Why This Is a Good Sign for Investors

The market is doing something subtle right now, and it’s a very good sign.

When the Market Disregards Bad News, It’s a Good Sign

Geopolitical headlines have remained aggressive and, on the surface, negative for investors. Just a few weeks ago, this type of news flow likely would have pushed markets meaningfully lower. 

And to be fair, that could still happen at any time. But something has changed.

Following the Iran ceasefire, the headlines quickly pointed to how “fragile” the agreement was. In the days that followed, more negative developments continued,  concerns around Israel’s bombing of Lebanon, shipping disruptions, stalled negotiations, and continued tension between all parties.

Yet instead of declining, the market rallied strongly.

A nearly 3% gain in a single day, followed by continued upside, marks a clear shift in market behavior.

Previously, the market would respond positively to good news, then quickly give it back as new concerns surfaced. That was the “character” of the market over the past few months.

Now, the market appears more willing to look past the noise. And that matters.

When markets stop reacting negatively to bad news, it often signals that sellers may be exhausted and buyers are gaining confidence. If that continues, it opens the door for a move back toward all-time highs. That’s a constructive environment for long-term investors.

After months of sideways movement since October, the market may be entering a new upward trend.

If that happens, you’ll likely hear less from me about short-term market movements and more about long-term investing principles and where we’re seeing relative strength across asset classes.

I would welcome that with open arms.

Account Adjustments

With the recent strength, I’ve felt comfortable increasing equity exposure back to normal levels across most client accounts.

You may recall that earlier, as the market weakened, I reduced equity exposure by about half. That wasn’t an attempt to time the market. It was a structured way to manage risk and prepare against the kind of drawdowns that can be difficult to recover from emotionally and financially, because it’s worth repeating.

Every major bear market starts the same way. It starts by going down.

Relative Strength: Where Opportunities Are Emerging

One of the most important things I watch after a market correction is what holds up best, and what rebounds the fastest. That’s what is known as relative strength. And it often continues once the market finds its footing.

Right now, international markets continue to stand out. With small and midcap companies as new asset classes showing similar strength.

International Markets and Emerging Economies

Brazil and the broader Latin America have shown notable resilience. Part of this strength can be attributed to:

• A weaker U.S. dollar, which tends to benefit emerging markets 

• Strong commodity exposure (energy, metals, agriculture), which has held up well 

• Attractive valuations compared to U.S. equities after years of underperformance 
  

Speaking of underperformance, international stocks have lagged U.S. markets for much of the past decade, roughly since 2011. Periods like that often set the stage for leadership shifts, and we may be in the early stages of one now.

Small and Mid-Cap Stocks Gaining Momentum

We are also seeing strength in small and mid-cap companies relative to large-cap stocks. These areas have been out of favor for several years, and if capital continues rotating away from mega-cap tech, they could have room to outperform over the intermediate to longer term. If this trend continues, these asset classes could outperform over the intermediate to long term.

Source: stockcharts.com as of 4/13/26. The green line is the Brazilian stock market index, dashed black line is the S&P 500 index. Note how the price behaved in the yellow box when the US market started turning downwards.

What If the Market Turns Back Down?

Even though the current tone is constructive, it always pays to stay open-minded. Markets can change quickly.

If we see another meaningful breakdown, I will once again reduce equity exposure across most accounts. That discipline is essential when it comes to persevering through deeper bear markets.

The goal is not to predict every move of the market. It’s to respond appropriately as more information continues to come to light.

Closing Thoughts

Markets are constantly changing, but the process doesn’t.

Stay disciplined. Stay patient. Stay flexible.

Over the past few months, we’ve navigated a choppy environment by managing risk and waiting for better conditions. If this recent shift continues, it may provide a more favorable backdrop moving forward.

As always, I’ll continue making adjustments based on what the market is telling us, not what the headlines are suggesting. This has worked well for clients in my 16 years of practice, and I don’t expect it to stop.

If you’ve found these updates helpful, and you know someone who feels overwhelmed by market swings or uncertain about how to navigate them, I’d be grateful for an introduction. 

Helping clients stay calm and confident through environments like this is one of the most meaningful parts of what we do.

Thank you, as always, for your trust. Please contact us by submitting a request on our home page.

Disclosures:

This material is provided for educational purposes only and does not constitute a recommendation or individualized investment or tax advice. There is no guarantee that the views or strategies discussed are suitable for all investors or will achieve desired results. Investors should consult a qualified financial and tax professional to determine what is appropriate for their individual situation. 

The opinions expressed are for general information only and are not intended as specific advice or recommendations for any individual. There is no guarantee that the views or strategies discussed are suitable for all investors or will achieve desired results. Economic forecasts may not develop as predicted and are subject to change. All indexes are unmanaged and cannot be invested in directly. Past performance is no guarantee of future results. 

Investing in stock includes numerous specific risks, including the fluctuation of dividends, loss of principal, and potential illiquidity of the investment in a falling market. The prices of small and mid-cap stocks are generally more volatile than large cap stocks. 

International investing involves special risks such as currency fluctuation and political instability, and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.