As our 2026 portfolio rebalancing approaches, Brett is taking an “avoid the landmines” approach this year. The focus is on staying clear of large forces that could have an outsized negative impact on certain areas of the market.

Looking at the S&P 500, the broader uptrend remains intact, though momentum has slowed and some consolidation is underway.

So what do we mean by “landmines”?

The first is politics, particularly as it relates to health insurance. The upcoming midterm cycle could introduce policy uncertainty and potential disruption within the health insurance sector.

The second landmine is software and market disruption. Traditional software-as-a-service companies, such as Microsoft, are showing an accelerating downward trend. This appears to be driven by AI eroding the long-standing competitive advantages of major software players.

The third landmine is valuation and concentration risk. Roughly 40% of the S&P 500 is concentrated in the top 10 market-cap companies, and those names are trading at approximately a 40% premium to historical valuations. We are also beginning to see signs of weakness within the “Magnificent Seven” cohort.

Together, these themes support a more cautious strategy that emphasizes tighter positioning, reduced speculative risk, and preservation of gains already made. We look forward to providing updates as the year unfolds.