FROM JOHN BIRD’S DESK

Warrior Trading. The Trading Geek. Trendy Traders Academy. 

What do these have in common? All are online courses or YouTube channels professing to help you make money through active trading. This of course begs the question; does more trading activity lead to better outcomes? 

It seems like it should. You see an investment you like at a price you like. Buy it. If it rises in value, sell it. If markets are looking shaky, sell. When markets appear solid, buy. Easy, right? 

But does it work? Let’s break it down. Suppose you’re concerned and want less risk. You decide to sell some positions. Now you have cash and it feels good. What if the market continues its ascent. Do you buy back in at the higher price? Or stay the course and wait for the market to turn lower? Suppose the market does turn lower. You expected this which is why you raised cash in the first place. Confirmation bias kicks in so you remain out of the market until it looks better. For most of us “looks better” means the market is on a strong upward trajectory. So you wait for it to show significant gains before buying back in? Hmm. Sort of defeats the purpose.  

Traders have to be right several times; first when they buy a position and next when they sell it. Then they must be right a third time when they redeploy the capital to buy the next position. And on and on and on. 

To date no one has demonstrated consistent success trading in and out of the market, or in and out of individual stocks. DALBAR publishes a Quantitative Analysis of Investor Behavior survey where they track returns of mutual funds and compare those returns to the actual returns achieved by the mutual fund investors. What the data shows is that the average mutual fund investor underperforms common benchmarks, and the returns of the funds they’ve invested in, by 3.5% to 5.5% per year over multi-decade time frames. They attribute this to investors selling out of funds during market drawdowns and buying back in when the markets have recovered. The DALBAR study quantifies the penalty the average investor pays for trying to time the market. Or put another way – for being a trader. 

A well-known investor, Warren Buffett, is the antithesis of a trader. In his Berkshire Hathaway portfolio he would buy and hold good companies. Often for decades. Did that label him a lazy investor? An absent portfolio manager? No. It resulted in him being recognized as a very successful investor. 

Albion follows a handful of guidelines: 

• Think and act long-term 

• Own good companies 

• Keep portfolios as simple as possible to meet the agreed upon investment policy 

Whether your investment accounts with Albion include a small contributory Roth IRA or a large multigenerational trust we employ the same philosophy and portfolio design. 

We work to find, purchase, and hold good companies for long periods of time. Having said that we work every day to understand the evolving dynamics of the companies we own as corporate fortunes can and do change. Sometimes for the better, sometimes for the worse.  

If we determine changing a position makes sense we change that position for all accounts, from the smallest to largest.* Every client account matters.  

Our favorite holding period is… forever. However that’s not the way the world works. Perhaps a stock price grew at a far faster rate than the underlying company. Still a good company but now the valuation is not as attractive as it was. Or the fortune of the company looks to be compromised for an extended period. There clearly are times when reducing or eliminating a position altogether makes sense. Yet on balance it’s time in the market, not timing the market, that leads to wealth creation. 

So is there money to be made with the trading tutorials listed at the top of the piece? Sure. By whoever is selling them. A lot less likely that the buyer will find them profitable. Most of us are far better off if we think and act long-term, own good companies, add additional diversification with carefully selected and managed Exchange Traded Funds, and let time in the market create wealth. That’s what Albion will continue to do on your behalf.  

*  There are occasions where due to our clients’ special circumstances their portfolios may be invested differently than those of other clients. For example a client may have a very large inherited low-basis stock position. We take such circumstances into account when designing and managing portfolios. 

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ECONOMY AND MARKETS by Jason Ware

The second quarter reminded investors of an important truth: markets often make the news feel much worse than it actually is. While headlines remained dominated by geopolitics, inflation concerns, and questions surrounding the Federal Reserve, the fundamental backdrop changed very little. Growth persisted (likely mid-2%), corporate profits advanced (over +20%), and the economy proved, once again, to be hardier than many expected. From our perch, recession risk remains low. In fact, we continue to hold a somewhat out-of-consensus view. Rather than an economy gradually slowing due to purported headwinds, we believe the more likely path remains one of modest re-acceleration in the coming months. 

The economic data continue to point toward sturdy growth. Consumer activity remains healthy, household balance sheets are solid, the labor market is stable, there’s a boom in tech capital spending, and the fiscal picture has switched from headwind to tailwind. On jobs, hiring has slowed from the strong pace of recent years, but unemployment remains low and layoffs are limited. Digging a bit deeper, employment statistics around “prime” (and “super-prime”) age cohorts are encouraging and good leading indicators. On balance, there are no signs of meaningful deterioration. 

Zooming out, it’s not a booming economy, but neither is it one showing signs of slowdown or recession. 

Perhaps the biggest surprise, and indeed strongest boost, in 2026 has been results from corporate America. Despite persistent concerns over tariffs, higher energy prices, elevated interest rates, geopolitics, lower labor supply, businesses are executing remarkably well. Productivity is rising, investment remains healthy, and companies endure in finding ways to grow profits. We think earnings will increase more than +20% this year, with early indications for 2027 also very constructive (double-digits). In our view, the durability of this earnings cycle remains underestimated. This, and the macro economy from which these earnings flow, are vital ingredients to stock prices.  

Inflation remains the story everyone wants to be over—but it isn’t quite finished. As we’ve previously described, prices have come down dramatically from their (June) 2022 highs, yet the final stretch back to the Fed’s 2% target has proven stubborn. Services inflation remains elevated, while recent increases in oil prices have added another wrinkle. Even so, today’s inflation environment looks far different than the one investors faced just a few years ago. Importantly, we believe that the current inflation setup is compatible with economic growth, healthy financial markets, and expanding corporate profits. We also reason that as the conflict in the Middle East is put behind us—as has long been our base case—energy prices will fall, bringing recent inflation pressures down with it (we’re already seeing this).  

That leaves the Fed in a familiar position. Interest rates now sit near levels that neither stimulate nor slow the economy, making patience the likely course of action for now. While we believe an additional rate cut or two remain probable, the hurdle for near-term easing remains high unless inflation cools further or the labor market weakens more meaningfully. Markets have spent much of the year debating exactly when the next cut will arrive (we’ve said 2027). The better question however is whether it materially changes the longer-term outlook. Increasingly, the answer appears to be no. Leadership at the Fed also entered a new chapter during the quarter with Kevin Warsh assuming the role of Chair. While every new Chair brings a different communication style and set of priorities, monetary policy is ultimately determined by committee, not by one individual. We therefore expect more continuity than change (though there will be some), with inflation remaining front and center. 

Outside our borders, the global economy is expanding at a modest pace. Europe remains sluggish but steady, emerging markets have generally benefited from improving financial conditions, and China continues its long transition toward a more consumer-oriented economy. None of these regions are likely to drive global growth on their own, but collectively they remain supportive of a stable economic backdrop. 

Geopolitics once again captured investors’ attention. Conflict in Iran pushed oil and gas prices higher during the quarter and reminded markets that geopolitical events rarely unfold in a straight line. While higher energy prices can temporarily pressure consumers and lift inflation, history suggests these episodes are more often drivers of short-term volatility than long-term economic outcomes. Unless they structurally impair global demand or energy supply for an extended period, markets have generally proven resilient. 

