📉The stock market fell last week, with the S&P 500 shedding 1.9% to end at 6,506.48. The index is now down 6.8% from its Jan. 27 closing high of 6,978.60 and down 5.0% year-to-date. For more on the stock market, read: 2026 could be crappy for the stock market, and that would be normal 📉 and If you think things are bad now, just keep in mind that they could get much worse 📉
–
I’ve been doing a lot of reading, listening, and watching over the past three weeks. And I can confidently say that no one knows where things are headed in the next couple of weeks and months.
Federal Reserve Chair Jerome Powell was asked last week how higher energy prices from the conflict in Iran would affect the economy.
“The thing I really want to emphasize is that nobody knows,” Powell said. “The economic effect could be bigger. They could be smaller. They could be much smaller or much bigger. We just don’t know.“
The experts with the highest conviction in their forecasts seem to be commodities analysts who are convinced oil prices are headed higher. But even they struggle to understand why prices aren’t higher already.
With the stock market, it’s usually the case that people don’t know how prices will behave in the near term. But I think this is especially the case right now.
For starters, many market participants didn’t see the attack on Iran coming. According to BofA’s Global Fund Manager Survey, just 14% of market pros cited geopolitical conflict as their top “tail risk” in February. In March, that jumped to 37%.
According to TKer Stock Market Truth No. 8: “The most destabilizing risks are the ones people aren’t talking about.” That’s because these risks aren’t priced into the market. And when they materialize, traders and investors inevitably scramble to price them in, often with incomplete information. The added uncertainty alone is enough to drive prices lower.
The bigger problem is that we remain in the throes of this risk event — the Iran war — which has an unclear timeline. It’s an event that directly affects the supply and price of oil, which in turn affects almost every corner of the global economy. The longer this goes, the more painful it becomes and the harder it is to unwind.
This unclear timeline makes it impossible for anyone to estimate costs in their financial models. A swift resolution to the conflict could mean costs are lower than expected. A protracted conflict could mean costs are higher than expected. Like Powell said, “They could be much smaller or much bigger. We just don’t know.”
Until we’re able to see an endgame, we’re almost certain to keep getting a mix of positive and negative headlines that whipsaw the markets, some reflecting seemingly optimistic developments that prove to be false hopes. One moment, we’re told the war is ending. Later, we’re told the conflict is escalating. One day, we hear about a coordinated effort to release strategic energy reserves. The next day, we learn that another major source of energy has been disrupted. And so on.
That gets you a stock market chart that looks like this:
“Markets are reacting to political comments about the length of the Gulf war,” UBS economist Paul Donovan said. “With uncertainty about U.S. objectives, it is hard for investors to assess how much more fighting is required to achieve the ‘end goal.’”
Erratic market behavior in response to a flurry of conflicting headlines is not new. You don’t have to go too far into history to find past episodes where risk events seemingly came out of nowhere, causing markets to swing violently in response to a rotation of positive and negative developments.
The slide below is from a presentation I gave to Columbia Journalism School students in 2022. It lists stock market news story headlines during the seven trading days following news of the Omicron variant of COVID-19 in November 2021.
We saw similar whipsaw behavior in March 2023 after Silicon Valley Bank failed, and everyone was scrambling to understand what it would mean. Here’s a roundup of headlines from that episode:
“The first draft of history is typically emotional, rarely accurate, and often conflicted,” Barry Ritholtz said at the time.
Based on the little I know about President Trump and the Iranian government, a swift resolution to the conflict appears unlikely in the near term.
From a markets perspective, I think we’ll know the worst is behind us only far in hindsight.
This doesn’t mean prices necessarily go much lower from here. It’s certainly possible that the stock market has bottomed in anticipation of some de-escalation in the future. It is typically the behavior of the stock market to bottom before everything else.
But I don’t know.
However, I am convinced we will continue to get more headlines that quickly send prices changing directions.
–
Related from TKer:
I spoke with Mike Larson at the 2026 Money Show in Las Vegas. We talked about AI capex, household finances, and much more! Check it out on YouTube!
There were several notable data points and macroeconomic developments since our last review:
🏛️ Fed holds rates. On Wednesday, the Federal Reserve kept its benchmark interest rate target range at 3.5% to 3.75%.
