Quote for the Week

That gets me to the point about the relationship between gambling and investing, that is, what you learn from one helps with the other. Gambling games are, for the most part, an area where you can calculate the odds, the probabilities, in detail and get them rather exact. There are some exceptions, like sports betting and so forth, that are more like social or financial markets. But you can actually come into a gambling game with known probabilities and get answers. You have the advantage, like you have in the physical sciences, of so-called repeatable experiments. You can simulate a gambling game a million times if you want because you know the probabilities. It’s much more difficult in the securities markets because we just have one history from which we have to infer what’s going on, and the probabilities that we have are not exact—they’re just estimates. We’re in a world that’s controlled by people, which evolves in complex ways that we don’t fully understand. So you don’t have the same simple rules you have in the physical sciences and in the calculations that are behind gambling games. Nonetheless, the things you learn about gambling games carry over, in large part, to the investment world. — Ed Thorp (source)

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The first quarter of 2026 reminded us how quickly markets can change for the worse. The second quarter did too in a good way.

Broader markets started the year strong but then geopolitical chaos spilled into markets in March pushing most global indexes lower. Broader indexes closed the first quarter flat to a small loss.

The recovery was unexpectedly swift with almost all global markets higher in April and May. Broader markets finished the second quarter positive.

Emerging markets lead through Q2 with a 24.0% total return. Small caps follow closely behind at 22.6%. US large caps more than recovered at 10.2%, followed by international markets at 9.8%.

Overall, a diversified portfolio came in handy this year. It helped stem the slide in March and took advantage of the quick recovery. It also benefited from some craziness in emerging markets too.

Parabolic moves are rare in market indexes. Unless that index is concentrated in a small number of stocks. For example, the MSCI South Korea index, part of the MSCI Emerging Markets index, is made up of 77 stocks. Not a small number, by any means. Yet, look at its recent performance.

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Quote for the Week

My study of history will not lead me to make any definite forecasts involving numbers and dates. That may be a disappointment to some, but it certainly is a great relief to me. The applicability of history almost always appears after the event. When it is all over, we can quote chapter and verse to demonstrate why what happened was bound to happen because it had happened before. This is not really very helpful. The Danish philosopher, Kirkegaard, made the statement that life can only be judged backwards, but it must be lived forward. That certainly is true with respect to our experiences in the stock market.

Yet, I think that a knowledge of history — general history, financial history, stock market history — will be found useful for a broad perspective in planning one’s course, even though it may create uncertainty and humility rather than cocksureness with respect to the immediate future. — Benjamin Graham (source)

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The asset class, sector, international, and emerging markets quilts are up to date through Q2 2026. you can find links to the updated versions below:

• Asset Class Returns
• Sector Returns
• International Market Returns
• Emerging Market Returns

Feel free to download copies here or grab the images below.

The second quarter story was one of market recovery. The war, and higher oil prices, turned out to be less impactful on businesses than markets imagined.

Broader markets spent the past three months recovering with emerging markets leading the way at 24% total return year to date. US small caps were close behind, followed by REITs, US large caps, and international markets.

US sectors found a new leader in Industrials. The Info Tech sector recovered from a 9% loss in Q1 to a 20% gain through Q2. All but two sectors, energy and consumer discretionary, rose in the second quarter.

The big story was emerging markets and semiconductors. South Korea and Taiwan led the way. South Korea is up 118% year to date compared to 17% through Q1. Taiwan is up 63% through Q2 compared to a 9% gain in Q1.

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Quote for the Week

In those early Wall Street days, it wasn’t too difficult to figure out what I was doing that was wrong. There are two principal mistakes that nearly all amateurs in the stock market make. The first is to have an inexact knowledge of the securities in which one is dealing, to know too little about a company’s management, its earnings, and prospects for future growth. The second mistake is to trade beyond one’s financial resources, to try to run up a fortune on a shoestring.

This was my main error at the outset. I had virtually no capital to start with. When I bought stocks I put up so small a margin that a change of a few points could wipe out my equity. What I really was doing, in fact, was little more than betting whether a stock would go up or down. I might be right sometimes, but any sizable fluctuation would wipe me out.

Only after I had been wiped out repeatedly did I learn the lesson of not overplaying my hand and of always holding back some part of my capital as a reserve. Had I learned this earlier I would have saved myself many a heartache, and avoided going broke again and again. What I was fighting out inside of myself was the age-old conflict that every ambitious youth experiences — of choosing between a reckless impulse to shoot the works and the cautious massing of one’s resources for the morrow. — Bernard Baruch (source)

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Here’s what I’ve been reading the past three months:

• Money and Me — Jonathan Clements’s final book is a personal one. Between topics around saving, investing, and retirement is where the personal in personal finance lies: family, happiness, and life. Clements tells his own story throughout which only adds to the wonderful lessons in his book.
• New Levels in the Stock Market — Charles Amos Dice fully bought into the “new era” view on the market and economy when he published this book weeks before the 1929 crash. Utopian describes Dice’s belief of what’s to come. Technology, and all its wonders, would somehow solve all our problems, and that’s why the market would keep going up. It didn’t, of course. Dice’s timing was awful. He was beyond overoptimistic but not wrong about everything either.
• Bullishly Speaking — The book is a collection of articles written by S. Allen Nathanson, for the magazine Scrap Age. His investment commentary is not new to anyone who read Graham or Lynch. It sits more as reminder from that viewpoint. His writing does offer a unique perspective on the period it was written, primarily 1966 to 1973.
• The Shock of the Old — David Edgerton covers the history of technology back to 1900. He argues that history books often distort the impact of new inventions, how quickly it gets adopted and displaces old technology. He, then, sets out to correct it with numerous examples.

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