The stock market certainly experienced its share of volatility this quarter. Sharp swings in sentiment, combined with uncertainty surrounding interest rates and geopolitics, produced another reminder that investing is rarely a smooth ride. Yet beneath those daily headlines, something important continued to happen: corporate earnings kept growing. Over long periods, that remains the single most important driver of stock prices. Valuations also became more attractive during the quarter, despite stocks moving higher, as profits easily outpaced price movement. Today, portions of the market appear considerably more reasonably valued than they did just six to nine months ago. At the index level, our math shows stocks sit at around fair value. For long-term investors, periods like these often create opportunity—not reasons for retreat. 

One observation we’ve shared with clients for years bears repeating. Markets spend a tremendous amount of time near all-time highs. That isn’t something to fear; it’s the natural consequence of an economy that grows, businesses that innovate, and profits that compound over time. Waiting for a more comfortable entry point often proves more costly than simply remaining disciplined and invested. 

All told, our outlook remains constructive. The economy is expanding, businesses are earning more money, inflation is not problematic, and the investment opportunities before us remain compelling. That doesn’t mean volatility has disappeared—far from it. But volatility is a feature, not a flaw, of investing. Our approach remains grounded in quality, discipline, diversification, and maintaining a long run perspective focused on fundamentals rather than headlines. 

We appreciate the continued partnership. 

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PLANNERS CORNER by Natalie Richards 

When Good is Better than Perfect 

Financial Decision Fatigue and Simplifying Your Life 

At some point, many of us reach a stage in life where the number of decisions we’re responsible for quietly multiplies.  Work becomes more complex.  Family responsibilities grow.  Financial life, once relatively simple, spreads across accounts, goals, and competing priorities.  And somewhere along the way, even small decisions start to feel heavier than they should.  Financial decisions are no exception.  In fact, they may be where this shows up most clearly. 

Today, investors are faced with more information, more options, and more opinions than ever before.  While that might sound empowering, it often has the opposite effect.  Noise is everywhere: from social media to news headlines, it’s all readily available on a device most of us always keep in our pocket or our purse.  We feel responsible for not just keeping up with the constant inflow of information, but processing, validating, interpreting, and taking action (or choosing not to take action) on what we’re seeing, hearing, and reading. Instead of clarity, it creates friction. 

Underneath this friction is a quiet but powerful force: the desire to get it exactly right. 

The right time to invest. 

The best allocation. 

The optimal tax decision. 

And while that instinct is understandable, it often leads to a surprising outcome – no decision at all, or one made under stress and fatigue.  In this way, the pursuit of perfection doesn’t improve decisions, it delays them.  Sometimes that delay is obvious when we put something off entirely.  Other times, it’s quieter.  We revisit the same decision again and again, looking for just a little more certainty, a slightly better answer.  But the outcome rarely changes – only the time and energy we’ve spent getting there.  And the result isn’t just inefficiency, it’s mental weight. 

In our experience, the most effective financial decisions share a few characteristics.  They are grounded and well-informed – but not overengineered.  They are aligned with long-term goals rather than short-term conditions.  And perhaps most importantly, they are simple enough to stick with.  Jason Ware is often reminding our team and our clients of this concept as part of Albion’s investment treatise: less is more, and the simpler the better. 

Four Ways to Push Back Against Decision Fatigue 

1. Define “good enough” in advance.  Have a plan that reflects your full financial picture and, just as importantly, your priorities.  When you know what you’re working toward, it becomes easier to recognize when a decision meets the mark, even if it’s not perfect.  Often, the goal isn’t to find the best possible answer, but one that clearly supports your desired long-term direction. 

2. Automate wherever possible. Automation isn’t just about efficiency, it’s about reducing the number of decisions you have to make in the first place.  When savings, investing, or distributions happen on a set schedule, you’re no longer forced to revisit the same decision over and over again.  Good decisions become habits rather than moments of effort. 

3. Limit inputs.  More information doesn’t always lead to better decisions – often it just adds friction or confusion.  Limiting the inflow doesn’t mean tuning everything out, but it does mean being selective.  A small number of dependable inputs – a few trusted people, a few diverse sources – can provide far more clarity than a constant stream of headlines and opinions.  In many cases, reducing noise is one of the fastest ways to improve decision-making. 

4. Give yourself permission to move forward.  Some decisions don’t become clearer with more time, they simply become heavier.  There’s value in being able to say: “This is sound, this is aligned, and this is enough to act on.”  Moving forward with a good decision rather than waiting for the perfect one is often what creates progress over time. 

A significant part of our role as advisors is not introducing more decisions, but helping reduce and clarify them.  Not every choice needs to be maximized.  Many simply need to be made thoughtfully and then left alone.  One simple question we come back to often is: “Is this decision worth optimizing?”  or said another way, “Is this really going to move the needle?”  Not every financial choice carries the same weight.  Some, like your long-term savings rate or overall allocation, deserve careful attention.  Others benefit far less from additional time and energy.  Being able to distinguish between the two is often more valuable than getting any single decision exactly right. 

The goal here isn’t to eliminate decisions, but rather to reserve your energy for the ones that matter most. 

Over time, financial success is shaped less by perfect decisions and more by consistent, thoughtful ones made along the way.  In a world that encourages constant optimization, there is real value in simplicity, and in moving forward with clarity, even when the answer isn’t perfect. 

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Albion Financial Group is an SEC registered investment advisor. The information provided is intended solely for educational purposes and should not be construed as an offer or solicitation for the purchase or sale of any particular securities product, service, or investment strategy. Past performance is not indicative of future performance. Additional information about Albion Financial Group is also available on the SEC’s website at www.adviserinfo.sec.gov under CRD number 105957. Albion Financial Group only transacts business in states where it is properly registered, notice filed or excluded or exempted from registration or notice filing requirements.

FROM JOHN BIRD’S DESK

The April 2026 issue of The Atlantic has a piece by McKay Coppins titled “Sucker – My Year as a Degenerate Gambler”. McKay does not fit a stereotypical gambler profile. A self-described “suburban dad with four kids, a mortgage, and a minivan” and “as a practicing Mormon, I am prohibited from indulging in games of chance”, he found the explosion of online sports betting fascinating. His editors fronted him $10,000 and he set out to understand and write about the world of legal online betting. While a full review of the piece is beyond the scope of this note I’ll focus here on how he found the act of sports betting changed his relationship with the games, his family and friends, and himself.  He became caught up in it. Obsessed even. Stepping away from dinners to hide in the bathroom to check on bets. Sitting in the car while ostensibly out doing errands to do the same. Staying up late to watch west coast games between teams he had no connection to but… had bets on. And he had plenty of support urging him to continue. Podcasts, TV shows, radio personalities, social media, and the apps themselves all provided a constant stream of promise for the big win and someone to blame for the bets that didn’t go his way. 

Sporting events were no longer being part of a like-minded community with a shared interest. Rather he had become a stand-alone observer with his own concerns about specific bets related to each game. He gained a deep self-absorbed attentiveness but lost the joy of a shared experience. There was always someone to blame, real or not, for the bets that didn’t work out. A referee. A player who botched an easy pass. Anger and bitterness began to creep in. 

The piece resonated with me for a variety of reasons not least of which is that we’ve seen the same narrow focus creep into citizens across broad swaths of our towns, cities, states, and the country regarding almost any issue. Many of us are focused on our own “bets” and anger and bitterness often color our perceptions of events and of those who hold a different point of view. 

