealth.com to arrange a conversation.

Sources

¹ MarketWatch, SpaceX has officially filed for its mammoth IPO
​ ​https://www.marketwatch.com/livecoverage/spacex-ipo-filing-prospectus-elon-musk/card/spacex-has-officially-filed-for-its-mammoth-ipo-i8PQqDikHBsmo9c6AskV​

² The Motley Fool, SpaceX IPO Timeline: Every Important Date Investors Need to Know
​ ​https://www.fool.com/investing/2026/04/27/spacex-ipo-timeline-every-important-date-need-know/​

³ Reuters, SpaceX accelerates IPO timeline, targets June pricing
​ ​https://www.reuters.com/world/spacex-accelerates-ipo-timeline-targets-june-11-pricing-nasdaq-2026-05-15/​

⁴ Business Insider, What the SpaceX IPO Means for Nasdaq and Index Inclusion
​ ​https://www.businessinsider.com/spacex-ipo-s1-spcx-stock-nasdaq-qqq-elon-musk-2026-5​

⁵ Wall Street Journal, SpaceX Staggers Lockup Releases for Investors

⁶ The Guardian, SpaceX Finances Revealed Ahead of Market Debut
​ ​https://www.theguardian.com/science/2026/may/20/spacex-finances-stock-market-debut​

⁷ The Verge, SpaceX Just Filed for What Could Be the Biggest IPO Ever​
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This Market Is More Normal Than You Think

If you’ve felt uncomfortable investing lately, you’re not alone.

The S&P 500 is near all-time highs while headlines are dominated by geopolitical tension, inflation concerns, and uncertainty around interest rates. That combination feels contradictory, and many investors instinctively interpret it as a warning sign.

But historically, markets spending time at all-time highs is not unusual. It is, in many ways, the baseline condition of a growing economy.

Markets Hit Highs More Often Than You Think

Since 1950, the S&P 500 has delivered approximately 10–11% annualized returns ¹. Because of that long-term upward trend, new highs are not rare events, they are a recurring feature of normal market behavior.

• From 1950 through 2024, the S&P 500 has hit over 1,200 all-time highs²
• That averages to roughly 16–17 new highs per year over long periods
• During strong bull markets, those highs tend to cluster. For example:
  • 1995 alone saw 77 new all-time highs³
  • 2017 saw 62 new all-time highs⁴
  • 2021 saw over 70 new all-time highs⁵

These are not anomalies. They are periods when earnings growth, liquidity, and investor confidence align.

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A market making new highs is not unusual, it is what a functioning, growing market is supposed to do.

Why All-Time Highs Don’t Equal a Bubble

A common mistake is assuming that high prices automatically mean irrational behavior.

Historically, bubbles are not defined by markets reaching new highs. They are defined by extreme disconnection between price and underlying fundamentals.

Example: The Dot-Com Bubble (Late 1990s)

• The Nasdaq peaked in March 2000 after rising over 400% in five years⁶
• Many companies had no earnings, and in some cases no revenue
• The S&P 500 traded at a forward P/E above 25x, while the Nasdaq traded even higher⁷
• Capital was flowing into speculative businesses with unproven models

When the bubble burst:

• The Nasdaq fell nearly 80% from peak to trough⁶
• Hundreds of companies went to zero

The collapse was not caused by high prices alone, it was caused by fragile underlying structure.

Why Today Looks Different (So Far)

Today’s market certainly has pockets of elevated valuation, particularly in AI-related stocks. but there are important differences:

• The largest companies driving the market (like Microsoft, NVIDIA, and Alphabet) are generating tens of billions in cash flow
• Corporate earnings overall are strong, with roughly 84% of S&P 500 companies beating earnings expectations this quarter⁸
• AI spending is not theoretical, it is translating into real revenue.

That does not mean the market is cheap. It means the current environment is being supported by actual earnings power, not just speculation.

Historical Perspective We Miss

Some of the strongest long-term returns in markets have come from investing during periods that felt uncomfortable at the time.

For example:

• Investors who stayed invested through the 1990s bull market participated in one of the strongest decades in history
• Investors who avoided markets after the 2008 financial crisis missed a more than 4x increase in the S&P 500 over the following decade⁹
• Even after major crises, markets have consistently gone on to reach new highs as earnings and economies recover

The Bottom Line

This market feels uncomfortable, but discomfort alone is not evidence of irrationality.

Historically, markets:

• spend significant time at or near highs
• reward long-term participation despite short-term uncertainty
• and move ahead of clarity, not after it

The reality is that “normal” markets often feel wrong in real time.

Waiting for market to feel comfortable can cost you.

Take The First Step:

If you are looking for a trusted partner on your investment journey, we encourage you to reach out. You can apply to be a client at this link.

