Etzler Financial Advisors - Fiduciary Financial Planning

OPEC, Tariffs, and All-Time Highs

Mon, 11 May 2026 13:23:58 -0700

For much of the history of the stock market, investing was primarily about individual stocks and bonds. Over the past few decades, however, macroeconomic developments have increasingly influenced markets.

Significant events, whether related to central bank policy, geopolitics, or global trade, now affect nearly all stocks across the market, regardless of their individual stories. For investors, this means that building modern portfolios is less about finding attractive stocks, and more about making asset allocation decisions that are aligned with financial goals.

This has been the case over the past year and a half, since the two biggest macroeconomic drivers have been the war in Iran and U.S. tariff policy. While these are quite different, they both affect consumer prices and business demand, either directly through higher energy prices or indirectly through the cost of imported goods. A key characteristic of these macro-driven events, however, is that their effects tend to fade over time. Thus, it’s important for investors to stay focused on the longer-term trends, and avoid the temptation to make portfolio changes based on a single event.

The war in the middle east, gasoline prices, and OPEC

The most visible way the conflict in Iran has reached American households is through the price at the pump. The national average for regular unleaded gasoline has climbed to around $4.50 per gallon, well above the long-term average and a meaningful jump from levels seen just a few months ago. In some parts of the country, gasoline is already above $6 per gallon. Because energy expenses directly affect the Consumer Price Index, headline inflation has moved higher, complicating an economic picture that was previously improving.

For some, this environment may bring back memories of the 1970s Arab Oil Embargo, when oil supply shocks led to skyrocketing inflation and gasoline rationing. However, the world has changed...Read More

Sell in May?

Mon, 04 May 2026 14:03:06 -0700

The human brain is excellent at finding patterns, a skill that has evolved to help us across many parts of life. However, it can also lead us astray when there is no real pattern at all, such as when we see shapes in clouds and ink blots. When it comes to investing, this is relevant because some patterns are important, such as the long-term relationship between the market and the economy, while others may be due to pure coincidence. Distinguishing between what makes for interesting trivia versus true investing principles is a challenging but important part of achieving long-term financial success.

It’s not surprising that investors have identified many calendar and event-based patterns, including “sell in May and go away,” the January Effect, the Santa Claus rally, the Super Bowl indicator, and more. After all, even when flipping a coin, you would expect streaks of several heads or tails in a row due to pure chance. To better understand these effects, the key is to separate random noise from knowledge of how financial markets truly function.

Many famous seasonal patterns have shifted over time

There are many market patterns, but it’s helpful to review seasonal trends as a whole. The chart above breaks out the S&P 500 into two distinct periods - from 1928 to 1999 and from 2000 to today. In the 20th century, it was indeed the case that some months were negative on average, while some were strongly positive. For instance, May and September experienced declines of 0.1% and 1% on average, while December and January experienced significant positive returns. It’s easy to see that the market has not behaved the same each month, so it’s tempting to wonder if we can simply invest during positive periods.

These observations have fueled concepts such as “sell in May,” the idea that the six-month period leading up to May experiences better returns than the other half of the year. However, since 2000, many of these months have...Read More

The Bull Market Cycle and Wall of Worry

Tue, 28 Apr 2026 16:48:51 -0700

It has now been more than three-and-a-half years since the bull market began in October 2022. At that time, inflation was rising at its fastest pace in fifty years, the Fed was hiking interest rates, and ChatGPT was still a month away from being released to the public. Since then, the S&P 500 has more than doubled in value and the Bloomberg U.S. Aggregate Bond index has fully recovered.

Although the world has changed since then, the fact that there are market concerns in the headlines has not. Each cycle brings new challenges and questions about whether the tried-and-true rules of investing are still relevant. The reality is that each cycle is unique, with catalysts, innovations, and sources of uncertainty that are never quite the same. And yet, the underlying principles of investing and financial planning have remained consistent across decades, and have continued to point investors in the right direction this year.

