Monthly Outlook: March 2026

Markets, and our managed portfolios, continue to trend higher in 2026, with gains of +2% to 4%, YTD. But hidden in this headline are undercurrents and subtle shifts that are taking place. The U.S. stock market (let’s use the S&P500), is actually near-flat, YTD, with a modest +0.6% gain. But last year’s darling, the NASDAQ 100, which has all the Big Tech names in it, is down -1.1%. It’s the international stock market that is the star of the global equity market, with a YTD gain of +9.7%. Within the emerging market equity markets, we see overall uptrends but splits between countries. Korea, Taiwan, and Brazil are up, while China and India are down. Lastly, the “boring” bond market is up +1.8%, YTD as the 10-year U.S. Treasury rate slides lower from 4.16% to 3.96% this year.

We see parallels to this bifurcated market story elsewhere. Analysts talk about the “K-shaped” economy where the top 10% of wealth owners are feeling good with stock market gains and financial stability while the bottom 50% of the economy struggles with financial insecurity and rising unemployment. In the Consumer Confidence reports, the index is at 91.2%, a level that usually indicates recession. But the CEO Confidence Index surged higher to 59%, above the 50% worry line. Lastly, a newspaper headline read, “The State of the Union is…Fractured.”

So, whether we’re talking about markets, the economy, or politics, we can accurately report that things may be fine on the surface, but it really depends on your position and who you ask. The differences are more pronounced than normal, and it feels uneasy. My college economics professor taught us this about averages and headlines: “If your left foot is on ice and your right foot is on fire, on average you’re fine.” This is the world – and markets – that we’re navigating, today.

Thinking About the Falling U.S. Dollar

If you ask most people what it means to be wealthy, they’d probably say to have a lot of money, meaning dollars, specifically U.S. dollars. That’s a good start, but it doesn’t really capture the essence of wealth. The real definition of savings, or wealth, is stored-up future spending. When you have more than you need, you can use that excess to invest in houses, real estate, global stocks, commodities, currencies, bonds, CDs, art, and so on. But the real goal of these investments is to be able to buy as much “stuff” sometime in the future as you could today. Your investments have to keep up with inflation and, hopefully, compensate you for the risk of deferring your spending. All of this should sound pretty logical and basic, so far.

Let’s assume we’re spending U.S. dollars today, and we expect to spend U.S. dollars in the future. As Americans, that’s a good bet. Since the Great Financial Crisis of 2008, the U.S. dollar has been rising against most other global currencies. The U.S. Dollar Index has risen from 72 to 110 since 2008. This acts like a tailwind, as we’re rewarded for holding U.S. dollars and assets that are priced in dollars. Now that the U.S. dollar is falling (the Index dropped from 110 to 98 today), we’re facing an additional headwind and our future spending power in the global market is diminished. To say it another way, if we only hold U.S. dollars and assets, it may appear that your financial statements show modest gains, but you might be losing future spending power, or real wealth.

Riding the Fastest Horses

When the U.S. dollar is rising, we can get away with simply pricing assets in dollars and buying the ones that are rising in price, and selling the ones that aren’t. But to really grow wealth, for a global investor, we need to go further. We need to ask, “Is this asset going up, and compared to what?” We need to consider replacing the denominator in the equation from the default, U.S. dollar, to other currencies and other assets. Is the S&P500 trending higher, priced in gold?  What about if priced in Australian dollars? Actually, the answer to both questions is No, the S&P500 appears to be falling. To an American, the S&P500 is rising, but to an Australian, it’s falling. Yet it’s the same market.

The solution is to compare each market not only to the U.S. dollar, but to other markets. In this way, we can see which markets are relatively better than others. It’s like riding the fastest horses in a race, jumping off the lagging horse and onto the surging ones. Today, the better horses include bonds, gold, US value stocks, international stocks, and some emerging market stocks. Our goal is to preserve your wealth, not just make dollars.