A quick note during this turbulent time in the markets – especially for technology stocks.
I cannot say I’m surprised with the current market pullback. During each calendar year there is almost always a double-digit giveback. We never know when it’s going to happen, which is what makes trading so difficult and why we invest for the long term. Short term transactions are a losing battle.
At the index level we are barely halfway to a defined correction (10% decline), but are certainly there on several of the stocks that we own – especially technology and software more specifically. The S&P 500 is 3% off all-time highs while the Nasdaq is 6% off. Hardly a bear market on either.
So why does it feel so painful? It’s ok to admit your discomfort. I have been doing this long enough to know when there is an uneasy feeling in the air.
Some of our larger stock positions, within technology, are down more than 20% from their recent highs. What is surprising to me is their stock performance after announcing tremendous quarterly/annual revenue and earnings growth. This only shows how high expectations were. It becomes increasingly hard to overcome higher hopes. Short term stock performance does not shake my confidence in the companies that we own. In fact, the cheaper prices coupled with the superior growth in revenue and earnings only makes me more excited about owning, and if appropriate for you, adding to those positions.
I absolutely do not believe that artificial intelligence (AI) is going to put application software companies out of business. What is going on right now is a classic overreaction. Any company associated with software is being punished. This reminds me of January 2025 when DeepSeek sparked a major selloff in semiconductor stocks and technology more broadly. DeepSeek caused panic because it demonstrated that AI models could potentially be trained for a fraction of the cost and sophistication that Nvidia has a dominant position in. How did that play out? Six months later the market was 16% higher.
The good news in the markets is that we are seeing solid performance from other sectors and industries. Diversification matters again and that is a healthy sign. Defensive sectors like energy, consumer staples, materials, and industrials are doing well and keeping the overall market afloat.
I encourage you to stay the course and remain steadfastly invested. Given the current powerful downside momentum, price action will probably get a bit worse over the next few weeks. Please continue to fight the urge to panic as that behavior is always the wrong long-term approach.
Insights
Market Update: February 2026
A quick note during this turbulent time in the markets – especially for technology stocks.
I cannot say I’m surprised with the current market pullback. During each calendar year there is almost always a double-digit giveback. We never know when it’s going to happen, which is what makes trading so difficult and why we invest for the long term. Short term transactions are a losing battle.
At the index level we are barely halfway to a defined correction (10% decline), but are certainly there on several of the stocks that we own – especially technology and software more specifically. The S&P 500 is 3% off all-time highs while the Nasdaq is 6% off. Hardly a bear market on either.
So why does it feel so painful? It’s ok to admit your discomfort. I have been doing this long enough to know when there is an uneasy feeling in the air.
Some of our larger stock positions, within technology, are down more than 20% from their recent highs. What is surprising to me is their stock performance after announcing tremendous quarterly/annual revenue and earnings growth. This only shows how high expectations were. It becomes increasingly hard to overcome higher hopes. Short term stock performance does not shake my confidence in the companies that we own. In fact, the cheaper prices coupled with the superior growth in revenue and earnings only makes me more excited about owning, and if appropriate for you, adding to those positions.
I absolutely do not believe that artificial intelligence (AI) is going to put application software companies out of business. What is going on right now is a classic overreaction. Any company associated with software is being punished. This reminds me of January 2025 when DeepSeek sparked a major selloff in semiconductor stocks and technology more broadly. DeepSeek caused panic because it demonstrated that AI models could potentially be trained for a fraction of the cost and sophistication that Nvidia has a dominant position in. How did that play out? Six months later the market was 16% higher.
The good news in the markets is that we are seeing solid performance from other sectors and industries. Diversification matters again and that is a healthy sign. Defensive sectors like energy, consumer staples, materials, and industrials are doing well and keeping the overall market afloat.
I encourage you to stay the course and remain steadfastly invested. Given the current powerful downside momentum, price action will probably get a bit worse over the next few weeks. Please continue to fight the urge to panic as that behavior is always the wrong long-term approach.