So how does this relate to the investment world? For every hour you as a client interact with your team at Albion to understand our thinking and gain reassurance you likely absorb scores of hours of media urging you to be concerned, be afraid, to take action… NOW!.  

Each day I consume information from a variety of sources and I imagine many of you do as well. News websites with a wide range of political and economic perspectives. Print media including newspapers, magazines and nonfiction books. The radio. Each one will typically have a different take on any given event. As investors our work is to sort through this and separate the signal from the noise. Without succumbing to emotional attachment to any specific outcome. 

In McKay’s sports betting experience he found the plethora of commentary from “experts” tremendously engaging. For any failed bet there was an explanation… and typically someone to blame. And there were always pundits urging to stay in the game and make the next series of wagers.  

The hundreds of public facing “investment experts” available through sources ranging from social media to the Wall Street Journal offer the same; a “reason” for nearly any market move whether an individual stock or aggregate indices. Sometimes their “reason” is correct. More often than not the “reason” may correlate with the event but as we all know correlation is not causation.  

So what do we do? We step back and look at the big picture and keep that in mind as we make investment decisions. In McKay’s case he was aware of the big picture. Per Nate Silver (self-described statistics nerd and founder of the 538 political forecasting website) 98 percent of sports bettors lose money over the course of a season. Yet the house always makes money as they charge a 4.5% fee every time a wager is placed; they have a strong financial incentive to keep bettors hooked in. Further there is ample data showing the negative impact sports betting has on many who participate. Damaged relationships, inability to pay bills, bankruptcy. Yet despite in his logical mind knowing all this McKay found himself drawn more deeply into the gambling culture. 

Stepping back into the investment world the data is clear. Those who dive into short-term trading, stepping in and out of markets based on a personal perception of risk, will almost always come up short. Peter Lynch, a renowned fund manager at Fidelity from the late 1970’s into 1990, when asked about selling positions to raise cash in anticipation of market downturns stated: 

 “Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than in the corrections themselves.”  

Think and act long-term. Own good companies. Understand that volatility is a feature of markets.  

There are many things to worry about in the world today. Perhaps more so than usual. Yet the world is not ending and even the most intractable issues have a way of passing on. Good companies will continue to generate earnings by providing value to customers. And they work hard every day to be sure their value proposition continues to grow. These are the types of companies we select to build your portfolios.  

Thank you for taking the time to read this note and for your continued trust and confidence in the Albion Team. 

“Volatility is the price of admission. The prize inside are superior long-term returns. You must pay the price to get the returns.” ~Morgan Housel 

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ECONOMY & MARKETS BY JASON WARE

The fundamental backdrop in the first quarter was defined less by extremes and more by balance. GDP growth persists, inflation is contained, and interest rates no longer work against the economy the way they did just a couple years back. In short, things are functioning—and from our perch, recession risk remains small. In fact, somewhat counter to current consensus, we think the next move in the economy may be gently higher, not lower. 

Starting with the US economy, the data overall point to firm, trend growth. Real GDP is tracking near a +2% pace—typical for a mature but healthy expansion. Consumer spending remains the backbone, supported by rising real incomes, healthy household balance sheets, and a labor market that continues to hold up. Sure, hiring has slowed and job demand has normalized, but unemployment remains low and layoffs are limited. This is a labor market that is cooling, but not breaking. 

Where we may differ from the prevailing narrative is in what comes next. With consumer spending still firm, AI-related investment robust, and fiscal tailwinds providing incremental support, we see a path toward slightly stronger growth as the year unfolds. Put differently, the economy does not appear to be rolling over. It appears to be recalibrating, with the potential to reaccelerate at the margin. 

Inflation has settled into the upper-2% range (long been our call). Goods prices are up due to tariffs, while services costs are moderately elevated but stable. That leaves the Federal Reserve close to where it wants inflation, but not quite there (yet). Importantly, inflation at these levels is not an obstacle to the economy, financial markets, or corporate profitability, even if it does keep policymakers vigilant. 

Meanwhile, interest rates and bond yields are steady. After three more Fed cuts in late-2025, borrowing costs are now near levels that neither stimulate nor slow the economy (“neutral”). With inflation still “sticky,” made worse by higher energy prices, we expect rates to remain in a narrow range for now. The hurdle for near-term easing is high in our view, absent a clear weakening in the jobs picture. That said, the Fed is unlikely finished cutting. Assuming the economic expansion endures and inflation gradually cools, there is a reasonable path toward a couple additional cuts over time—just not imminently. Markets often price the destination correctly, but not the timing. From our perch, the Fed sits in wait-and-see mode. 

Another layer complicating monetary policy is leadership. Jerome Powell’s term ends in May, with Kevin Warsh expected as the new Chair. Warsh previously served as a Fed Governor during the 2007/08 financial crisis and is generally viewed as pragmatic, with a strong focus on maintaining credibility around inflation. While leadership transitions can introduce uncertainty and market volatility, we expect broad policy continuity given how decisions at the Fed are made (by committee). 

Meanwhile, weaker areas of the economy—namely housing and manufacturing, two sectors most impacted by rates—are stabilizing. Activity remains slow, but early signs of a bottom exist. Mortgage rates below cycle highs are beginning to bring homebuyers back, while recent manufacturing data reveal tentative improvement after a prolonged slump. These areas are not yet drivers of growth. But importantly, they are no longer clear drags. 

Corporate profits remain a key pillar of the current expansion. Earnings are expected to grow at a double-digit pace again in 2026, with early visibility into 2027 also constructive. That growth is being driven by a resilient economy, productivity gains, operating efficiency, and sustained investment in technology. We think the durability of this earnings cycle continues to be underappreciated. 

Geopolitics, as always, remains a wildcard. Recent developments involving Iran have brought renewed attention to energy markets and regional stability. Oil prices have moved sharply higher, with ripple effects into areas like transportation and agriculture, including fertilizers. We’ve seen similar episodes before, and while they often create short-term noise, they have rarely derailed the broader economy when underlying demand remains intact. 

Outside the US, global growth remains decent. Europe is moving forward at a modest pace, emerging markets are benefiting from a relatively favorable currency environment, and China is working through longer-term structural challenges. Overall, the global economy appears to be expanding at a secure clip (about +3%). 

Turning to markets, the first quarter’s final weeks served as an always uncomfortable reminder that even promising setups can include periods of volatility. US stocks experienced a decline, driven by higher oil prices, rising yields, acute geopolitical concerns, and a reset in expectations within the tech and AI space. However, pullbacks like this are not only normal—they are healthy. Excessive optimism cools off, valuations reset, and things generally come back into better alignment. Together, these “gut check” moments usually extend the life of a bull market. 

Within equities, dips have been most pronounced in the tech and AI-related names that strongly led markets higher in prior periods. But this decline has occurred alongside continued earnings growth, resulting in lower valuations. Indeed, because of the recent correction the S&P 500 now trades at a 20x P/E, in line with its 5-year average and only slightly above its 10-year (~19x). More encouragingly, multiples are now even lower beneath the index’s surface. Select areas now look more attractive and boast durable earnings profiles. Opportunities abound.  

All told, business profits remain the anchor. While valuations can fluctuate and narratives shift, it’s the continual growth of earnings that ultimately drives long-term stock returns. And with profits expected to grow in both 2026 and 2027, the fundamental backdrop is supportive. Add a largely benign inflation and rates picture, and we retain our generally positive outlook. 