Sources

¹ S&P 500 historical returns – NYU Stern (Damodaran)​
² Deutsche Bank / Bloomberg data on S&P 500 all-time highs
³ 1995 market data – S&P Dow Jones Indices
⁴ 2017 record highs – CNBC market analysis
⁵ 2021 record highs – Reuters market recap
⁶ Nasdaq dot-com crash data – Federal Reserve / historical charts​
⁷ S&P 500 valuation history – Multpl​
⁸ FactSet Earnings Insight
⁹ S&P 500 total return post-2008 – S&P Global / Morningstar data

We kicked off earnings seasons last week, and this is always an interesting time because companies’ price moves depend more on how it does against expectations, rather than how they do in general. Picture it like a teacher that grades a student based on ability rather than standardized testing. If the teacher expects a student to do well, it will be a lot harder for them to impress. If the teacher expects them to fail, it is easier to impress.

Stocks don’t move simply because a company is doing well. They move based on whether expectations were too high or too low.

Companies With Elevated Expectations

There is a group of companies where expectations are incredibly demanding.

This includes names like Nvidia, Microsoft, Amazon, Meta Platforms, and Apple.

Across this group, analysts have steadily raised earnings estimates over the past several quarters, largely driven by expectations around artificial intelligence, cloud growth, and continued margin expansion.¹

The challenge is that when expectations are this high, companies are not rewarded for simply doing well. They are expected to deliver exceptional results. Even a modest miss, or slightly cautious forward guidance, can lead to outsized downside reactions.²

The “Quietly Expensive” Group

There is another category of companies that are not always framed as “hype” stocks but still carry elevated expectations due to consistent outperformance.

This includes Costco Wholesale, Eli Lilly, Netflix, Visa, and Chipotle Mexican Grill.

These companies have delivered steady results, which has led analysts to gradually revise expectations higher over time.³ As a result, they face a similar dynamic: it is not enough to beat expectations, they need to meaningfully exceed them to continue justifying current valuations.

Companies With Lowered Expectations

On the other side of the spectrum are companies where expectations have already been reset lower.

Names such as Nike, Starbucks, Target, Boeing, and Walt Disney Company fall into this category.

Here, analysts have reduced forecasts in response to slowing growth, margin pressure, or company-specific challenges.⁴ Investor sentiment tends to be more cautious, and in many cases, negative.

That dynamic creates a different setup. These companies do not need to deliver perfect results. Stabilization, modest improvement, or even “less bad” outcomes can lead to positive stock reactions.

Why Market Reactions Matter More Than Results

The most important takeaway from earnings season is that outcomes are relative, not absolute.

A company with strong results can see its stock decline if expectations were too high. Conversely, a company with weaker results can rally if expectations were sufficiently low.

This dynamic reflects a core reality of markets: prices adjust based on the difference between expectations and reality, not simply the quality of the results themselves.⁵

What I Am Watching This Earnings Season

Over the coming weeks, a few themes will matter most:

• Whether companies tied to artificial intelligence can justify the level of growth currently priced into their valuations
• Whether consumer demand remains resilient, or begins to show signs of softening beneath the surface
• Whether companies that have faced pressure begin to stabilize, creating opportunities for upside surprises

Small shifts in any of these areas can lead to meaningful changes in market leadership.

In this moment of global stress, the United States has become more central, not less.

Let’s break that down;

When tensions rise in the Middle East, the first thing the world worries about is oil. In this current war, we are dealing with Iran’s closure of the straight of Hormuz where roughly 20% of global oil supply flows through.¹

Even if the strait isn’t fully closed, the risk that Iran can close it increases shipping costs, insurance premiums, and delays. That tightens supply and pushes prices higher.

In the 1970s, this would have crippled the U.S. economy, but not today…

The U.S. is now one of the largest oil producers in the world, thanks to the shale boom.² That means when global oil prices rise, the U.S. doesn’t just absorb the pain, it participates in the upside.

At the same time, Europe is still rebuilding its energy strategy after the Russia-Ukraine war and has become increasingly reliant on U.S. energy exports.³

So higher oil prices don’t just create inflation pressure. They also increase America’s leverage in global energy markets. In periods of conflict, the global system naturally gravitates toward stability, and the United States continues to serve as its primary anchor.

That becomes especially clear when you look at China.

China is the world’s largest importer of crude oil, and a significant portion of that supply comes from the Middle East.⁴ China does not possess the same global military infrastructure to safeguard those routes, especially in high-risk regions such as the Persian Gulf.

So when tensions rise the U.S. protects trade routes and China is forced to depend on them. It changes the landscape from simply a military difference to a power structure difference.

This dynamic also strengthens alliances.

After Russia invaded Ukraine, countries rallied around NATO and increased defense spending.⁵ Similar patterns are emerging now.

When risk rises, allies coordinate more closely, defense budgets increase and security dependence on the U.S. deepens. As a result, U.S. defense companies can see increased demand. U.S. Treasury bonds become a “safe haven.” And global capital often flows into the U.S. dollar during uncertainty.⁶

None of this means the situation is “good.​

War brings real consequences; human loss, economic strain and inflation risks. il spikes can ripple into higher costs across transportation, food, and everyday goods. Markets can become volatile in the short term.

