Q2 Investment Update: Navigating Markets and the Next Era of Growth

📊  Q2 2026 Investment Update 

We are pleased to share updates regarding the macroeconomic landscape and actions taken by our Investment Committee over the past quarter. 

Strategic Shifts and Market Milestones 

At the beginning of July, with market conditions improving, our Investment Committee adjusted discretionary portfolio allocations by increasing stock exposure ("risk-on" posture). This strategic shift positioned our portfolios for the fresh, all-time highs, hit in the market last week on August 4th. The market rally is broadening and signaling that strength is expanding beyond a handful of tech giants and into the wider economy. 

Historic Corporate Earnings Growth 

Supporting these market highs is an exceptional foundation of corporate profits. Current results and projections indicate that S&P 500 earnings growth is on track to be the fastest and strongest since 1999 (excluding standard recovery spikes immediately following recessions). We believe this extraordinary earnings power reflects operational efficiency, corporate capital expenditures (more on that), and resilient consumer demand across multiple corporate sectors. 

The Multi-Trillion Dollar AI Buildout 

A primary catalyst for this growth is the immense, ongoing capital expenditure dedicated to Artificial Intelligence infrastructure—spanning hardware, state-of-the-art data centers, and advanced energy solutions. 

• Current Landscape: Global infrastructure spending in this domain has already reached a staggering $2.5 trillion, with roughly $700 billion explicitly concentrated in hardware and data centers alone. 

• The Five-Year Outlook: Leading industry figures, including Nvidia CEO Jensen Huang, project that this foundational infrastructure footprint will expand to $3 trillion, $4 trillion, or even $5 trillion within the next five years. 

• The Economic Ripple Effect: This massive buildout is not just about technology; it represents a fundamental modernization of the global economy. As these tools are fully integrated, we anticipate a massive wave of long-term productivity gains across almost every major industry. 

🔄 Portfolio Changes

At the beginning of July our Investment Committee adjusted discretionary portfolio allocations by increasing stock exposure ("risk-on" posture). Specifically we increased exposure to Domestic Large Company Stocks, maintained our holdings in Emerging Markets Stocks, and sold Treasury Bonds in favor of High Yield Bonds. Emerging Market Stocks continues to be a bright spot, an overweight we have held in our discretionary models for over a year now.     

📈 What’s next?  

Risk Management and Portfolio Discipline 

While the growth narrative is compelling, disciplined risk management remains a high priority. 

• Macro Indicators: Inflation and interest rates remain a point of ongoing concern, particularly if we see an acceleration.   

• Prudent Profit-Taking: Given the velocity of recent market gains, concerns regarding localized market bubbles or heightened geopolitical tensions are natural. For clients looking to manage short-term anxiety, it is entirely reasonable to selectively take profits or scale back incrementally. 

• Staying the Course: However, completely exiting the market in an attempt to time the next downturn is highly discouraged. Historical data proves that missing out on broad market expansions severely damages long-term compounding wealth. 

• The IPS Safeguard: To help ensure long-term financial security, we advise maintaining a strict minimum baseline of market exposure, fully aligned with the risk parameters established in your individual Investment Policy Statement (IPS). 

We remain deeply committed to navigating this historic market expansion on your behalf, balancing growth opportunities with risk management. If you would like to discuss your specific portfolio positioning or review your Investment Policy Statement, please do not hesitate to contact our office. 

If your financial situation has changed or you’d like to review your investments, please reach out to us for a review.

The views and opinions expressed herein are those of the author(s) noted and may or may not represent the views of Lincoln Investment. These views are as of August 11, 2026 and are subject to change based on subsequent developments. The material presented is provided for informational purposes only. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Nothing contained herein should be construed as a recommendation to buy or sell any securities. As with all investments, past performance is no guarantee of future results. No person or system can predict the market. All investments are subject to risk, including the risk of principal loss.