From the Fed’s policy statement: “Available indicators suggest that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has been little changed in recent months. Inflation remains somewhat elevated.”
From Fed Chair Powell’s press conference: “The implications of developments in the Middle East for the U.S. economy are uncertain. We will remain attentive to risks to both sides of our dual mandate.“
The FOMC also raised its projections for GDP growth, while also increasing its expectations for inflation in the near-term. The so-called dot plot continues to signal one rate cut in 2026 and one more in 2027.
For more on what Fed policy could mean for markets, read: About Fed rate cuts and stocks ⚖️
💼 New unemployment insurance claims, total ongoing claims remain low. Initial claims for unemployment benefits declined to 205,000 during the week ending Mar. 14, down from 213,000 the week prior. This metric remains at levels historically associated with economic growth.
Insured unemployment, which captures those who continue to claim unemployment benefits, declined to 1.86 million during the week ending March 7.
For more on the labor market, read: The next couple of years for the job market could be tough 🫤
👎 Recent job private job growth has been lackluster. According to payroll processor ADP, private U.S. employers added 9,000 jobs in the four weeks ending Feb 28.
For more on the labor market, read: About that ugly jobs report 📉
⛽️ Gas prices surge. From AAA: “With the Spring equinox ushering in warmer weather and more time on the road, gas prices are trending upward alongside seasonal demand. Last week’s announcement by the White House to release 172 million barrels of oil from its strategic reserves over four months has no immediate relief on the oil market as the price of a barrel of crude continues to climb.”
For more on energy prices, read: Our love-hate relationship with rising oil prices in charts 💔🛢️📊
💳 Card spending data is holding up. From JPMorgan: “As of 13 Mar 2026, our Chase Consumer Card spending data (unadjusted) was 6.4% above the same day last year. Based on the Chase Consumer Card data through 13 Mar 2026, our estimate of the US Census February control measure of retail sales m/m is 0.61%.”
From BofA: “Total card spending per HH was up 4.9% y/y in the week ending Mar 14, according to BAC aggregated credit & debit card data. Y/y gas spending rose to 14.4% due to higher gas prices, with lower income gas spending growth outpacing higher income. Total card spending ex gas was up a solid 4.3% y/y, with a notable rise in airlines, electronics & transit spending growth.“
More color from BofA: “This rise in gasoline spending could potentially dampen consumers’ ability to spend on ‘nice-to-have’ or discretionary categories. But the ‘good news’ so far is that discretionary spending growth remains solid – in the week to March 14 it was up 5.3%. This strong momentum could be, in our view, due to relatively robust overall wage growth and higher 2026 tax refunds.” – BofA“
Consumer spending data has looked a lot better than consumer sentiment readings. For more on this contradiction, read: We’re taking that vacation whether we like it or not 🛫 and Household finances are both ‘worse’ and ‘good’ 🌦️
🛠️ Industrial activity ticked higher. Industrial production activity in February increased 0.2% from prior month levels. Manufacturing output rose 0.2%.
🏭 Business investment activity rose to new record. Orders for nondefense capital goods excluding aircraft — a.k.a. core capex or business investment — climbed marginally from its December peak to $79.32 billion in January.
Core capex orders are a leading indicator, meaning they foretell economic activity down the road.
🏠 Mortgage rates rise. According to Freddie Mac, the average 30-year fixed-rate mortgage rose to 6.22%, up from 6.11% last week: “The 30-year fixed-rate mortgage edged up this week to 6.22% but remains nearly half a percentage point lower than the same time last year. Potential homebuyers are poised for a more affordable spring homebuying season than last with the market experiencing improvements in purchase applications and pending home sales.”
As of Q4, there were 148.7 million housing units in the U.S., of which 87.8 million were owner-occupied and about 40% were mortgage-free. Of those carrying mortgage debt, almost all have fixed-rate mortgages, and most of those mortgages have rates that were locked in before rates surged from 2021 lows. All of this is to say: Most homeowners are not particularly sensitive to the small weekly movements in home prices or mortgage rates.
