Market Review
As you’ve heard us say many times, the common perception of the S&P 500 Index as representative of “the stock market” is misleading. Over the years, as the S&P 500 has become more and more dominated by a small group of very large and successful tech firms, this misperception has grown. When those “Magnificent 7” stocks stumble even slightly, as they did during Q4 2025 and January, 2026, the S&P 500 wobbles. Then it bears remembering that Milestone has you in a diversified portfolio, where U.S. Large Growth stocks are not the only game in town.
As opposed to U.S. Large Cap which had a sluggish start to the year with the S&P 500 returning 1.45%, Emerging Markets (8.86%) and International Developed Markets (5.22%) continued to outperform U.S. equity markets during this time period. That outperformance can be attributed in part to a weakened dollar. U.S. Small Cap stocks also had a strong start to the year with a return of 5.35%.
Fixed Income returns were only slightly positive for January with a 0.11% return, with yields moving slightly upwards as the dollar weakened during the month.
Federal Reserve News
The big news to come out of the financial world in the last month centered around the Federal Reserve, with three primary themes, not including their decision to maintain interest rates at their current levels.
First is the selection of 55-year-old Kevin Warsh as the new Federal Reserve chairman. A former member of the Fed’s board of governors (and the youngest member ever at 35) he has the experience to lead and will have to be confirmed by the Senate before current chairman Jerome Powell’s term ends in May.
This pick comes two weeks after the Department of Justice launched a probe into Jerome Powell and his testimony to Congress regarding the renovation of the Fed’s headquarters in Washington D.C. The threats of criminal indictments against Powell seemed to be aimed at using prosecutorial attacks to undermine the Fed’s independence.
The Supreme Court also heard arguments about President Trump’s attempts to fire Federal Reserve Board of Governor’s member Lisa Cook. Based on the Court’s questions during the oral arguments, they seem unlikely to allow her firing to go forward. The Court didn’t feel that the termination process was conducted fairly, nor did they seem to believe the alleged action would have been serious enough to terminate her in any case.1
The change in Fed leadership will be closely watched, as an independent Federal Reserve is a cornerstone to properly functioning global financial markets. One should expect that any hint of coercion by the administration to direct interest rates for political gain will be quickly reflected in a negative market response.
Interest Rates
The Federal Reserve held rates steady at the central bank’s first meeting of the year, with Jerome Powell saying that the U.S. economy has been expanding at a solid pace and that the job market has shown some signs of stabilization.2 Chairman Powell also implied that there won’t be any additional rate cuts in the first half of the year, based on their assessment of current economic data.
Greenland
Greenland also dominated the news in January, although the markets didn’t seem to take threats of the U.S. “getting”, “buying” or “taking” Greenland seriously. The short-lived threat of 10% tariffs on imports from those European countries who didn’t publicly support the U.S. purchasing Greenland did temporarily cause a pullback in U.S. markets.
Tariffs
President Trump defended his tariff policy in an opinion piece in the Wall Street Journal on January 30th, seemingly a written plea to the Supreme Court to not overturn the tariffs when they rule on their legitimacy later this summer.3 Although the President believes the tariffs have created “an economic miracle,” the U.S. consumer doesn’t share the same sentiment. The Consumer Confidence Index fell sharply in January beyond the lowest level of the pandemic era.4
Precious Metals
Investing in supply and demand-based commodities like gold and silver can be perilous for investors. Shortly after President Trump nominated Kevin Warsh for Chair of the Federal Reserve, silver prices crashed 31% and gold fell 11%.5 Call it a “reset” of irrational speculation, it still is painful lesson to learn for investors going all-in on precious metals. Considering precious metals to be “stores of value” (Bitcoin enthusiasts say the same thing) doesn’t really hold if asset value can erode by almost a third in a single day.
Portfolio Diversification
Returning to the theme of diversification with which we started this letter, we call your attention to a New York Times article from January 30th about “non-diversification risk” in U.S.-based equity index funds. They write that the run-up in tech stock valuations has caused more than 25% of some index funds’ total assets to be comprised of single stocks representing more than 5% positions.6 This concentration phenomenon reduces overall diversification and increases investor risk.
Milestone is committed to holding diversified portfolios which include not only those “Magnificent 7” U.S. tech stocks, but also many thousands of securities in other parts of both the U.S. and international stock and bond markets. Your portfolio is positioned to take advantage of periods when outperformance may come from an unexpected source, and diversification smooths out the investment ride.
The following table summarizes the performance of major asset classes through 01/31/2026:
Note: Return data obtained from Dimensional Fund Advisors database. Returns include dividends and reinvestments.
Regards,
The Milestone Team
Reminders
Please contact us if your financial goals or circumstances have changed or if we can address your needs. Also, please let us know as soon as possible about any change to your contact information.
SEC regulations require us to remind you to compare our reports with the statements provided by the independent custodian that holds your accounts (Fidelity). Please let us know if there are any discrepancies, or if you are not receiving separate statements (or notification of their online availability) directly from the custodian. Please remember that past performance does not predict future results.