Bull markets climb a wall of worry

Even though geopolitics continue to impact markets, perhaps the more important consideration for long-term investors is the overall market cycle. With the market hovering near all-time highs, it’s natural for some investors to worry about market pullbacks and corrections. After all, these events can occur frequently, with the S&P 500 historically experiencing four or five pullbacks of 5% or worse each year, on average. While they are never pleasant, long-term investing depends much more on historical patterns over years and decades. This is one reason that overreacting to market swings can be counterproductive, since it may leave investors poorly positioned in the context of their long-term financial goals.

Investors often say that the market climbs a “wall of worry” on a regular basis. Over the past several years, markets have overcome high inflation, a banking crisis in 2023, geopolitical conflicts, the possibility of a Fed policy error, AI-related market concentration,...Read More

Housing Market Update

Mon, 20 Apr 2026 20:29:09 -0700

For many households, a home represents not only where they live and raise their family, but also their largest financial asset, monthly expense, and source of debt. From a broader economic perspective, the housing market is deeply intertwined with consumer confidence and economic growth. So, while investor attention has been on geopolitics and market volatility this year, the fact that home prices remain near all-time highs continues to play an important role in financial planning.

Housing activity is mixed but prices remain near record levels

Housing activity has been mixed in recent years across a number of measures. For new buyers, the biggest challenge with affordability is mortgage rates. The 30-year fixed mortgage rate is around 6.3%, well above the lows of 3% or less in 2020 and 2021, and the average of 4.6% since 2008. This means that the monthly cost of purchasing a home is significantly higher than it was just a few years ago, even for buyers with substantial down payments.

For those homeowners who were able to lock in mortgage rates near historic lows over the past decade, it can be a difficult decision to sell and give up these rates. This has kept the supply of existing homes limited, leading to a tighter housing market. In March, the sales volume of existing homes fell 3.6%, a reversal to its low one year ago, after climbing earlier this year.

In reaction to this, new construction has increased, with housing starts accelerating to 1.5 million units per year in January, but it will take time for this to ease pressure on prices. Even among homebuilders, however, the outlook remains uncertain. The NAHB/Wells Fargo Housing Market Index, which measures sentiment among homebuilders, fell from 38 to 34 in April. From a stock market perspective, the homebuilding subindustry within the S&P 500 index has been roughly flat on the year with a gain of only 0.4%, after several years of mixed performance.

Despite...Read More

A View of Inflation & Earnings

Mon, 13 Apr 2026 09:53:40 -0700

The conflict between the United States and Iran continues to evolve, with markets reacting to each new set of headlines. A ceasefire announcement initially eased tensions and pushed oil prices lower, with Brent crude falling into the $90 range. However, the subsequent breakdown of peace talks sent prices back above $100 per barrel, reminding investors that the geopolitical situation can change quickly. While the situation remains unstable, the most important question for long-term investors is how they affect the broader economy, businesses, and consumers.

The reality is that geopolitical conflicts tend to affect financial markets through energy prices, which directly impact fuel costs and can then ripple through the economy. How much this affects prices depends on how long energy costs stay high. Understanding these transmission mechanisms can help investors maintain perspective. In particular, inflation, the job market, and corporate earnings, can provide useful insights in today’s market environment.

Energy costs are driving overall inflation higher

The most direct way the Iran conflict is affecting consumers is through higher energy prices. The latest Consumer Price Index report for March showed that energy costs jumped 12.5% year-over-year, with gasoline prices surging 18.9% and fuel oil rising 44.2%. These increases pushed headline CPI to 3.3%, a sharp acceleration that has understandably raised concerns about a return to the inflation environment of 2022. Of course, much of this increase was expected since the conflict in Iran began at the end of February.

