{"id":1146,"date":"2026-06-03T16:00:00","date_gmt":"2026-06-03T20:00:00","guid":{"rendered":"https:\/\/advisor.wellington-altus.ca\/stonehavenwealthmanagement\/?p=1146"},"modified":"2026-06-03T09:44:48","modified_gmt":"2026-06-03T13:44:48","slug":"june-2026-update","status":"publish","type":"post","link":"https:\/\/advisor.wellington-altus.ca\/stonehavenwealthmanagement\/2026\/06\/03\/june-2026-update\/","title":{"rendered":"June 2026 Update"},"content":{"rendered":"

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Over the past twelve months, the Growth Portfolio gained 21.2%, the Income Portfolio rose 9.7%, and the American Growth Portfolio advanced 25.3%.<\/p>\n

In last month\u2019s letter, we highlighted how April\u2019s rally was less about conviction and more about mechanics: short covering, thinning liquidity, and forced buying pushing markets back toward highs. That view has only strengthened. Since then, the S&P 500 has continued higher, rising roughly 10% from the point where we began outlining the risk of a meaningful decline. Rather than signalling a clear shift, this move appears to reflect a continuation of those same underlying conditions, now playing out in a more extended form.<\/p>\n

From our perspective, what has changed is not the destination, but the path. By several measures, conditions are more extreme today than they were just weeks ago. That does not make markets safer in our view. It simply means the imbalance between risk and reward is becoming more pronounced.<\/p>\n

What makes the current environment unusual is the contrast between what we see on the surface and what is developing underneath. Prices continue to rise, but many of the traditional indicators that support those moves, such as broad participation, institutional demand, and steady inflows are quietly weakening. It increasingly resembles a market advancing on progressively thinner foundations.<\/p>\n

As leadership narrows, there are fewer areas within equities for capital to rotate. If those leading groups begin to lose momentum, adjustments can become less orderly. The same forces that helped lift a concentrated group of stocks higher can work in reverse, particularly in an environment where liquidity is not as deep as it once was.<\/p>\n

At the same time, the options market is reflecting an unusual degree of calm. Expectations around both the likelihood and magnitude of disruptions remain near historic lows. Protection against more material downside is relatively inexpensive and, in some cases, absent altogether. Historically, this type of setup has created a more fragile and temporary equilibrium. It does not take a major catalyst to introduce volatility, only a change in how investors perceive risk.<\/p>\n

We are also beginning to see early signs of pressure extending beyond equities. Volatility is gradually building across markets that typically sit at the system\u2019s foundation, including currencies. When instability begins to emerge there, it tends to carry much broader implications.<\/p>\n

Meanwhile, several of the divergences we noted in prior commentaries remain in place. Institutional participation continues to shrink with the rally, and leadership among the largest companies remains inconsistent. The flow dynamics that have supported markets over the past several years show signs of fatigue. When fewer stocks are doing more of the work, and with less incremental capital entering the system, the structure can become increasingly sensitive.<\/p>\n

The economic backdrop offers a mixed picture. Fiscal support in the United States has stabilized after a period of decline, offering some near-term balance. Meanwhile Canada has already moved into a recession, the first among the G7 to do so. While there remains room for policy to respond, that flexibility is gradually narrowing.<\/p>\n

Inflation also appears to be evolving. Rather than a sustained acceleration, it increasingly reflects the after-effects of prior credit expansion moving through an economy that has not significantly expanded its productive capacity. Without a renewed cycle of investment and credit creation, that pressure may gradually ease, bringing interest rates lower over time.<\/p>\n

Even then, the impact of lower rates may be more muted than in past cycles. Many U.S. households remain locked into lower borrowing rates secured between 2019 and 2021, which limits the extent to which falling rates can stimulate new lending or spending. In that environment, lower policy rates may do more to lift asset prices like bonds than support broad economic acceleration.<\/p>\n

Taken together, the message is straightforward. Markets can continue to rise in the short term, and we remain open to that possibility. At the same time, the foundation beneath those gains is becoming narrower and far more sensitive. In our view, risks in the equity market remain materially underappreciated. Our focus is on protecting capital, being highly selective in where we take risk, and maintaining the flexibility to act when more durable opportunities emerge.<\/p>\n

Further Discussion<\/strong>
\nClients interested in a deeper look at the mechanics driving today\u2019s markets may find the following podcast conversation helpful. We discuss our systematic approach to investing, market structure, and the growing influence of passive flows and options activity:<\/p>\n