Monthly Outlook: August 2026
July was another headline-grabbing month with daily reports of individual stocks going either up or down 10%. As reported by Zero Hedge, “It was the Nasdaq’s worst July in 22 years, bonds biggest July yield hike since 2005, and oil’s biggest July jump in 30 years.” Yet, the broad US stock market index, the S&P500, was dead flat at +0.05% for July. Go figure.
As for bonds, the US 10-year interest rate jumped to 4.75% (remember when it was <1.0% in 2020?). And the 30-year rate jumped to 5.27%, the highest rate since 2007. Most investors attribute the upward rate trend to the Fed’s decision to continue holding Fed Funds rate steady at 3.5% despite most inflation readings showing a stubborn 4% rate. This has a negative effect on long maturity bonds and why Ryan Investments is only holding short- to intermediate-term bonds and bond ETFs.
Tech & AI Stocks Dominate the Headlines
For much of 2026, the story has been the love affair that investors have with all-things Tech & AI. And these companies are now some of the largest companies (by market cap, anyway) in the index. So goes AI, largely goes the market. Just last week, four of the seven “Magnificent 7” mega-cap tech stocks reported quarterly earnings. After their earnings were released, Microsoft and Amazon popped 15% higher. However, Meta (Facebook) and Apple dropped 7%.
But if we look at the overall S&P500 index, we see that the bloodbath was almost entirely contained to the Technology sector, with the chip makers especially hard hit. Consider these July returns: Micron Tech -20%, Intel -28%, Applied Materials -22%, IBM -21%, Tesla -28%, and so on. Meanwhile, Energy was +12%, Financials were +4%, and Healthcare +2%. So, is the sky falling? Not really, unless you only own tech stocks, especially AI focused.
At Ryan Investments, we measure the price “trendline” of every asset using moving averages. It’s a measurement, like measuring the temperature. Just like we can say that temperatures below 32 degrees are freezing, we can say that asset prices below their trendline are “downtrending.” This is our signal to sell and de-risk. As we start August, we note that there are still many markets in uptrends: S&P500; NASDAQ; EAFE Int’l; emerging markets; short-term bonds; and the financial, healthcare, and energy sectors. In short, despite a very rough month for Tech & AI stocks, the broader markets are still holding up.
The Smart Way to Invest in Volatile Markets
First, it should be noted that all of the scary one-day moves were in individual stocks, never diversified ETFs. Even the focused Tech sector ETF was “only” down 8% in July, far better than many of the individual stocks mentioned above. The first step in risk mitigation is to avoid “company-specific risk” by investing in ETFs instead of individual stocks.
Second, we diversify our ETF holdings across many different asset classes like Stocks, Bonds, and Other; and then further diversify like US Large Growth, US Small, INTL Value, Emerging, and so on. There’s opportunity everywhere in the world and we keep our portfolios open to these global opportunities for growth through diversification.
The third step to smart investing is to add a risk mitigation overlay. We do this with our trendline signals. As long as an ETF remains above its trendline, we’ll stay fully invested for full-steam-ahead growth! But, when an ETF falters and moves below its trendline, that’s our signal to sell/trim and reduce our allocation in that ETF to protect from losses. It’s common sense, really, and similar to how you drive your car. When the coast is clear and it’s safe, you hit the gas. When you crest a hill and the visibility is unclear, you reduce your speed and remain watchful.
Today, as we enter the traditionally weaker months of August and September, most of the markets (and therefore most of the ETFs in our portfolios) remain in uptrends, and so we remain fully invested. We’ll stay disciplined, optimistic for continued gains, and willing to sell any market that doesn’t keep up. That’s how we invest for growth and protection, year after year, for solid and stable returns.