For more on mortgages and home prices, read: Why home prices and rents are creating all sorts of confusion about inflation 😖
🏠 Homebuilder sentiment ticked higher. From the NAHB: “While the Freddie Mac 30-year fixed rate mortgage averaged 6.05% in February, the lowest since August 2022, downpayment hurdles and uncertainty from the conflict with Iran and the price of oil will be headwinds going forward. The administration’s executive orders issued last week to reduce regulatory burdens associated with home building are a positive step toward increasing attainable housing supply.”
🏘️ New home sales fall. Sales of newly built homes fell 17.6% in January to an annualized rate of 587,000 units.
New home sales figures come with a large margin of error. For more on this, read: Mathematical context can totally change the story 🧮
😬 This is the stuff pros are worried about. From BofA’s March Global Fund Manager Survey: “Asked for the biggest ‘tail risk,’ 37% of FMS investors said geopolitical conflict, up sharply from 14% a month ago. Last month, the biggest tail risk per FMS investors was “AI bubble” (now just 10%).”
Here’s how the biggest “tail risk” has evolved over the years.
For more on risks, read: Three observations about uncertainty in the markets 😟 and Two times when uncertainty seemed low and confidence was high 🌈
📈 Near-term GDP growth estimates are tracking positively. The Atlanta Fed’s GDPNow model sees real GDP growth rising at a 2.3% rate in Q1.
For more on GDP and the economy, read: It’s too ambiguous to just say ‘the economy’ 🤦🏻♂️ and Economic data can often be both ‘worse’ and ‘good’ 🌦️
Earnings look bullish: The long-term outlook for the stock market remains favorable, bolstered by expectations for years of earnings growth. And earnings are the most important driver of stock prices.
Demand is positive: Demand for goods and services remains positive, supported by healthy consumer and business balance sheets. Personal spending activity remains at record levels. Core capex orders, which are a leading indicator of business spending, have been on the rise.
Growth is cooling: While the economy remains healthy, growth has normalized from much hotter levels earlier in the cycle. The economy is less “coiled” these days as major tailwinds like job openings and excess savings have faded. Job creation is hovering at near-zero. It has become harder to argue that growth is destiny.
Actions speak louder than words: We are in an odd period, given that the hard economic data decoupled from the soft sentiment-oriented data. Consumer and business sentiment has been relatively poor, even as tangible consumer and business activity continues to grow and trend at record levels. From an investor’s perspective, what matters is that the hard economic data continues to hold up.
Stocks are not the economy: There’s a case to be made that the U.S. stock market could outperform the U.S. economy in the near term, thanks largely to positive operating leverage. Since the pandemic, companies have aggressively adjusted their cost structures. This came with strategic layoffs and investment in new equipment, including hardware powered by AI. These moves are resulting in positive operating leverage, which means a modest amount of sales growth — in the cooling economy — is translating to robust earnings growth.
Mind the ever-present risks: Of course, we should not get complacent. There will always be risks to worry about, such as U.S. political uncertainty, geopolitical turmoil, energy price volatility, and cyber attacks. There are also the dreaded unknowns. Any of these risks can flare up and spark short-term volatility in the markets.
Investing is never a smooth ride: There’s also the harsh reality that economic recessions and bear markets are developments that all long-term investors should expect as they build wealth in the markets. Always keep your stock market seat belts fastened.
Think long-term: For now, there’s no reason to believe there’ll be a challenge that the economy and the markets won’t overcome. The long game remains undefeated, and it’s a streak that long-term investors can expect to continue.
For more on how the macro story is evolving, check out the previous review of the macro crosscurrents. »
Here’s a roundup of some of TKer’s most talked-about paid and free newsletters about the stock market. All of the headlines are hyperlinked to the archived pieces.
The stock market can be an intimidating place: It’s real money on the line, there’s an overwhelming amount of information, and people have lost fortunes in it very quickly. But it’s also a place where thoughtful investors have long accumulated a lot of wealth. The primary difference between those two outlooks is related to misconceptions about the stock market that can lead people to make poor investment decisions.
Passive investing is a concept usually associated with buying and holding a fund that tracks an index. And no passive investment strategy has attracted as much attention as buying an S&P 500 index fund. However, the S&P 500 — an index of 500 of the largest U.S. companies — is anything but a static set of 500 stocks.
