The next significant market shock—and rest assured, there will be one—will almost certainly come from an unexpected direction.

— Don Davey, DEM Q4 2025 Newsletter

As if on cue, the first quarter of 2026 delivered a significant* market shock stemming from two unexpected sources: doubts about the previously invincible artificial intelligence boom and the war in the Middle East.

To your collective credit, not a single DEM Spartan has called, emailed, or texted with questions such as “What are we doing in response to this market meltdown?” I suspect the reason is that by now, you know exactly what my response would be. But just in case you have any doubts, here it is:

• We expect the market will experience, on average, a 15% peak-to-trough decline every year, with a 30% peak-to-trough decline every five years.
• Nobody—least of all me—can predict how AI or the war in Iran will ultimately play out. And it is impossible to base an investment policy on complete unknowns.
• Rather than reacting to current events, we invest with your family’s most important long-term goals in mind, as defined in your Lifetime Financial Plan. So unless your goals change, your Plan won’t change—and neither will your portfolio (apart from periodic rebalancing).
• Those of us in the accumulation phase of life greedily view market declines as all-too-rare opportunities to increase our ownership in Great Companies at temporarily discounted valuations. So please forgive us for cheering the market lower.
• If the current hiccup accelerates into a legitimate market downturn, we will simply fund distributions to our retirees from our Bear Market Reserves for the next year—or two, or three.
• In the meantime, each of the more than 13,000 companies we have exposure to is actively seeking to incorporate AI into its business model in ways that will directly benefit shareholders.
• When the war in Iran ends, we expect oil will resume flowing freely from the Middle East, gas prices will likely decline, and the world may end up being a little safer place.
• Obviously, some companies will benefit more than others after the dust settles. But in beautifully Darwinian fashion, the gains in our winners will dwarf the declines in our losers, allowing the permanent upward trend in our portfolios to resume. Therein lies the simultaneous brilliance and humility of our diversified approach.

In short, our advice is to simply Ignore the Noise while you enjoy a very pleasant Easter weekend with your families and friends!

* Forgive me for allowing the recent ~10% peak-to-trough market decline to qualify as “significant” in any way.