Of course, risks remain. Policy missteps, geopolitical tensions, evolving data, and investor mood swings will, at times, create a bumpy ride. But volatility is a feature—not a flaw—of long-term investing. Our approach is grounded in quality, discipline, diversification, and maintaining a longer run perspective focused on fundamentals rather than headlines. 

As always, thanks for your continued trust. 

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PLANNER’S CORNER BY ANDERS SKAGERBERG, CFP®, EA

What Are You Retiring To? 

Anders Skagerberg, CFP®, EA  |  Senior Wealth Advisor 

I recently watched a short animated film called Retirement Plan, directed by John Kelly and voiced by Domhnall Gleeson. It was nominated for an Academy Award this year, and it’s only seven minutes long. In it, a man named Ray sits at the edge of retirement and begins listing everything he’ll finally do once he has the time.  

“When I retire… I’ll read the 35 years of saved articles on my reading list. I will finish all those books I started. I’ll learn the names of trees and I’ll know which spring flowers bloom first. I will order wine by year and specific area of Italy, but not in an annoying way.”  

The list grows and grows, funny and tender and then increasingly anxious as Ray ages, until it becomes clear that the list itself is the point. Ray isn’t really making a plan. He’s attempting to compress an entire unlived life into whatever time he has left. 

It’s a beautiful little film, and I’d encourage you to watch it (it’s free on YouTube). But the reason I bring it up here is that it captures something we see in our work planning for retirement: there can be a gap between being financially ready for retirement and being ready for retirement.  

Let’s explore that gap. 

The Gap Between the Numbers and the Life 

Retirement doesn’t come with a rehearsal.  

For some, it is a long-awaited exhale after decades of meaningful, demanding work. For others, it arrives abruptly, forced by corporate restructuring, health issues, or circumstances outside their control. But regardless of how retirement begins, one truth shows up again and again in our work with retirees at Albion: 

Being financially ready for retirement does not automatically mean being ready for retirement. 

As advisors, we spend a lot of time helping clients assess the numbers. Can you fund retirement? Will your assets support your lifestyle? How resilient is your plan? Those questions matter. A lot. But over the years, we’ve learned that the clients who thrive most in retirement are rarely the ones who simply checked every financial box.  

Instead, they’re the ones who can clearly answer a much more human question: What are you retiring to? 

Retiring From vs. Retiring To 

One of the most important mindset shifts someone can make heading into retirement is this: “I am not retiring from something. I am retiring to something.” 

People who focus primarily on what they are leaving behind can struggle with the transition, even if they are more than financially secure. In contrast, those who have clarity around what awaits them on the other side tend to move into retirement with more confidence, energy, and fulfillment. 

And often, ironically, those who feel most desperate and burned out in their work can be the least emotionally prepared for retirement. That’s because the more consuming and exhausting a career has been, the more likely it is that work has crowded out hobbies, friendships, and interests outside the office. Often in those situations, work has become the center of gravity for someone’s identity, structure, and social life. 

So before you decide you are ready to retire, pause and ask yourself honestly: 

What am I retiring to? 

And before you answer too quickly, let me say this plainly: golf and pickleball (despite how fun they are) are not a retirement strategy. They can be great additions to a fulfilling retirement, but they don’t provide the foundation. Filling a few hours a week is very different from building a meaningful life structure that can support you for decades. 

So what can fill that space? 

The Four Cs of a Good Retirement 

One of the most useful frameworks I’ve found for thinking about what makes a good retirement (and life) comes from Brian Portnoy’s book The Geometry of Wealth. While it’s not written specifically about retirement, the principles translate beautifully. 

Portnoy argues that the recipe for a good life is built on four key ingredients: connection, control, competence, and context.  

Let’s walk through these together. 

1. Connection: Having meaningful relationships and a sense of belonging. 

Connection is often the most underestimated challenge of retirement. For many people, their job is also their primary social network. Colleagues, clients, and professional routines create daily interaction and a sense of community. When work ends, those connections can fade quickly, leaving an unexpected social vacuum.  

A successful retirement includes a deliberate plan for relationships, whether that means nurturing existing friendships, spending more time with family, or intentionally building new communities through volunteering, clubs, faith groups, or hobbies. Loneliness can be one of the greatest threats to health and happiness in retirement.  

2. Control: Having autonomy over your time and decisions. 

Control is the area where retirees often experience the most immediate upside. After years of structured schedules, meetings, and obligations, retirement brings a rare and powerful gift: autonomy.  

It reminds me of one of my favorite quotes from Morgan Housel, bestselling author of The Psychology of Money (if you haven’t read his book I highly recommend it): 

“The ability to do what you want, when you want, with who you want, for as long as you want, is priceless. It is the highest dividend money pays.” 

In retirement, you choose how to spend your time, who you spend it with, and what your days look like. This is why you often hear new retirees joke, “Every day is Saturday.” But autonomy also requires intention. Without some structure, unlimited freedom can slowly turn into aimlessness. The happiest retirees tend to use their control not to eliminate structure entirely, but to redesign it around what matters most to them. 

3. Competence: Feeling capable, skilled, and effective. 

This is the dimension that catches many people off guard. During your working years, your sense of competence is constantly reinforced. You’re good at what you do and every day you get a little bit better. You solve problems. People rely on you. Retirement can quietly strip that feedback away. A fulfilling retirement includes activities that allow you to continue growing, learning, and contributing in meaningful ways, whether through mentoring, volunteering, teaching, learning new skills, or even part-time work. The goal is not productivity for productivity’s sake. It is the deep human need to feel useful and capable. 

4. Context: Having purpose and a sense of meaning. 

Last but certainly not least, context asks the most important question of all: Are you part of something bigger than yourself? Retirement is not the end of your story. It’s a new chapter. People who flourish in retirement tend to see their lives as part of something larger, whether that is family legacy, service, creativity, spirituality, or staying active in their community. Purpose does not have to be grand or public. It simply needs to feel true. When retirees lack context, days can blur together, and time can feel strangely empty.  

Bringing It All Together 

In the end, money funds retirement, but it does not define it. These four ingredients, connection, control, competence, and context, are what separate a retirement that looks good on paper from one that actually feels good to live. 

So whether you’re approaching retirement or already in it, it’s worth considering: 

• How will your social life change?  

• What will you continue getting better at each day? 

• What will you be a part of that’s bigger than yourself? 

• How will you spend your time when every day is Saturday? 

• How will you stay connected to the people that are important to you? 

As you think through these questions, remember that the beauty is a) there’s no right or wrong answers here and b) your answers can change over time. You may find that what works in early retirement does not work later in retirement, and that is okay. Once you know the ingredients to a good retirement, it’s simply an art project to dial in the right amounts of each. 

And to put a bow on all of this, if you haven’t yet, I encourage you to watch the short animated film Retirement Plan. At the very least you’ll get a chuckle out of it, or a cry, or perhaps you’re like me and you’ll get both. 

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Albion Financial Group is an SEC registered investment advisor. The information provided is intended solely for educational purposes and should not be construed as an offer or solicitation for the purchase or sale of any particular securities product, service, or investment strategy. Past performance is not indicative of future performance. Additional information about Albion Financial Group is also available on the SEC’s website at www.adviserinfo.sec.gov under CRD number 105957. Albion Financial Group only transacts business in states where it is properly registered, notice filed or excluded or exempted from registration or notice filing requirements.

