The second quarter of this year saw continued volatility in stock prices. However, despite multiple wars, higher inflation, and potentially higher interest rates, two of the major market indices – the S & P 500 Stock Index and the Dow Jones Industrial Average – made record highs. Both indices are up about 8.6% year-to-date.
Why? Corporate profits are improving at a much faster pace than anticipated. Interest rates, while inching up, are relatively low historically. Spending on Artificial Intelligence (AI) related projects, e.g., data centers, power generation, is soaring. Continued high government spending, and high investor money market balances are catalysts to push a lot of money into the economy. Investors typically look ahead 6-9 months and, rightly or wrongly, believe the economic scenario will improve.
We continue to believe that current stock prices already reflect improvements, and that higher, not lower, interest rates may lie ahead, given the continued strength in the economy. Investors do not like higher interest rates, and stock valuations – think price-to-earnings ratios – are at record highs. Thus, we think a higher-than-normal cash (money market) allocation is warranted for investment portfolios.
But there are always opportunities. The recent weakness in some big technology companies – Microsoft (MSFT, $ 369), and IBM (IBM, $ 275) are examples. Both stocks trade at only a slight premium to the average stock, despite their solid outlooks. Alphabet (Google) recently issued a 6.25% Preferred stock (GOOGM, $50) that converts into common stock in 3 years – income and growth. Some banks that we have recommended are still attractive, despite their recent gains e.g., Columbia Bank (COLB, $31.80) and Truist (TFC, $50).
Please contact one of our friendly advisors for a free portfolio check-up or more information about the above stocks. Our portfolio management service continues to expand. Contact Bob Mann for more information.
Prices and yields as of June 20, 2026. The above information is believed to be reliable but is not guaranteed to be accurate. Investors should check every investment for suitability for his or her needs. Stock investing is risky, and you could lose money. The author and/or his clients maintain positions in all of the above-mentioned securities. First Georgetown Securities, Inc. will provide available information supporting the above recommendations on request.