When the US–Iran conflict started, stocks took quite a tumble due to the geopolitical uncertainty, and the prospect of higher oil prices. But as ceasefires start and stop, investors seem to be looking past the conflict at this time and focusing on fundamentals. The stock market reflects forward-looking prospects for companies, especially earnings. And the quarterly earnings reports have been coming in strong. Analysts expected year-over-year (yoy) earnings growth of just over 13% this quarter, and that is exactly what is being reported. If the trend holds as expected, it will mark the sixth consecutive quarter of double-digit yoy earnings growth. Investors are looking at a strong tailwind from earnings, and that is why stock indexes have bounced back and are nearing or hitting new highs. FactSet Earnings Insight Earnings Calendar - Zacks Investment Research
When Earnings Speak, Stocks Listen: As long-term readers of the RSWA Newsletter will note, we always stress that stock prices and earnings tend to move together (actually, readers will say we state this ad nauseam!). While markets can overshoot in either direction in the short-term, gains in share prices are ultimately anchored by growth in profits. Earnings represent the cash-generating power of companies, and history shows that when earnings rise steadily, stock valuations usually follow. That relationship looks especially encouraging today. Projected full-year earnings growth for 2026 and 2027 looks incredibly strong at 19.1% and 16.8%, respectively (see chart). The expectations reflect resilient consumer demand, increasing productivity, and disciplined cost management across many sectors. If companies deliver on these forecasts, earnings growth could continue to provide a solid underpinning for stock prices. We probably state the earnings-stock correlation at least once a year in the newsletter. But it’s worth repeating when the news and markets are volatile, and investors need to be reminded that earnings and looking long-term are what matter for stocks.
Don’t Wait on Those New Software Updates: The Anthropic company develops AI models and related software systems, and is best known for its Claude software. Their new security model software, called Mythos, is unusually good at finding deep software vulnerabilities. So good in fact, it found thousands of “high-severity vulnerabilities in every major operating system and web browser.” Therefore, Anthropic released Mythos early to major software developers such as Apple, Google, and Amazon, so the bugs could be fixed before Mythos is more widely available and could fall into hackers’ hands who can take advantage of vulnerabilities.
What this means is that no one should ignore software updates from phones, tablets, computers, etc. In fact, it may be better to set your systems to automatically update. If you don’t use automated updates, don’t put them off; do them immediately.
Financial Planning/Investment Strategy Corner:
Moving to a New State for Retirement:
Many people choose to move to another state in retirement to improve their quality of life. A lower cost of living, better weather, closer proximity to family, or access to preferred activities such as beaches, mountains, golf, or cultural amenities can make retirement more rewarding and manageable.
But before making the move, several factors deserve careful consideration. Taxes are a major consideration, as states differ widely in how they tax income, property, Social Security benefits, pensions, estates, and inheritances (For example, did you know the state of Pennsylvania has an inheritance tax on almost all assets that is usually between 4.5% - 15% depending on who receives it? Yikes!). Healthcare is equally important, as retirees should evaluate their needs regarding specialists, quality of care, and how a move might affect Medicare plans. The cost of living goes beyond housing and property taxes and includes home insurance, utilities, plus everyday expenses. Lastly, if the move is more permanent, consider long-term needs such as aging in place, transportation, and support networks.
A thoughtful evaluation before you make a big move can help ensure you get the most personal fulfillment out of your retirement years. Forbes - How To Decide If Moving To A New State After Retirement Makes Sense
Quick Hits:
- Gen Z is ditching subscription services and buying CDs and vinyl records: Newsweek
- Are isometric exercises the most efficient fitness regime? BBC
- We’ve heard a lot about people retiring to Portugal, but Ecuador sounds OK too: WSJ
- Has the cold weather dampened your mojo down for gardening? Well, maybe the Netflix six-part series “This Is a Gardening Show” by Zach Galifianakis will get your tickle bone in the mood: AP News
- Grab some popcorn this weekend to watch the NFL Draft. And since I’m a Browns fan, Draft Season is really the only season! ESPN - 2026 NFL Draft Tracker by Round - ESPN
Book Review: History Matters, by David McCullough:
I recently picked up History Matters, a collection of writings, speeches, interviews, and essays by David McCullough, who passed away in 2022. The book was edited by his daughter, Dorie McCullough, who managed his public life for 30 years and affectionately referred to him as “DMcC.” I wanted to read it for several reasons: I enjoy history, it is the country’s 250th anniversary this year, McCullough led a fascinating life, and I was looking for a break from the relentlessly negative news. McCullough always carried a hopeful tone.
What shines through is his belief that the past is a source of strength rather than regret. He reminds us that the American story was built by ordinary people, not just famous ones, and shows how earlier generations faced deep divisions and uncertainty – yet persevered through grit, optimism, and faith in American ideals. I highly recommend the book for anyone interested in history and wanting to feel optimistic about the future. Longfellow Books - Portland, Maine Water Street Bookstore – Exeter, NH
Quote: “A nation that forgets its past can function no better than a person with amnesia.” David McCullough, historian
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