For investors, anything you can ever learn about a company matters only if it also tells you something about earnings. That’s because long-term moves in a stock can ultimately be explained by the underlying company’s earnings, expectations for earnings, and uncertainty about those expectations for earnings. Over time, the relationship between stock prices and earnings has a very tight statistical relationship.
Investors should always be mentally prepared for some big sell-offs in the stock market. It’s part of the deal when you invest in an asset class that is sensitive to the constant flow of good and bad news. Since 1950, the S&P 500 has seen an average annual max drawdown (i.e., the biggest intra-year sell-off) of 14%.
Every recession in history was different. And the range of stock performance around them varied greatly. There are two things worth noting. First, recessions have always been accompanied by a significant drawdown in stock prices. Second, the stock market bottomed and inflected upward long before recessions ended.
Since 1928, the S&P 500 has generated a positive total return more than 89% of the time over all five-year periods. Those are pretty good odds. When you extend the timeframe to 20 years, you’ll see that there’s never been a period where the S&P 500 didn’t generate a positive return.
While a strong dollar may be great news for Americans vacationing abroad and U.S. businesses importing goods from overseas, it’s a headwind for multinational U.S.-based corporations doing business in non-U.S. markets.
…you don’t want to buy them when earnings are great, because what are they doing when their earnings are great? They go out and expand capacity. Three or four years later, there’s overcapacity and they’re losing money. What about when they’re losing money? Well, then they’ve stopped building capacity. So three or four years later, capacity will have shrunk and their profit margins will be way up. So, you always have to sort of imagine the world the way it’s going to be in 18 to 24 months as opposed to now. If you buy it now, you’re buying into every single fad every single moment. Whereas if you envision the future, you’re trying to imagine how that might be reflected differently in security prices.
Some event will come out of left field, and the market will go down, or the market will go up. Volatility will occur. Markets will continue to have these ups and downs. … Basic corporate profits have grown about 8% a year historically. So, corporate profits double about every nine years. The stock market ought to double about every nine years… The next 500 points, the next 600 points — I don’t know which way they’ll go… They’ll double again in eight or nine years after that. Because profits go up 8% a year, and stocks will follow. That’s all there is to it.
Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius. But Sir Isaac’s talents didn’t extend to investing: He lost a bundle in the South Sea Bubble, explaining later, “I can calculate the movement of the stars, but not the madness of men.” If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases.
According to S&P Dow Jones Indices (SPDJI), 79% of U.S. large-cap equity fund managers underperformed the S&P 500 in 2025. As you stretch the time horizon, the numbers get even more dismal. Over three years, 67% underperformed. Over 5 years, 89% underperformed. And over 20 years, 93% underperformed. This 2025 performance was the 16th consecutive year in which the majority of fund managers in this category have lagged the index.
Even if you are a fund manager who generated industry-leading returns in one year, history says it’s an almost insurmountable task to stay on top consistently in subsequent years. According to S&P Dow Jones Indices, just 4.21% of all U.S. equity funds in the top half of performance during the first year were able to remain in the top during the four subsequent years. Only 2.42% of U.S. large-cap funds remained in the top half
SPDJI’s report also considered fund performance relative to their benchmarks over the past three years. Of 738 U.S. large-cap equity funds tracked by SPDJI, 50.68% beat the S&P 500 in 2022. Just 5.08% beat the S&P in the two years ending 2023. And only 2.14% of the funds beat the index over the three years ending in 2024.
Picking stocks in an attempt to beat market averages is an incredibly challenging and sometimes money-losing effort. Most professional stock pickers aren’t able to do this consistently. One of the reasons for this is that most stocks don’t deliver above-average returns. According to S&P Dow Jones Indices, only 19% of the stocks in the S&P 500 outperformed the average stock’s return from 2001 to 2025. Over this period, the average return on an S&P 500 stock was 452%, while the median stock rose by just 59%.
![i’m-nervous,-too!-[part-2]](https://10xwealthreport.com/wp-content/uploads/2026/03/177042-im-nervous-too-part-2-1568x784.jpg)