Introduction

Welcome to our third-quarter update, where we reflect on the key events that shaped the past quarter and share insights to help you prepare for the months ahead. First, “From the Desk of Liz Bernhard,” Albion’s President and Senior Wealth Advisor balances subjective investor sentiments with the stronger realities of hard economic data. Then, Chief Investment Officer Jason Ware analyzes and interprets recent economic events to provide an assessment of our current trajectory. And Senior Wealth Advisor Jackson Watson makes his debut in the Planner’s Corner by framing the remainder of the year around a checklist of practical financial planning considerations. Finally, don’t miss the final segment of this letter to meet the newest members of our team and for registration details to our Fall Conference Call on October 29th.

From Liz Bernhard’s Desk

Vibecession is still a thing 

First, a definition.  

Vibecession: an economic situation in which people feel like the economy is in a recession even if the objective data such GDP, employment, and inflation don’t actually meet the criteria for a recession.  

The term vibecession was coined in 2022 when we had tension between high inflation on one side and strong labor markets and growth on the other. Fast forward 3 years and the disconnect between how people feel about the economy and what is actually happening in the economy is still prevalent. I can’t tell you how many conversations I’ve had recently in which clients express their disbelief at how well their accounts and the markets in general have performed this year. For many, their somber expectations stem from what they hear in the news, on social media, or in their social circles. We know that doom and gloom sell – negative headlines get more attention than positive ones, and just about everything counts as “breaking news” these days. It is easy to understand how people’s perception of the economy may not mirror the objective economic data however, as prudent investors tasked with making the best decisions possible on behalf of our clients, we ask ourselves, what is really happening in the economy?   

Let’s dig in.  

You may have heard the term “soft data” and wondered what constitutes data that is soft. Statistics on laundry detergent or plush toilet paper? Nope. The term “soft data” is generally used to categorize information about how people feel. Think surveys. Two of the most frequently referenced surveys are the University of Michigan Consumer Sentiment Survey and the Conference Board’s Consumer Confidence Survey. Both surveys poll households across the U.S. monthly by asking a series of questions aimed at determining how people feel about the economy, their financial situation, and their outlook for the future. Although they use slightly different methodologies, both surveys (as of August/September) show consumer confidence/sentiment continuing to decline. 

Can survey responses be subjective? Absolutely. Wording of questions, the respondents’ recent experiences, headline news, and political identity all contribute to the responses given on these surveys. In fact, consumer sentiment has increasingly diverged along party lines since the early 2000s.  

If many consumers are generally feeling uneasy about the current state of the economy and the future, what is driving the markets higher? The answer: hard data! Hard data is not statistics on steel or cement, but rather measurable, quantifiable, observable happenings. The unemployment rate, inflation, GDP, retail sales, businesses fixed investments, and default rates are all examples of hard data. And so far, these data are holding up ok – some might even say they are holding up well (depending on how the question is asked and what side of the bed you woke up on). The overall unemployment rate is hovering around 4.3%, inflation is hovering around 3%, GDP for the second quarter was just revised up to an annual growth rate of 3.8%, and retail sales continue to climb. In this hard data environment companies are growing their earnings – on average earnings of S&P 500 companies are up more than 11% in the last year. Earnings drive stock prices and if companies are growing their earnings, investors are willing to pay more to be owners of the stock.   

 In an ever-divergent population where data is questioned and opinions are given ad nauseum, where clickbait sells, and feel-good stories are buried on page 6, it seems hard to envision the unification of sentiment. Some portion of the population is always dissatisfied with their current situation and pessimistic about the future. We are human and to be human is to be biased. However, to be a good investor we must put aside our personal feelings colored by our relationships, politics, and beliefs and look at the facts. That doesn’t mean we ignore the collective sentiment of consumers in the U.S. – we would be remiss to do so as consumer spending drives over 70% of our economy. If enough consumers feel bad about their lot in life, this collective sentiment, this “soft data” can impact the hard data too. Yet we must strike a balance. Regardless of your current vibes, we must look through the noise and focus on the measurable, trackable, quantifiable metrics that drive growth. 

Thank you for entrusting Albion to do this work on your behalf day after day, year after year. We are honored to be working side by side with you to reach your goals.   

Economy and Markets  by Jason Ware

The third quarter gave investors more plot twists (when does it not?): the first Fed (FOMC) rate cut in nine months, a notably cooling labor market, green shoots in both housing activity and the manufacturing sector, and equity markets that – despite periodic jolts from Washington – keeps grinding higher. 

Beneath the headlines, the real economy continues to expand. Not a boom like just after the pandemic, but a solid pace. After a soft(ish) first half due almost exclusively to spring tariff shocks, growth has resumed and looks far better in the second and third quarters. To wit, we think GDP growth over the summer may have tracked as high as +3% (annualized). For its part, the Atlanta Fed’s ‘GDPNow’ presently sits around +4%. Combined, that keeps full-year growth in a good lane underscoring the resilience of consumer demand and business investment (especially AI capex!). Private sector balance sheets are in good shape. Meanwhile, the job market has cooled but is overall healthy. Unemployment sits at 4.3%, while hiring slowed to sub 50K per month (average) and is more mixed across industries. Manufacturing jobs, energy, and government sectors were a drag while healthcare and education endured as bright spots. Other metrics within the labor market, like layoffs (low), wages (beating inflation), and demand (buoyant, though AI is probably having some impact), suggest that the overall employment situation is constructive. From our perch, waning monthly job adds might have more to do with labor supply than anything else. Consequently, a sub 100K cadence may, for now, be equilibrium. 

On the inflation front, things remain sticky, largely benign, though still above Jerome Powell’s 2% goal. The latest read on core PCE – the US central bank’s preferred gauge – ran at 2.9% y/y (headline 2.7%). Services continue to produce most of the inflation we experience, while goods prices are low yet have seen an uptick (perhaps due to tariffs). Within the service category, housing and insurance obstinacy lingers, though drifting down. Overall, inflation has not surprised us, and remains in the zone that we’ve long said was likely (mid/upper-2s). 

Housing has stirred a little recently. With mortgage rates easing into the low-6s by late September, purchase and refi activity perked up a bit and pending home sales surprised to the upside (+4% m/m in August). Certainly not boom levels of activity – inventories remain pretty tight – but lower financing costs and buyers finally losing patience have housing transactions thawing some. US manufacturing is also showing some promising signs after over two years mired in a slump. Time will tell if this is a durable upturn … it’s early … but we are encouraged by what we’ve seen in the data lately. Services continue to do more of the economic heavy lifting (as is typical). 

On policy, the Fed delivered a fresh rate cut at quarter’s end and (re)emphasized data-dependence. We expect additional easing in the months to come, particularly if the labor side softens further while inflation behaves. The present internal debate on the FOMC is interesting. Some favor moving faster, although the current center of gravity is gradualism. We continue to reason a destination near a mid-3s “neutral” funds rate is sensible; the glidepath will reflect the jobs-inflation tradeoff in the months ahead. Meanwhile, yields finished the quarter lower at the front end (on the Fed cut) but the 10-year Treasury hovers around 4.15% as term premium, growth and inflation data (plus expectations), and supply dynamics offset much of the easing impulse. 

