This quarter, the market behaved like a popularity contest at a high school dance — and only a few students got invited. A handful of large-cap tech names, most of them wearing AI-themed corsages, carried the bulk of the market’s gains. If you removed the top ten performers from the index, the rest of the market looked more like a quiet Tuesday than a celebration. Money continues to pour into anything with “AI” in the pitch deck, whether or not the business has a clear path to profitability. This has skewed the large-cap space, making the indexes look healthier than they really are. It’s a bit like judging the average height of a room by measuring the basketball team.

Meanwhile, small caps — especially the lower-quality ones — sprinted ahead, fueled more by enthusiasm than earnings. Our small and mid-cap managers, who insist on investing in companies that actually make money, found themselves politely watching from the sidelines while the market rewarded the loudest voices in the room.

On a more encouraging note, international markets finally decided to show up. After years of underwhelming performance, regions like Europe and Japan delivered solid returns. Our global allocation, which has been patiently waiting like a well-prepared understudy, finally got its moment on stage.

Most of the gains in your portfolios this quarter didn’t come from chasing trends or picking the next AI darling. They came from asset allocation — the quiet, dependable strategy that doesn’t make headlines but consistently does the heavy lifting. It’s not flashy, but it’s the reason your portfolio is working.

We’ll continue to invest in quality, stay diversified and let others chase the shiny objects. If you’d like to review your portfolio or talk about why popularity contests make poor investment strategies, we’re always happy to connect.