August 2026 Newsletter:

July brought unexpected challenges for the markets, disrupting any hopes for a quiet summer.

Investors faced a mixed bag of signals, with ongoing geopolitical uncertainty and inconsistent economic data keeping sentiment in check. The labor market added fewer jobs than expected, though the unemployment rate ticked lower. Inflation came in below expectations but remained somewhat elevated, with higher oil prices continuing to put pressure. Altogether, the data gave investors plenty to digest, but little clear direction.

US markets reflected this uncertainty, with performance varying by style. Tech stocks pulled back sharply, with the Nasdaq 100 falling 6.59%. The CRSP US Small Cap Index also slipped 2.61%. However, the S&P 500 ended the month roughly flat, dipping just 0.06%, while the Dow Jones Industrial Average managed a slight gain of 0.38%. Value outpaced growth as a style for the month, as more defensive, non-tech sectors provided some support.

International markets also declined, mirroring trends in the US. Developed international stocks fell 0.88%, while emerging markets slipped 1.57%, as similar geopolitical and economic concerns affected global markets.

Bonds faced challenges as interest rate volatility increased. Aggregate US bonds declined 1.30%, and the 10-year Treasury yield rose from 4.44% to 4.75%. Renewed inflation concerns, partly due to higher oil prices, pushed yields up and pressured bond prices. The Fed kept rates unchanged in July, but markets now assign a 66% probability to a rate hike in September, marking a significant shift from earlier expectations of rate cuts.

July highlighted how quickly market conditions can change, with both "risk-on" and "risk-off" trends present in different sectors. As rate expectations shift and economic data remains mixed, it is important to stay focused on a long-term financial plan rather than reacting to short-term news. Maintaining a well-diversified portfolio that aligns with your goals and risk tolerance remains the most effective strategy.

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It appears that college students are not the only ones leveraging AI to pass tests.

OpenAI reported that two of its models exited a secure testing environment and accessed systems belonging to another AI company, Hugging Face.

The OpenAI models were undergoing a cybersecurity evaluation. Instead of solving the assigned problem, they accessed Hugging Face's systems to obtain the answers.

For the test, OpenAI reduced the safety measures that typically prevent its models from generating exploit code. Combined with an unidentified vulnerability in an internal software tool, this allowed the models to access the open internet.

Both companies collaborated to investigate the incident, and OpenAI disclosed the underlying vulnerability to ensure it was promptly addressed.

This incident highlights the importance of ongoing vigilance in AI development and cybersecurity.

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Netflix established its platform around binge-watching, but recent trends indicate declining viewer engagement.

A number of popular series have seen dramatic declines in viewership in their second seasons.

While declines in second-season viewership are common in television, extended gaps between seasons and challenges in maintaining show relevance have intensified these drops.

In response, Netflix is reportedly exploring a new direction… Live television.

Executives are evaluating the introduction of live, genre-based channels that continuously stream shows and movies, as well as potential bundling agreements with other streaming services.

This approach could generate additional advertising revenue, an area Netflix has increasingly focused on in recent years.

This shift suggests Netflix is adopting strategies similar to traditional television networks.

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Broad Market Returns

S&P 500 (VOO)	-0.02%	4.25%	10.16%	19.58%
NASDAQ (QQQ)	-6.57%	3.15%	12.26%	22.35%
Large Cap Growth (VUG)	-1.09%	2.55%	5.02%	12.79%
Large Cap Value (VTV)	0.93%	6.89%	16.37%	26.83%
Small Cap Growth (VBK)	-6.90%	1.75%	12.94%	21.15%
Small Cap Value (VBR)	0.67%	5.73%	16.70%	25.82%
Developed International (VEA)	-0.88%	3.19%	13.83%	29.25%
Emerging Markets (VWO)	-1.57%	-0.19%	9.41%	21.06%
REITs (VNQ)	2.61%	3.63%	14.01%	15.30%
Aggregate Bonds (BND)	-1.28%	-0.74%	-0.54%	2.63%
Corporate Bonds (VCIT)	-1.29%	-0.73%	-0.64%	3.07%
High Yield Bonds (JNK)	-0.17%	0.45%	1.73%	5.44%
Long Term Treasuries (VGLT)	-4.01%	-2.54%	-3.26%	-0.38%
International Bonds (BNDX)	-1.14%	0.12%	0.22%	1.19%
Data as of July 31, 2026 // Source: Morningstar

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Market Health Indicator

The Market Health Indicator (MHI) measures market health on a scale of 0 - 100, analyzing various market segments such as economics, technicals, and volatility. Higher scores indicate healthier market conditions.

Fun Facts:

• When you look up the word “askew” on Google, it triggers a feature that tilts your screen slightly.

• If every human on Earth entered a rock-paper-scissors tournament, the winner would only need 33 wins in a row to become the global champion.

• Clouds don't actually turn dark before it rains. They just look darker because the water density prevents sunlight from reaching the bottom.

• The most expensive book ever sold is the Codex Leicester by Leonardo da Vinci, which was purchased for $30.8 million in 1994.

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The information presented is not investment advice - it is for educational purposes only and is not an offer or solicitation for the sale or purchase of any securities or investment advisory services. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser when making investment decisions.