The Q2 Switcheroo
Quarter 1 of 2026 (Q1) was a tough one for investors, particularly in March, with the attack on Iran and subsequent spike in oil prices and continued inflationary pressures. Markets were down across the board. Now Q2 has seen a full reversal of Q1 and then some. Most every stock index was up double-digits in Q2 and at the mid-year mark indexes are also up nicely. The S&P 500, Dow Jones Industrial Average and Nasdaq have, seemed to ‘meet up’ at a similar place by end of the second quarter. Nasdaq, which fell the most in Q1, rose the most in Q2 and the DJIA the opposite.
Not every boat rose with the rising market tide. Even very high-quality companies that are doing very well in both profitability and operations saw their stock prices struggle, including stalwarts such as Medtronic, Visa and Microsoft.
As we move into the second half of the year, I can see the possibility of more notable market-related changes – including which stocks lead the way upward…or perhaps downward. As an investor, this environment requires patience and flexibility instead of just simply expecting one market outcome then being potentially punished if that scenario doesn’t come to pass.
SpaceX: Houston, We Have A …
Mid-June brought the many blessings of SpaceX to the publicly-traded investment world and the world rejoiced….for about 3 days. The stock rocketed upwards then fell back to where it first started trading on day 1 within a few weeks. It’s impossible to know for sure where it will go from here, but it’s safe to say that the excitement which swirled in anticipation of the SpaceX IPO has dissipated and likely will never reach that pitch again. This would mean that the demand for SpaceX stock has likely already peaked.
Of course, I could be wrong and SpaceX could make more and greater headlines going forward, but given how much it was being discussed and bragged-about in so many circles pre-IPO, can the actual news ever match that anticipation?! (which was out-of-this-world, figuratively and basically literally).Previously, the IPO’s of fellow tech firms Google and Apple were fantastic times to buy those stocks(in retrospect) and thus SpaceX would seem just another great opportunity.
However, Apple and Google had their IPO’s when they were much smaller and ‘younger’ companies, thus the opportunity for exponentially grow afterward was very much intact. Contrast this to SpaceX, which IPO’ed as a much larger and more mature company, thus it would seem a good deal of its exponential growth is behind it (plus, besides Starlink, what else does SpaceX own that is slam-dunk going to be greatly profitable?!).
When a company is already one of the largest in the world at its IPO, the law of large numbers suggests it cannot keep growing at such a breakneck pace. This same dynamic is likely going to be the case for Anthropic and OpenAI as well. If so, those IPO’s will benefit current owners of the companies, but not necessarily the investors that will be buying in coming months. Caveat Emptor!!
More Money vs. More Results
A simple but often inaccurate perspective is to think more money always leads to better results. Though sometimes it can be true that you get what you pay for, it’s also true that money and value can be two very different things.
In the sports world, some players get paid shocking amounts of money (even by their sport’s standards) and don’t come close to living up to their huge paydays. In business, this can also be the case. The Wall Street Journal recently did a study looking at the top pay packages for CEO’s and found that about 75% of these top-paid CEO’s saw their company stock trail the S&P 500 index (which is supposed to represent the average market return).
What does this tell us? I believe it both says that corporate boards often reward the wrong thing and that simply throwing money at something rarely results in excellence. Money represents many things: power, strength, influence and reward, but it doesn’t represent important characteristics such as diligence, integrity, character and teamwork, all of which help create the best results and positive outcomes.
Yes, money is important, but if it’s THE most important reason to do something (unless there’s no choice), then failure or at least suboptimal results are likely to follow.
Instead, whether directed toward an athlete, manager, CEO or most anyone else, good pay is important to attract and retain talent, but as important as money (and perhaps more so) is having a solid team, a positive environment, strong collective character and values. The best organizations and investments are those where the whole is greater than the sum of the parts, typically by the leaders creating an environment for collective success. The best businesses make a good profit while providing a valuable product or service AND also collaborate with and reward employees.
This is what people, in general, want – a chance and set of opportunities to improve their lives if they apply themselves and make good choices. Companies should create such possibilities both to help their employees thrive but to also benefit their business! The two are NOT mutually exclusive but instead should be interlocked.
Disney – No Magical Profit Sharing
Disney is a corporate colossus with a treasure trove of well-known characters and movies that allow Disney to generate billions upon billions in profits. Their theme parks are considered magical and loved by generations. People who work for Disney are referred to as ‘cast members’ instead of employees to indicate they are special.
However, the cast members who help make these theme parks the “happiest places on Earth” don’t get much reward nor likely feel terribly special themselves. Recently, theme park workers in California protested their lack of what they consider reasonable pay and benefits.
It seems to me that Disney should be a prime company to lead by example and include all employees (cast members) in some sort of profit-sharing system. It would align leadership with those that work for leadership, it would be great P.R. and if they are truly looking to have Disney be the ‘happiest place on Earth’, they should at least try to span that reality gap by also rewarding those who help make it so ‘happy’. It only seems fair, if not magical.
BrianWeisman, CFA,CPA,CFP,CMA
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