RVW Quarterly Newsletter

THE BOTTOM LINE: The global economy has thus far adjusted to the energy shock, and its impact may be fading, absent further escalation. Growth is supported by a surge in investment spending. History reminds us that geopolitical events often create short-term volatility but rarely alter the long-term trajectory of well-functioning capital markets in defense, supply chains, energy transition, and artificial intelligence infrastructure. Earnings growth is doing the heavy lifting for equities.

In this RVW Report:

• Economic & Market Review

• Charts & Graphs

• Investing At All-Time Highs

• SpaceX: By the Numbers

• The Folly of Market Predictions

• The Story of “Mr. Market” by Warren Buffett

• How Tesla Builds a Car Every 5 Seconds

FIRST HALF 2026 ECONOMIC AND MARKET REVIEW

Geopolitics creates headlines, but powerful fundamentals have driven long-term returns.

Equity markets delivered stellar returns despite navigating geopolitical conflict in the Middle East, energy-price volatility, shifting expectations for interest rates, and ongoing economic uncertainty. Once again, markets demonstrated an ability to look beyond today's headlines and focus on tomorrow's opportunities. The first half of 2026 reminded investors why discipline remains one of the most valuable investment assets.

An encouraging development during the period was the broadening of market leadership. For much of the past two years, returns had been driven by a narrow group of mega-cap technology companies known as the Magnificent Seven. We have long believed that a healthier and more sustainable bull market would ultimately require broader participation across sectors, industries, and company sizes. That broadening occurred with considerable force during the first half of the year, validating the importance of maintaining broadly diversified portfolios rather than concentrating investments in a handful of companies.

Economic fundamentals, innovation, and the earnings power of well-managed businesses have consistently proven to be far more important drivers of long-term investment returns than short-term geopolitical events. Investors who remained disciplined were generously rewarded, while those who reacted emotionally to headlines by selling during times of uncertainty and screaming headlines usually missed the subsequent recoveries.Our investment philosophy has always been grounded in these principles. Rather than attempting to predict economic or geopolitical events, we construct evidence-based portfolios designed to withstand uncertainty through broad diversification, ownership of financially strong companies, prudent risk management, cost efficiency, and disciplined rebalancing. The resilience demonstrated by both the markets and our investment approach reinforces our confidence that these enduring principles remain the most reliable guide for achieving long-term investment success.We therefore design portfolios that are aligned with long-term objectives rather than allowing short-term events to dictate investment decisions.

A PICTURE TELLS A THOUSAND WORDS–AND A CHART TELLS THE STORY

PROFIT MARGINS ARE ELEVATED

CAPITAL EXPENDITURE IS GROWING, FUELED BY AI

AI IS BEING INTEGRATED INTO VIRTUALLY EVERY ASPECT OF ECONOMIC ACTIVITY

CONSUMERS HAVE HEALTHY BALANCE SHEETS AND ARE NOT IN SIGNIFICANT DEBT

THE BROADENING OUT OF THE MARKET BEYOND THE MAG-7 AS ANTICIPATED

WHY WALL STREET BULLS AREN’T WORRIED ABOUT SKY-HIGH STOCK PRICES

Net profit margins are higher than average across multiple sectors, indicating corporate America has grown more resilient Wall St Journal June 2026

The net profit margin for companies in the S&P 500 rose significantly in the first half of the year and are expected to continue along this path as AI impacts every aspect of the economy.  It isn’t just tech companies - multiple sectors including financial services and industrials reported net margins above their five-year averages. For investors, the broad-based strength suggests corporate America has gotten more resilient to geopolitical conflicts that could trigger an inflationary jump and economic slowdown.

“This is a productivity driven environment, much like the 90s were, and productivity is spreading across sectors,” said Nancy Tengler, chief executive of Laffer Tengler Investments. “It’s thanks to not just AI, but all the new technologies.”

INVESTING AT ALL TIME HIGHS

Investors are often reluctant to buy stocks when the market reaches a new all-time high, fearing they have "missed the opportunity" or that a correction must surely follow. History suggests otherwise. New highs frequently occur because the economy is expanding, corporate earnings are growing, and investors are becoming increasingly confident about the future. In other words, markets often reach new highs not because they are about to fall, but because they are in the midst of long-term upward trends. Waiting for a pullback can result in sitting on the sidelines while markets continue to advance. The evidence supports this view. Over the past century, the U.S. stock market has spent much of its time setting new record highs, and those highs have often been followed by additional gains over the subsequent one, three, and five year periods.

THE LARGEST COMPANIES ARE EXHIBITING THE MOST ROBUST PROFIT GROWTH

Your RVW Equities are overweighted towards this sector.

EQUITY MARKETS HAVE OVERCOME ALL CRISES OVER TIME AND RESUMED THEIR LONG-TERM UPWARD TRAJECTORY

TIMING THE MARKET HAS GENERALLY NOT BEEN REWARDING

PREDICTIONS ARE EASY. BEING RIGHT IS NOT.

We don’t predict. We prepare.

