2026 | May Risk Odometer

Our Risk Odometer moved back up to +3 in May from the previous two months reading of +2.  Despite the small changes in the net score, our Current Outlook remains at “Positive,” where it has been for the past eleven months. 

March witnessed a large amount of market volatility, sparked by the unforeseen Iran War.  Our Risk Odometer remained fairly stable and our outlook pegged at its highest level of Positive throughout.  The war remains ongoing but at a stalemate with a quasi-cease fire agreement in place while both sides negotiate an end to it.  The Risk Odometer, rooted in facts and data, helps remove our emotions from investment decisions and keeps us discipled during these uncertain times.

Our feelings regarding the Iran War’s impact on the markets was that the volatility was noise.  Our recommendation was to ignore it or view it as opportunistic, largely due to its minimal impact on the Risk Odometer.  Our opinion was that the Trump administration would find an off-ramp to wind down the war because they were more concerned with mid-term elections, approval ratings, and the economic impact of elevated gas prices than eliminating Iran’s nuclear capabilities or regime change.

April and May’s dramatic rebound in the markets validated our opinions.  We were not surprised about the recovery but the speed and velocity of it were somewhat of a surprise.  We are becoming conditioned to flash crashes and short-term spikes in volatility, a result stemming from an unpredictable president who thrives on gut decision making.  Although the war is not over, we believe the US will find an off-ramp and a winning narrative to spin, justifying the markets move prior to the end of it.

Despite the uncertainty the Iran War is creating, the economy continues to remain on strong footing.  First quarter earnings growth of US companies has surpassed all expectations.  At nearly 29% year-over-year growth, it is double the pace of last year’s growth and double the pace of recent expectations.  Earnings are the main driver of equity returns, and strength in this area provides a floor to any flash crash and uncertainty-induced volatility the war might create.

As always, we continue to believe our Risk Odometer provides guidance in making better investment decisions because it keeps us objective and disciplined.  We use this methodology and advise our clients to do the same.  Emotions are our enemies in investing. 

It is important to understand that our Risk Odometer is not designed to anticipate small to medium corrections, typically those in the 5-15% range.  Instead, it monitors for conditions which have typically preceded larger corrections.  We believe trying to anticipate small to medium corrections sounds attractive but more often results in lost opportunity than savings.

The Equity Market Risk Odometer is our guide for judging risk in the equity market.  It is used as a guide for investment decisions in our proprietary investment strategies.  It is composed of various indicators based on leading economic indicators, earnings, technical price action, breadth, and volatility.  Its score can range from +5 to -5.  Readings greater than one are positive and readings less than or equal to zero are negative.

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_{This information does not have regard to the specific investment objectives, financial situation and the needs of any specific person who may view this information. Statements, opinions, and forecasts made represent a particular observation and assessment of the market environment at a specific point in time and are not intended to be a forecast of future events or a guarantee of future results. Statements regarding future prospects may not be realized and may differ materially from actual events or results. Past performance is not indicative of future performance.}

_{FC Wealth Solutions and its representatives do not provide legal or tax advice. You may want to consult a legal or tax advisor regarding any legal or tax information as it relates to your personal circumstances.}

_{Michael Fickell is an investment advisor representative of FC Wealth Solutions}

_{Securities and investment advisory services offered through FC Wealth Solutions, a registered investment advisor.}

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