Against this backdrop, equities continue their advance. Many US indices notched fresh highs in late September as mega-cap tech, semis, select communication services, and consumer discretionary groups led, while breadth improved on the margins with cyclical participation waxing and waning alongside rates. Small caps also (finally) logged a solid quarter. Indeed, year-to-date returns are firmly positive. Driving this are corporate earnings (critically important) with the summer reporting period posting double-digit growth (+11%). Q3 is tracking for further gains. Importantly, the AI-levered “super earners” still anchor the markets story, but we are seeing some level of a “quiet broadening” under the surface. 

Valuation is an open question. By most lenses stocks are “fully valued” versus history, though not egregiously so, expressly when paired with double-digit profit growth – both now and in the pull through 2026/27. There’s also the prospect of policy tailwinds from the Fed as well as tax cuts, deregulation, and other “business friendly” impulses on the fiscal side. Nevertheless, P/E multiples currently carry a premium to long run averages. That premium however is (still) more concentrated in higher growth, exciting areas like tech and AI – which, to date, continue to deliver. 

We kicked off 2025 talking about a “year of three-twos”: roughly +2% GDP, core inflation in the (mid) 2s, and at least two Fed cuts. That framework largely holds. Growth is proving sturdier than most feared, inflation sports a 2-handle, and we now have [Fed] “Cut #1” in the books with at least one more plausible before corks pop on New Year’s Eve. Add in steady corporate cash flows, the dream of AI productivity propelling profit margins, and a more pro-growth policy stance (both fiscal and monetary), and the bull case remains intact. Risks haven’t vanished, of course. Policy errors, including ever-present DC drama (e.g., late-September funding standoff, tariffs, etc.), geopolitics, and the penchant for markets to, at times, go to extremes, all could produce turbulence along the way. However, volatility is part of the experience in the stock market on the path toward reaping the magic of compounding returns. 

As always, we’ll keep adapting as facts change and stay grounded in what matters – discipline, resilience, and the long view. Thanks for your trust. 

Planner’s Corner by Jackson Watson

Fall Reflections & Year-End Readiness
As the third quarter wraps up and the days start to cool, I always enjoy the slower pace that fall brings—time with loved ones, crisp mornings, and the anticipation of ski season. It’s also a natural moment for reflection: to take stock of what the year has brought, and to focus on what still needs attention before it draws to a close.

While the world around us continues to shift—markets, legislation, technology—the principles of good financial planning remain steady. As we head into the final stretch of the year, the planning team at Albion is here to help you tie up any loose ends and ensure everything is aligned with your goals.

Here are a few key items to review:

1. Retirement Contributions
   If you’re contributing to a 401(k), 403(b), 457(b), or another employer-sponsored plan, now’s a great time to check whether you’re on track to contribute what you intended by the December 31st deadline. Reviewing your paystub or custodian’s website is a helpful place to start—and we’re always here to assist with questions about contribution amounts, Roth vs. traditional, or anything else.
   
2. Required Distributions
   If you’re turning 73 this year (or are already older), you may need to take Required Minimum Distributions (RMDs) from tax-deferred accounts by year-end. First-time RMD recipients have until April 1, 2026—but all others must take their RMD by December 31, 2025. If Albion manages these accounts for you, this is likely already in place. But if you have outside accounts, let’s make sure nothing gets missed.

If you have an inherited IRA that you inherited after 2019, RMDs were not required for 2020-2024, but they must be taken this year. As a reminder, these accounts need to be fully distributed within 10 years. 

The same goes for trust distributions—some irrevocable trusts require income to be distributed by year-end. If we manage a trust account for you, we’re happy to help with this review.

3. Charitable Giving
   Gifts of cash or appreciated stock—including to Donor Advised Funds—must be completed by December 31st to count for 2025. If you’re making Qualified Charitable Distributions (QCDs) from an IRA, those must be made before taking the full RMD, or they won’t reduce your taxable income. Timing matters, and we can help ensure things are processed correctly.
   
4. Annual Exclusion Gifting
   The end of the year is also a great time to consider annual exclusion gifts as part of your wealth transfer strategy. In 2025, you can gift up to $19,000 per recipient without using any of your lifetime gift and estate tax exemption. Married couples can combine their exclusions to give $38,000 per recipient. These gifts can be a simple, tax-efficient way to support children, grandchildren, or others—and when done consistently over time, they can significantly reduce the size of a taxable estate. To count for 2025, gifts must be completed by December 31st.
   
5. Estimated Taxes
   Fourth-quarter estimated taxes are due January 15, 2026. This is a good time to check if those payments are still appropriate based on your income and realized gains this year. We can assist in reviewing your year-to-date picture to avoid under -or overpaying.
   
6. Roth IRA Conversions
   For some clients, converting a portion of pre-tax IRA funds to a Roth IRA can be a valuable long-term strategy—especially if your current tax rate is lower than what you expect in the future. With the OBBBA tax changes arriving in 2026, this may be a particularly important year to review your Roth conversion potential.
   
7. Realized Gains & Losses
   We’ll review realized gains and losses in Albion-managed accounts, but if you’ve sold assets elsewhere, let us know. We may be able to help coordinate with your CPA or adjust your estimated tax payments accordingly.
   

Closing Thoughts
The leaves are changing, and the first snowfall won’t be far behind. Just like prepping your skis for the season or doing a bit of fall yard cleanup, a little proactive financial prep now can save stress later.

If any of these items apply to you—or if you simply want to check in—we’re here to help. Thank you for your continued trust, and we look forward to helping you close out the year with confidence.

Albion Community Update

Save the Date

On Wednesday, October 29, 2025 at 10:00 AM MT we will
be hosting our next Client Conference Call. We always look
forward to these calls and greatly value the opportunity to
connect and share ideas with you. We encourage your
participation and welcome any questions you may have—
either live during the call or in advance by sending us an
email. A recording of the call will be available on our blog
and YouTube channel afterwards, and a copy will be
emailed to you. Go to our website to register –
www.albionfinancial.com/events.

New Faces

Please join us in welcoming the newest member of our
Financial Planning team, Lily Prunty. Lily is from Sandy,
Utah. She graduated from Utah Valley University with a
bachelors degree in Personal Financial Planning. Lily also
recently passed the CFP® exam and is working on
completing her certification. She will be working alongside
Michelle Buxton and Paige Christensen.

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Albion Financial Group is an SEC registered investment advisor. The information provided is intended solely for educational purposes and should not be construed as an offer or solicitation for the purchase or sale of any particular securities product, service, or investment strategy. Past performance is not indicative of future performance. Additional information about Albion Financial Group is also available on the SEC’s website at www.adviserinfo.sec.gov under CRD number 105957. Albion Financial Group only transacts business in states where it is properly registered, notice filed or excluded or exempted from registration or notice filing requirements.

During last week’s conference call, our panelists – Jason Ware (CIO & Chief Economist), John Bird (CEO & Co-Founder), Anders Skagerberg (Senior Wealth Advisor), and Liz Bernhard (President & Senior Wealth Advisor) – addressed the heightened uncertainty in today’s economic and market environment. They discussed recent volatility in both stock and bond markets, the weakening US dollar, and declining consumer sentiment. The conversation covered the broader economic landscape, including the impact of shifting trade policies, new tariffs, and changes in federal policy leadership, all of which have contributed to a general slowing in economic activity as businesses and consumers await greater clarity.