What the CPI report also shows is that higher energy costs have not yet spread to other important consumer categories. Core CPI, which excludes food and energy costs, rose only 2.6% year-over-year, which was below consensus expectations and only slightly above the prior month's 2.5%. An even narrower measure that also removes housing costs, sometimes referred...Read More

The Myth of “Constantly Managed” Investment Portfolios

Sun, 12 Apr 2026 21:42:48 -0700

When many people hire an investment manager—especially one with discretionary authority—they picture something very specific: someone watching their portfolio daily, making adjustments in real time, reacting to markets, and actively protecting their investments. It sounds reassuring—but it isn’t how most portfolios are actually managed.

What “Discretionary Management” Really Means

In general regulatory terms, discretionary management means your advisor has the authority to decide which securities to buy and sell in your account without obtaining your prior approval for each transaction. The U.S. Securities and Exchange Commission describes this as having discretionary authority over your account, as reflected in Form ADV instructions and disclosures¹. It does not mean your portfolio is monitored daily, decisions are made continuously, or trades are happening frequently. Discretionary authority is primarily about permission, not a promise of continuous activity.

What Actually Happens Behind the Scenes

Many professionally managed portfolios—especially at larger advisory and brokerage firms—follow a model-based process that is widely used across the industry.

In practice, a portfolio is built using ETFs or mutual funds around a target allocation, then applied across many investors. Systems monitor for exceptions like allocation drift or cash levels, and adjustments are made periodically—typically through rebalancing or occasional model updates. Industry research from organizations such as Morningstar and the CFA Institute highlights the widespread use of model portfolios and systematic rebalancing².

The result in many of these structures is that portfolios are not actively “worked” every single day; instead, they are maintained within a set of rules and adjusted when certain thresholds or conditions are met.

Market Update: First Quarter 2026

Wed, 01 Apr 2026 17:18:24 -0700

The first quarter of 2026 illustrates the importance of preparation when it comes to financial planning and investing. After strong gains in 2025, markets have faced a combination of geopolitical shocks, higher oil prices, and renewed economic uncertainty. The conflict in Iran, which began at the end of February, became the dominant market story, pushing oil prices sharply higher and sparking the first market pullback of the year. However, by the end of March, headlines around a possible ceasefire emerged, and the situation continues to evolve.

Taking a broader perspective, markets have still performed exceptionally well over the past twelve months. Beneath the surface, many parts of the market have supported portfolios, including energy and defensive sectors. There will undoubtedly be new market questions in the coming months, including a change in leadership at the Federal Reserve and the midterm election later this year.

For long-term investors, the first quarter is a reminder that markets rarely move in a straight line, and that the principles of sound investing matter most when uncertainty is at its peak.

Key Market and Economic Drivers

The S&P 500 experienced a total return of -4.3% in Q1, the Nasdaq -7.0%, and the Dow Jones Industrial Average -3.2%.
The Bloomberg U.S. Aggregate Bond Index was flat for the first quarter of 2026. The 10-year Treasury yield ended the quarter at 4.3% after falling as low as 3.9% at the end of February.
Developed market international stocks (MSCI EAFE) were down -1.1% and emerging market stocks (MSCI EM) declined -0.1% over the quarter, both on a total return basis in U.S. dollar terms.
Oil prices spiked with Brent crude reaching $118 per barrel at the end of March after beginning the year under $61. WTI ended the quarter at $101 per barrel.
Gold ended the quarter at $4,668 per ounce after...Read More

How Rising Gasoline Prices Affect Us

Mon, 30 Mar 2026 13:07:55 -0700

For most Americans, the price of gasoline at the pump is one of the direct ways the conflict in Iran affects their everyday lives. Gasoline prices are prominently displayed and updated frequently, and filling up on at least a weekly basis is a basic necessity to commute to work, school, buy groceries, and more. Diesel prices are just as important since they affect the transportation and manufacturing costs of many goods across the economy. This is why these prices serve as key economic indicators, and why the ongoing situation in the Middle East has become a growing concern for consumers and investors.

As the conflict enters its second month, with new headlines ranging from proposed peace agreements to possible escalation on a daily basis, oil prices continue to remain high with large intraday swings. Brent crude is now trading above $110 per barrel and WTI above $100, meaning that higher energy prices will affect household budgets, inflation metrics, and Federal Reserve decisions.