But from a structural standpoint, the key idea is that power isn’t measured in calm environments, it’s revealed during stress.

Historically, during periods of global stress, the U.S. system (its markets, its military, and its currency) have all proven to be the place the world gravitates toward. arkets are not just reacting to the event, they are pricing who is most resilient through the event.

I am always here to remind you that short-term fear is loud, but long-term positioning is quiet. The investors who win over time are the ones who understand the difference.

Take the First Step

If you want a partner to help you navigate your investments in this ever-changing economic landscape, we invite you to send us an email to set up a consultation.

For decades, one geopolitical flashpoint had the power to rattle the entire global economy; The Strait of Hormuz.

It is a narrow shipping corridor between Iran and Oman, which carries roughly 20 million barrels of oil per day, representing about 20% of global petroleum supply.¹ When conflict threatens this route, markets notice immediately.

Historically, disruptions to energy supply have triggered some of the most dramatic economic shocks in modern history. The 1973 oil embargo quadrupled energy prices. The Iranian Revolution in 1979 sent inflation surging across the developed world. Even the Gulf War in 1990 caused oil prices to spike sharply.

So when tensions in the Middle East escalate and shipping through Hormuz slows, investors instinctively expect the same outcome. We expect oil to surge (it’s up about 50%), inflation to return and for stocks to fall.

Yet something interesting is happening today. Oil prices have risen, but equity markets have remained relatively resilient. Instead of panic, markets are responding with measured volatility. The reason is a structural shift that has quietly reshaped the global energy landscape.

The Shale Revolution Changed Everything

Twenty years ago, the United States was heavily dependent on foreign oil. In the mid-2000s, U.S. crude production hovered around five million barrels per day. Today, the country produces roughly 13.5 million barrels per day, making it the largest oil producer in the world.² This transformation was driven by the shale revolution.

Advances in horizontal drilling and hydraulic fracturing unlocked enormous reserves in places like the Permian Basin in Texas and New Mexico, dramatically increasing domestic supply.³ In practical terms, this means the United States now has far greater control over its own energy destiny.

When oil prices rise, American producers benefit. Domestic energy companies generate higher revenues, which helps offset the broader economic impact of higher fuel costs. In earlier decades, rising oil prices were purely a tax on the U.S. economy, byt today, they are partially a profit center.

A Different Economy Than the One That Faced the Oil Shocks

Another reason markets are reacting differently is the structure of the modern economy. In the 1970s, manufacturing and heavy industry dominated economic output. These sectors were highly sensitive to energy prices. Today’s economy looks very different.

Technology, software, and services make up a much larger share of GDP and stock market value. In fact, technology alone accounts for roughly one-third of the S&P 500. Energy companies, by comparison, represent only a small portion of the index. The result is that oil price spikes still matter, but they no longer hit the economic engine as directly as they once did.The United States also produces more economic output per unit of energy than it did decades ago, meaning each barrel of oil supports significantly more economic activity.

Strategic Reserves Add a New Shock Absorber

There is another important tool that did not exist during earlier energy crises: strategic petroleum reserves. Following the oil shocks of the 1970s, the United States and other developed nations built massive emergency stockpiles designed to stabilize supply during disruptions. These reserves allow governments to release oil into the market during geopolitical crises, helping smooth temporary shortages and calm price spikes.

Recent coordinated releases from strategic reserves around the world demonstrate how this mechanism can soften supply shocks when major shipping routes are threatened.

Markets Are Pricing Risk, Not Collapse

The key distinction in today’s market environment is that investors are reacting to uncertainty rather than a full supply breakdown. Despite tensions around the Strait of Hormuz, oil is still moving, just way more slowly and with higher insurance costs. Tanker traffic has declined significantly, but the global energy system has not stopped functioning.

Markets tend to react dramatically to actual supply collapses. But when the situation is uncertain and fluid, prices adjust gradually as probabilities change. For now, oil markets appear to be pricing a risk premium, not a structural shortage.

The Variable That Matters Most

Ultimately, the global economy hinges on one question: Does the Strait of Hormuz remain partially disrupted, or does it close completely for an extended period?

If the strait were shut for weeks or months, the impact would be profound. Roughly one-fifth of the world’s oil supply would need to find alternate routes or replacement sources.¹ That scenario would likely push oil prices sharply higher and reintroduce inflation pressures just as central banks were beginning to regain control. But if shipping resumes or tensions ease, energy markets could normalize surprisingly quickly. Oil shocks have a long history of reversing as rapidly as they appear.

The Quiet Lesson for Investors

Periods of geopolitical tension often feel like moments when markets should fall apart, but history repeatedly shows that the global economy is more adaptable than headlines suggest. Energy markets evolve, supply chains re-route and production adjusts.

The shale revolution has fundamentally altered the balance of power in global energy, and it is one of the reasons the market’s reaction today looks very different from the oil shocks of the past.