The team also shared insights from our client conversations. Many are understandably feeling nervous given the current uncertainty, and we emphasized that Albion’s planning process is designed to account for both good times and challenging periods. Our scenario modeling is designed so financial plans remain robust, even in less favorable environments. At the same time, we recognize that everyone’s situation and perspective is unique—some are concerned, while others, with more experience weathering market cycles, are less fazed by current events.

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Albion Financial Group is an SEC registered investment advisor. The information provided is intended solely for educational purposes and should not be construed as an offer or solicitation for the purchase or sale of any particular securities product, service, or investment strategy. Past performance is not indicative of future performance. Additional information about Albion Financial Group is also available on the SEC’s website at www.adviserinfo.sec.gov under CRD number 105957. Albion Financial Group only transacts business in states where it is properly registered, notice filed or excluded or exempted from registration or notice filing requirements.

As the snow melts and spring blossoms emerge, we close the books on a dynamic first quarter and look forward to the opportunities that lie ahead in this season of renewal and growth. From the desk of Albion’s President Liz Bernhard, this letter begins with a retrospective of headlines from past recessions compared to the tone of today’s newspapers. Then our CIO Jason Ware details the strengths and weaknesses of the US economy and markets. Finally, Senior Wealth Advisor Anders Skagerberg promotes the long-term mindset that is required to persist through challenging times. Read through to our Community segment for team updates and upcoming events.

From the Desk Of Liz Bernhard

“This Time Is Different”—But Is It, Really? 

Every market cycle brings its own headlines, anxieties, and reasons to believe that “this time is different.” And in some ways, it is—unique political developments, global tensions, new technologies, and shifting economic data can make the present feel unprecedented. 

Lately, investors have voiced concerns about market volatility, geopolitical strife, and domestic political uncertainty. It’s easy to feel unsettled. These moments invite the temptation to react, retreat, or alter long-term plans based on short-term fears. 

But while the circumstances change, human behavior rarely does. History shows that uncertainty is not the exception—it’s the norm. Markets have weathered wars, recessions, elections, and crises. And each time, the refrain is familiar: “But this time feels different.” 

And yet—this too shall pass. 

Let’s take a walk down memory lane. Remember the Great Financial Crisis of 2008? Of course you do. A few headlines from that time: 

• “Job Losses Accelerate, Signaling Deepening Recession” — The New York Times, Dec. 6, 2008 

• “Foreclosures Soar as Homeowners Fall Behind” — Bloomberg, late 2008 

• “World Recession Looms as Markets Tumble” — BBC News, Oct. 6, 2008 

How about COVID? 

• “Wall Street’s Coronavirus Collapse Marks Fastest Bear Market Ever” — Bloomberg, Mar. 12, 2020 

• “Oil Prices Plunge to 18-Year Low as Demand Evaporates” — CNBC, Mar. 30, 2020 

• “March 2020 Becomes Most Volatile Month in Stock Market History” — MarketWatch, Mar. 31, 2020 

The beginning of the war in Ukraine: 

• “Market Volatility Spikes as Russia Launches Full-Scale Attack on Ukraine” — CNBC, Feb. 24, 2022 

• “Stocks Swing and Oil Prices Soar After Russia Attacks Ukraine” — CBS News, Feb. 24, 2022 

• “Global Inflation Surges Amid Ukraine Conflict” — Reuters, May 10, 2022 

And now: 

• “Consumer Confidence Hits Two-Year Low as Inflation and Job Fears Rise” — Associated Press, Mar. 28, 2025 

• “Wall Street Tumbles, and S&P 500 Drops 2% on Worries About Slower Economy, Higher Inflation” — Associated Press, Mar. 28, 2025 

Each moment felt unique: the worst economy since the Great Depression, a global pandemic, a war in Europe. And each time, the market—and headlines—reacted. Yet the market recovered. 

• The S&P 500 took about 4.5 years to recover from the March 2009 low during the GFC. 

• The COVID crash recovery took under five months. 

• After Russia’s invasion of Ukraine in February 2022, it took only a month for markets to bounce back. 

The point is: markets recover. Stocks go higher. While each situation truly was different, those who stayed the course were rewarded. 

The core principles of sound investing haven’t changed: stay disciplined, remain diversified, and stay focused on long-term goals. Emotional reactions to uncertainty are among the greatest threats to building lasting wealth. 

Our approach remains rooted in evidence, not emotion. We build durable portfolios designed to weather a wide range of possibilities—always with an eye on the big picture and the most probable long-term outcomes: humanity will progress, economies will grow, markets will rise. And within that reality, asset allocation, diversification, behavior, and planning are what matter most. 

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Economy and Markets by Jason Ware

The first quarter of 2025 is in the books, and it was a bumpy one. While it never feels like it at the time, corrections are normal – even healthy – in a bull market. Since 1928, the S&P 500 has experienced 103 such corrections, occurring about once every 13 months, with an average drawdown of -13.5%. The latest decline of about -10% follows an extended stretch of relative calm as the previous correction (September-October 2023) was roughly 16 months ago. Put differently, in a way, markets were sort of due. We certainly recognize that pointing to historical patterns offers little comfort when portfolios are under pressure. But history is clear on how most corrections end: by avoiding recession. The majority don’t turn into full-blown bear markets. When they do, it’s almost always tied to economic contractions or sudden, unexpected shocks. 

Consequently, the critical question now is: where do we stand on recession risk? Let’s unpack.  

Underneath the volatility – both in the markets and the headlines – the US economy remains on pretty good footing, though with some shifting undercurrents. Growth is moderating from last year’s pace, but not stalling. The labor market, while cooling at the margins, is still adding jobs, layoffs are low, and wage growth continues to outpace inflation supporting real household incomes. Meanwhile, business investment runs apace, with AI, automation, software, and infrastructure spending leading the way. 

That said, some pockets of weakness are emerging. Higher borrowing costs continue to weigh on certain industries, particularly interest-rate-sensitive sectors like commercial real estate, housing, and manufacturing. Consumer spending, while resilient, is showing more divergence between higher-income households (who are still spending freely) and lower-income consumers, who are feeling the pinch of tighter credit conditions, a lower savings cushion, and elevated uncertainty. However, with pro-growth fiscal deficits still in place (despite ‘DOGE’), productivity improving, and a generally healthy jobs market underwriting robust services activity (by far the largest piece of GDP), we continue to believe the post-Covid economic expansion endures. 

Meanwhile, the inflation story has largely played out as we’ve expected. The supply shocks and demand surges of 2021-23 have faded, and price pressures have eased. While we’re unlikely to see inflation sustainably at 2% any time soon, the mid-to-high-2s look like a reasonable resting place. That’s a world away from the 9.1% peak of 2022, and as long as inflation stays contained the Fed has room to maneuver. Moreover, as we’ve past highlighted, inflation at 3% or less is constructive for both the economy and stock market.  

After holding rates steady for much of 2024, the Fed finally pivoted to rate cuts late last year. The goal? A “soft landing” where inflation stays in check without tipping the economy into recession. The Fed’s definition of “neutral” policy – where rates neither stimulate nor restrict growth – coupled with the economy’s structural underpinnings as we see them suggest a terminal fed funds rate somewhere around 3.5%. With inflation easing, the Fed had begun moving in that direction, but the path forward remains uncertain. Markets are pricing in multiple rate cuts ahead, but the Fed is keeping its options open, and we see “sticky” inflation restraining them for now – unless unemployment begins to rise meaningfully. 

