Dear Friends,
The start of 2026 has been interesting, with a lot of headlines causing volatility, but general market performance
has still been good. All three major indexes had positive returns in January. The Dow performed the best,
returning about 2.50%. The S&P 500 also briefly cracked 7,000 for the first time in history, but that record was
short-lived as it currently trades around 6,900 again. We are hopeful these records can continue to be broken,
but so far, earnings season has brought a bit of volatility. Microsoft reported what looked like strong earnings,
beating on revenue and Earnings Per Share (EPS), but it sold off regardless. When stocks are trading at higher-
than-usual valuations, that creates less room for error. Even with some volatility, though, we still believe that
large-cap tech is in a great place to grow long-term. First Trust estimates that the Magnificent 7 will grow EPS by
20.9% in 2026, so we are still bullish on this area long-term.
The Federal Reserve held interest rates steady during its January meeting, but the larger story is that President
Trump finally revealed the replacement for Jerome Powell. Kevin Warsh will serve as the new Fed chair. Warsh
has experience working for the Fed, he served on the Fed from 2006 to 2011, before voluntarily resigning his
position. Warsh also has experience navigating difficult environments, and he was an essential part of the Fed
during the Great Recession. Overall, we feel that Warsh is competent and will do a good job following the data.
The Federal Reserve needs to act independently of the executive branch so that it can best serve the American
people.
The core of our economy is strong, and corporations are expected to deliver earnings growth again this year.
This is especially true for the smaller companies held in the S&P 500. The other 493 are expected to report EPS
growth of 13% in 2026. This is nearly double the EPS growth of 6.9% they experienced in 2025. As these
companies continue to catch up to the Mag 7, we would expect broader market performance, which benefits
stock pickers. AI infrastructure build-out will continue to be a huge theme in 2026, and we expect AI efficiency
and growth to diffuse outwards into other sectors. In fixed income, we have a blend of diversified investments
spread out between both active and passive funds. We think that rates will be cut 2 times this year, which
means we will have to be selective about how we chase yield. We will continue doing everything we can to
provide you with the best returns for the lowest amount of risk.
The following are our best current recommendations:
The start of 2026 has been interesting, with a lot of headlines causing volatility, but general market performance
has still been good. All three major indexes had positive returns in January. The Dow performed the best,
returning about 2.50%. The S&P 500 also briefly cracked 7,000 for the first time in history, but that record was
short-lived as it currently trades around 6,900 again. We are hopeful these records can continue to be broken,
but so far, earnings season has brought a bit of volatility. Microsoft reported what looked like strong earnings,
beating on revenue and Earnings Per Share (EPS), but it sold off regardless. When stocks are trading at higher-
than-usual valuations, that creates less room for error. Even with some volatility, though, we still believe that
large-cap tech is in a great place to grow long-term. First Trust estimates that the Magnificent 7 will grow EPS by
20.9% in 2026, so we are still bullish on this area long-term.
The Federal Reserve held interest rates steady during its January meeting, but the larger story is that President
Trump finally revealed the replacement for Jerome Powell. Kevin Warsh will serve as the new Fed chair. Warsh
has experience working for the Fed, he served on the Fed from 2006 to 2011, before voluntarily resigning his
position. Warsh also has experience navigating difficult environments, and he was an essential part of the Fed
during the Great Recession. Overall, we feel that Warsh is competent and will do a good job following the data.
The Federal Reserve needs to act independently of the executive branch so that it can best serve the American
people.
The core of our economy is strong, and corporations are expected to deliver earnings growth again this year.
This is especially true for the smaller companies held in the S&P 500. The other 493 are expected to report EPS
growth of 13% in 2026. This is nearly double the EPS growth of 6.9% they experienced in 2025. As these
companies continue to catch up to the Mag 7, we would expect broader market performance, which benefits
stock pickers. AI infrastructure build-out will continue to be a huge theme in 2026, and we expect AI efficiency
and growth to diffuse outwards into other sectors. In fixed income, we have a blend of diversified investments
spread out between both active and passive funds. We think that rates will be cut 2 times this year, which
means we will have to be selective about how we chase yield. We will continue doing everything we can to
provide you with the best returns for the lowest amount of risk.
The following are our best current recommendations:
HARE Portfolio
(Growth Companies)
TORTOISE Portfolio
(Dividend Paying Companies with a Stable Business Model)
Growth ETF Pick of the Month
Fixed Income ETF Pick of the Month
Bond Picks of the Month
CDs
Author's Perspective
Yours Truly,
Alan Locke, President
Locke Investment Management
Alan Locke, President
Locke Investment Management
About Alan Locke
Alan Locke, BS, MBA, CGA, CFP is the President of Locke Investment Management. After a successful financial management career, Mr. Locke founded Locke Investment Management, a registered investment advisory firm, in 1994. His credo has always been to build the best possible portfolio for each client in order to help that client achieve his or her financial goals.