The 1970s energy crisis is perhaps the most commonly cited historical example of how high oil prices can reshape consumer behavior and the broader economy for years. During that decade, two separate oil embargoes led to long lines at gas stations, rationing, and a shift in how Americans thought about energy consumption and security.

Fortunately, today's situation differs in important ways. The lasting impact from the 1970s and early 1980s included a wave of investment in domestic energy production and fuel efficiency measures that have changed the sensitivity of the U.S. economy to oil spikes. The U.S. is now the world's largest oil producer, inflation had been trending lower before this shock, and markets have historically adjusted and moved forward once the initial disruptions fade. While there could continue to be challenges for consumers, perspective and patience remain essential for long-term investors.

Gasoline prices have risen...Read More

How Oil and AI Affect Portfolios

Mon, 23 Mar 2026 08:02:58 -0700

When investors think about the stock market, they tend to focus on broad indices like the S&P 500 or Dow Jones Industrial Average. While this is a natural starting point, it’s often helpful to look one level deeper at the sectors within each index. For instance, the 11 sectors that make up the S&P 500 each have unique characteristics and can behave differently based on economic conditions and geopolitical developments. Understanding these dynamics is important for portfolio construction, diversification, and long-term financial planning.
In today's environment, the difference between the best and worst performing sectors has widened to over 40 percentage points this year. This is a significant development driven by the ongoing conflict in the Middle East, oil prices swings, and the evolving narrative around AI.
At the moment, the S&P 500 also experienced its first pullback of more than 5% from its all-time high, even though 6 of the 11 sectors are positive so far this year. This is possible because the S&P 500 index does not weigh all sectors equally, with Technology currently making up nearly one-third of the index, compared to Energy and Utilities at just 3.5% and 2.5% respectively. Of course, while the past is no guarantee of the future, history also shows that conditions can change quickly and the market can recover, often when it’s least expected.
While the market dynamics of the past few months are impactful, the reality is that there is unique sector-level behavior every year. Taking a longer-term view, many sectors have performed well over the past few years, often in ways that surprised investors. This is a reminder that maintaining balance across sectors matters as much as doing so across asset classes. So, what perspective is needed to understand the recent sector rotation and market pullback?
The energy sector has surged amid geopolitical uncertainty
The energy sector has benefited from geopolitical...Read More

Market Pullbacks and Achieving Portfolio Balance

Mon, 16 Mar 2026 10:46:24 -0700

The ongoing conflict in Iran and rising oil prices have been the primary drivers of stock market swings in recent weeks. Brent crude oil has climbed back above $100 per barrel, raising questions about whether higher energy costs could slow economic growth while also pushing inflation higher. This adds to existing concerns such as the impact of artificial intelligence on existing companies, broad market valuations, private credit, and the path of Federal Reserve policy. For investors, this can naturally create questions about the health of their portfolios.
The author Alfred A. Montapert once wrote “do not confuse motion and progress.” With markets experiencing daily swings due to global headlines, there can be a tendency to believe that portfolios and financial plans should be adjusted frequently. However, a key principle of proper planning is that by the time uncertainty strikes, the hard work has already been done. A well-constructed portfolio is one that holds an appropriate mix of complementary asset classes and is aligned to financial goals. This is designed to weather different types of market environments without the need for constant adjustment.
Still, markets that lack a clear direction can feel uncomfortable. In times like these, maintaining a level-headed perspective is critical when there is so much negativity in the news. It’s more important than ever to not lose sight of long-term goals, especially because saving and investing properly are still the best ways to grow wealth over time. What should investors keep in mind as uncertainty continues?
Market pullbacks are an unavoidable part of investing
The stock market has been choppy this year, with the S&P 500 sitting just about 5% below its all-time high reached back in January, as of mid-March. While some investors may feel unsettled by recent market moves, pullbacks around this size are completely normal. In fact, the average year experiences several...Read More