Bond yields have settled into a more predictable range. If neutral rates are around 3.5% and term premiums are historically normal, then long-term Treasury yields should hover in the 4.0-5.0% range. Of course, fiscal deficits, geopolitical events, US economic growth and inflation, as well as investor sentiment will keep things volatile at times. But in general, this is a favorable environment for long-term investors with a balance asset allocation looking to lock in attractive yields. 

Turning to stocks, notwithstanding the acute volatility since late-January, US equities remain well-supported by fundamentals. Corporate earnings are growing at a healthy pace. S&P 500 earnings-per-share (EPS) finished 2024 at $243, with estimates for 2025 approaching $270 (that’s double-digit growth!) and 2026 potentially reaching $300. For context, EPS was about $138 at the Covid low and $162 in 2019, reinforcing the ever-present resiliency and dynamism that defines American business … a vigor we never wish to bet against.  

While earnings growth remains strong, valuation is a key consideration. As of this writing, the S&P 500 trades at ~20.5x this year’s earnings – not “cheap” per se, but certainly not extreme. Much of the premium remains concentrated in a handful of technology (AI) stocks, while other areas of the market, such as healthcare, industrials, REITs, financials, and small / mid-caps, offer more attractive valuations. Many of the mega cap stocks, or “Mag 7”, also look more attractive amid the market pullback. Portfolio positioning remains key, as leadership may continue to broaden beyond the handful of dominant winners. In everything we do, the mantra own great companies and diversify reigns supreme.   

In sum, as noted in our last missive, we’re calling 2025 “A Year of Three-Twos.” That is, a US economy growing at roughly +2%, core inflation settling into the mid-2s, and a Fed that may cut rates two times. It’s a backdrop supportive of continued, if more moderate, market gains. Indeed, we don’t need multiple expansion. Rather, merely sustaining nourishment from a salubrious business cycle and profits should do the trick. Of course, risks remain. Geopolitics, tariffs, government austerity, the level of inflation and bond yields could each or in concert introduce volatility. But overall, the foundation, at present, remains solid from our perch. 

As always, we remain resolutely focused on navigating the ever-evolving landscape while keeping our true north, the long-term, firmly as our guide. Thank you for your continued trust! 

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Mind The (Behavior) Gap

Anders Skagerberg, CFP®, EA

As the first quarter of 2025 comes to a close, a few things stand out to me.

First and foremost, as an advisor, I’m reminded that one of the best parts of my job is the privilege of walking alongside my clients—through market ups and downs, life’s milestones, and all the thoughtful decisions in between. This is meaningful, important work.

Second, periods like these highlight just how powerful human behavior is. Recently, markets have been bumpy and headlines unsettling, affecting how we feel as investors—and ultimately, how we behave.

Like it or not, we’re wired to feel losses more intensely than gains and to focus more on negative information than positive. These behavioral biases—known as loss aversion and negativity bias—are built-in features of the human brain.

Now, don’t get me wrong—these biases aren’t inherently bad. Think of them like a well-meaning friend who always ‘speaks their mind.’ They’re survival mechanisms, hardwired to protect us from danger. If we rewind a few hundred thousand years, early humans lived in a world filled with physical threats, where losing essential resources like food, shelter, or safety could literally mean life or death. That harsh reality shaped our brains to prioritize avoiding losses and taking fewer risks—because back then, one wrong move could have serious consequences.

Fast forward to today, and those same instincts often lead to unintended, sometimes costly, outcomes. What once protected us can now get in the way, pushing us toward decisions that undermine our long-term financial well-being.

In our industry, we call this impact The Behavior Gap.

At Albion, this concept is so central to how we think about investing that we’ve made “Behave Yourself” one of our Four Pillars of Investing. It’s something our Chief Investment Officer, Jason, reminds us of regularly: “Investor behavior will determine success or failure more than anything else.”

Popularized by financial writer Carl Richards and quantified in Dalbar’s annual Investor Behavior Report, the behavior gap refers to the difference between what an investment should return and what an investor actually earns. Simply put, it’s the gap between potential returns and actual results.

And it turns out, there’s quite a gap. 

Dalbar’s most recent study, published in April 2024, shows the average investor underperformed the market by 5.5% in 2023—the third-largest gap in the past decade. Looking at the long-term data, since 1988 the market has averaged a 10% annual return, while investors earned just 4.1%. That’s nearly a 6% shortfall per year!

This is why, as investors, managing our own behavior is one of the most crucial ingredients for growing wealth.

Of course, that’s easier said than done. If it were easy, everyone would do it—and the gap would disappear. But it’s worth the effort. And ultimately, this is where we strive to add the most value as your advisors. We understand it’s scary. We understand how it feels (we’re investors too). And we understand what’s at stake.

If nothing else, I hope this gives you a glimpse behind the curtain at how we think about our work. To us, the most meaningful thing we can do is be there—through the good times and the bad—to help you make the best decisions for yourself and your family, even when they don’t feel like the easiest.

But before I go, in true advisor fashion, I want to leave you with some practical steps. Here’s how to mind the (behavior) gap:

Step 1: Be aware of the gap.

If you’ve read this far, you’re already ahead—you’re now aware of the gap that exists between investment returns and investor returns. Awareness is the first, crucial step.

Step 2: Understand the role of volatility.

You’ve likely heard the term, but volatility simply measures how much and how quickly an asset’s price moves over time. Here’s the key: volatility isn’t something to avoid—it’s something to expect. It’s the price we pay for long-term growth. As financial writer Morgan Housel puts it, “Volatility is the price of admission. The prize inside is superior long-term returns. You have to pay the price to get the returns.”

But here’s the part you can control: how much volatility you feel.

Consider two investors who both started 30 years ago, invested the same way, and never sold. One checks their account once after 30 years. The other checks daily.

Both end up with the same financial result—but their experiences are vastly different.

The first investor might think, “Wow, investing is simple. Look how much my account grew.” The second, having lived through every dip—the dot-com crash, the 2008 financial crisis, the COVID crash—might feel like they barely made it through.

This is an extreme example, but the point stands: volatility is unavoidable, but how intensely you experience it is within your control. The more you check, the more you’ll feel the bumps. The volatility exists either way—but you decide how much of it affects you.

Step 3: Focus on what really matters.

At the end of the day, investing isn’t just about numbers or market performance—it’s about your life, your family, your dreams, and your legacy. When headlines feel overwhelming and markets feel uncertain, it helps to come back to what truly matters.

Think about the goals we’ve planned for together—whether it’s retirement, supporting your kids or grandkids, or contributing to causes close to your heart. Keeping these front and center brings clarity and perspective when doubt creeps in.

As your advisors, we’re here to keep you grounded in those objectives. It’s not always easy, but the most important decisions rarely are. We’re grateful for your trust and partnership as we navigate these moments—always keeping your bigger picture in mind.

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Read the full quarterly letter with the Community segment here.

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Albion Financial Group is an SEC registered investment advisor. The information provided is intended solely for educational purposes and should not be construed as an offer or solicitation for the purchase or sale of any particular securities product, service, or investment strategy. Past performance is not indicative of future performance. Additional information about Albion Financial Group is also available on the SEC’s website at www.adviserinfo.sec.gov under CRD number 105957. Albion Financial Group only transacts business in states where it is properly registered, notice filed or excluded or exempted from registration or notice filing requirements.