Yogi Berra famously observed, "Prediction is very difficult, especially about the future." Nowhere is that truer than in the investment world. Financial media are filled with experts confidently forecasting where the stock market is headed, which sectors will outperform, or when investors should buy or sell. Yet decades of research show that even the most prominent market strategists have little ability to consistently predict future market movements. In fact, studies have found that their forecasts are often no more accurate than random chance, while Wall Street's annual market predictions have repeatedly missed actual returns by wide margins. The future is shaped by new information—economic developments, technological breakthroughs, corporate earnings, geopolitical events, and unexpected surprises—that simply cannot be known in advance.

This is precisely why our investment philosophy is built on evidence rather than forecasts or predictions. At RVW, we do not believe long-term financial success depends on accurately predicting the next recession, interest-rate move, election, or market correction. Instead, we build globally diversified portfolios of high-quality companies, manage risk prudently, keep costs low, and remain disciplined through changing market environments. Rather than trying to outguess tomorrow's headlines, we rely on principles that have stood the test of time. History has consistently shown that patient investors who stay invested and avoid reacting to predictions are far more likely to achieve their long-term financial goals than those who attempt to forecast the unpredictable.

The famous BusinessWeek cover story, "The Death of Equities," appeared on August 13, 1979, when the S&P 500 was approximately 107. As of today, the S&P 500 is trading around 8,000, meaning the index has appreciated by roughly 7,400%—about 75 times its 1979 level. This remains one of the greatest lessons in investing. Just as public sentiment reached maximum pessimism and a leading financial publication declared the "death" of stocks, one of the greatest bull markets in history was about to begin.

THE STORY OF MR. MARKET

As retold by Warren Buffett and attributed to his teacher, Benjamin Graham

Imagine that you own a successful business with a partner named Mr. Market. Every day, Mr. Market knocks on your door and offers either to buy your share of the business or sell you his. The unusual thing about Mr. Market is that his mood changes constantly. On some days he is wildly optimistic and offers an extremely high price because he believes the future is bright. On other days he becomes deeply pessimistic and offers to sell at a bargain-basement price because he fears disaster.

The key insight is that you are under no obligation to accept Mr. Market's offer. His daily quotations should be ignored. As Warren Buffett has often observed, the market is there to serve you, not to guide you. Successful investing comes from owning outstanding businesses over the long term—not from following Mr. Market's ever-changing emotions.

THE ESSENTIAL RVW INVESTMENT PRINCIPLES FOR LONG-TERM WEALTH OPTIMIZATION

• Successful investing is about discipline, not prediction. Long-term wealth is built through a well-designed investment process rather than trying to identify the next winning stock or market trend. A Financial Plan becomes the GPS system, guiding all investing decisions.

• Behavior matters more than market timing. Investors who remain calm during periods of volatility are far more likely to achieve their long-term financial goals.

• Costs matter. Trading charges, income tax and the cost of being out of the market.

• Time is your greatest investment advantage. Starting early allows compounding to work, while delaying investing can significantly reduce long-term wealth. Having a long-term perspective is the key.

• Compounding rewards patience. Consistent investing and staying invested are far more powerful than attempting to perfectly time the market.

• Inflation quietly erodes purchasing power. Excessive cash holdings may feel safe but often lose real value over time as the cost of living rises.

• Risk extends beyond market fluctuations. Concentration risk, liquidity, and emotional decision-making can all undermine long-term success.

• Every investment should have a purpose. Different financial goals require different strategies, time horizons, and levels of risk.

• Distinguish risk from volatility. Risk as we define it is the possibility of permanent loss of capital. Volatility is simply the manifestation of the market pricing mechanism where each day, herds of bulls and bears clash in fiery confrontation. In the end the bulls win.

• Asset allocation drives long-term results. The mix of stocks, bonds and alternative investments is typically more important than individual investment selection.

• Diversification builds resilience. A broadly diversified portfolio reduces dependence on any single investment, sector, or market.

• Focus on value, not simply low fees. Reasonable costs matter, but quality advice, tax planning, and disciplined portfolio management can add significant long-term value.

• Tax planning, estate planning and appropriate insurance coverages are critical elements of risk mitigation and long term wealth optimization.

RECOMMENDED VIEWING: HOW TESLA BUILDS A CAR EVERY 5 SECONDS

Tesla's new assembly line in Austin is unlike anything the car industry has ever built, and it completely changes how fast a car can be made. This video breaks down Tesla's entire manufacturing machine, from the Giga Press, to the unboxed Cybercab line, to the humanoid robots that could take over the factory floor.

CLICK HERE to watch the video.

As trained Personal Financial Planners, our team stands ready to provide guidance and counsel in all related matters.  Thank you for entrusting your nest egg to our stewardship, and to those who referred friends and family members to us, we are deeply grateful. RVW is about providing a successful investment experience. That means more than just returns. It means providing peace of mind because you know that a transparent process backed by decades of research is powering every decision.

Sincerely,

Your RVW Wealth Team:Selwyn Gerber, Jonathan Gerber, Loren Gesas, Mary Ann Moe, Simon Liu, Jesse Picunko, Dylan Scott, Simmons Allen, Kelly Sueoka, Shuey Wyne, Joseph Woods, Doug LaCombe, Jeffry Niedermeyer, Emma Peitzer, Logan Wurm, Alberto Rodriguez, and Kelly Richardson

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