Volatility is normal and should be utterly ignored.

— John Bogle

I am proud to report on the continued progress of our long-term Plans during the first six months of 2026. And I don’t mean “progress” merely in the sense that all of the major equity indexes rose — although they certainly did. Even if we were experiencing one of the equity market’s frequent drawdowns, the remarkable growth in the earnings and dividends of the companies we own would still represent genuine progress toward our goals.

I typically divide my midyear comments into two parts: a restatement of our unwavering investment principles and my current observations on what was certainly a turbulent first half of the year.

Investment Principles:

• We are goal-focused, plan-driven, long-term equity investors, working over years — even decades — toward attaining your most cherished financial goals.
• The sequence of our decision-making process is always: (1) quantify your goals, (2) develop a rational Plan for achieving those goals, and (3) design a portfolio that gives us the highest probability of reaching the stated goals within the desired time frame.
• Unless your goals change, there is never a reason to alter your Plan. And if your Plan remains unchanged, so will your portfolio.
• We provide exposure to thousands of securities from dozens of countries, representing all major asset classes. We periodically rebalance to systematically reduce our exposure to richly valued sectors while increasing ownership in more reasonably valued ones.
• We believe the economy can never be consistently forecast, nor the markets consistently timed. Thus, we do not react to current events of any kind, be they economic, financial, geopolitical, or other.
• We believe the only way to capture the full long-term returns of our equity portfolios is to remain fully invested through both good markets and bad. Therefore, we always maintain sufficient Bear Market reserves to fund anticipated withdrawals during inevitable market downturns.

Current Observations:

• We’ve seen a major war, severe energy price disruption, inflation, the sudden threat of higher rather than lower interest rates, equity valuations near historic highs, extreme concentration in the broad market averages, the total collapse of Bitcoin and precious metals, and by far the biggest initial public offering in history — around spacecraft, of all things. Did I miss anything?
• How would one go about making rational investment policy out of this? The answer is that one doesn’t, because one can’t. Instead, we stand back and celebrate the chaos for one compelling reason: it has nothing to do with us.
• As stated above, we have goals and a Plan, and a portfolio as closely aligned with both as we know how to make it. So, amid this year’s chaos, confusion, and turmoil, we will continue funding our portfolios, continue systematic withdrawals from our portfolios, and/or continue rebalancing periodically.
• Those of us who view ourselves as long-term owners of the World’s Great Companies can only marvel at how dramatically their earnings have grown. Their profit margins remain near record highs, their dividends continue to rise, and they continue investing aggressively in innovation and future growth.
• None of this is meant to suggest our portfolios can’t significantly — even violently — correct at any moment. They can, and if history is any guide, they will, and almost certainly when we least expect it. Because we humbly accept our inability to time such things, we will simply ride out any correction when it comes, just as we always have.

As we prepare to celebrate the 250th birthday of the world’s greatest country, thank you, as always, for being our Spartans. It continues to be a privilege, and indeed a joy, to serve you and your families!