Disclaimer: This is not to be considered investment, tax, or financial advice. Please review your personal situation with your tax and/or financial advisor. Milestone Financial Planning, LLC (Milestone) is a fee-only financial planning firm and registered investment advisor in Bedford, NH. Milestone works with clients on a long-term, ongoing basis. Our fees are based on the assets that we manage and may include an annual financial planning subscription fee. Clients receive financial planning, tax planning, retirement planning, and investment management services and have unlimited access to our advisors. We receive no commissions or referral fees. We put our client’s interests first. If you need assistance with your investments or financial planning, please reach out to one of our fee-only advisors. Advisory services are only offered to clients or prospective clients where Milestone and its representatives are properly licensed or exempt from licensure. Past performance shown is not indicative of future results, which could differ substantially.
Market Review
As you’ve heard us say many times, the common perception of the S&P 500 Index as representative of “the stock market” is misleading. Over the years, as the S&P 500 has become more and more dominated by a small group of very large and successful tech firms, this misperception has grown. When those “Magnificent 7” stocks stumble even slightly, as they did during Q4 2025 and January, 2026, the S&P 500 wobbles. Then it bears remembering that Milestone has you in a diversified portfolio, where U.S. Large Growth stocks are not the only game in town.
As opposed to U.S. Large Cap which had a sluggish start to the year with the S&P 500 returning 1.45%, Emerging Markets (8.86%) and International Developed Markets (5.22%) continued to outperform U.S. equity markets during this time period. That outperformance can be attributed in part to a weakened dollar. U.S. Small Cap stocks also had a strong start to the year with a return of 5.35%.
Fixed Income returns were only slightly positive for January with a 0.11% return, with yields moving slightly upwards as the dollar weakened during the month.
Federal Reserve News
The big news to come out of the financial world in the last month centered around the Federal Reserve, with three primary themes, not including their decision to maintain interest rates at their current levels.
First is the selection of 55-year-old Kevin Warsh as the new Federal Reserve chairman. A former member of the Fed’s board of governors (and the youngest member ever at 35) he has the experience to lead and will have to be confirmed by the Senate before current chairman Jerome Powell’s term ends in May.
This pick comes two weeks after the Department of Justice launched a probe into Jerome Powell and his testimony to Congress regarding the renovation of the Fed’s headquarters in Washington D.C. The threats of criminal indictments against Powell seemed to be aimed at using prosecutorial attacks to undermine the Fed’s independence.
The Supreme Court also heard arguments about President Trump’s attempts to fire Federal Reserve Board of Governor’s member Lisa Cook. Based on the Court’s questions during the oral arguments, they seem unlikely to allow her firing to go forward. The Court didn’t feel that the termination process was conducted fairly, nor did they seem to believe the alleged action would have been serious enough to terminate her in any case.1
The change in Fed leadership will be closely watched, as an independent Federal Reserve is a cornerstone to properly functioning global financial markets. One should expect that any hint of coercion by the administration to direct interest rates for political gain will be quickly reflected in a negative market response.
Interest Rates
The Federal Reserve held rates steady at the central bank’s first meeting of the year, with Jerome Powell saying that the U.S. economy has been expanding at a solid pace and that the job market has shown some signs of stabilization.2 Chairman Powell also implied that there won’t be any additional rate cuts in the first half of the year, based on their assessment of current economic data.
Greenland
Greenland also dominated the news in January, although the markets didn’t seem to take threats of the U.S. “getting”, “buying” or “taking” Greenland seriously. The short-lived threat of 10% tariffs on imports from those European countries who didn’t publicly support the U.S. purchasing Greenland did temporarily cause a pullback in U.S. markets.
Tariffs
President Trump defended his tariff policy in an opinion piece in the Wall Street Journal on January 30th, seemingly a written plea to the Supreme Court to not overturn the tariffs when they rule on their legitimacy later this summer.3 Although the President believes the tariffs have created “an economic miracle,” the U.S. consumer doesn’t share the same sentiment. The Consumer Confidence Index fell sharply in January beyond the lowest level of the pandemic era.4
Precious Metals
Investing in supply and demand-based commodities like gold and silver can be perilous for investors. Shortly after President Trump nominated Kevin Warsh for Chair of the Federal Reserve, silver prices crashed 31% and gold fell 11%.5 Call it a “reset” of irrational speculation, it still is painful lesson to learn for investors going all-in on precious metals. Considering precious metals to be “stores of value” (Bitcoin enthusiasts say the same thing) doesn’t really hold if asset value can erode by almost a third in a single day.
Portfolio Diversification
Returning to the theme of diversification with which we started this letter, we call your attention to a New York Times article from January 30th about “non-diversification risk” in U.S.-based equity index funds. They write that the run-up in tech stock valuations has caused more than 25% of some index funds’ total assets to be comprised of single stocks representing more than 5% positions.6 This concentration phenomenon reduces overall diversification and increases investor risk.
Milestone is committed to holding diversified portfolios which include not only those “Magnificent 7” U.S. tech stocks, but also many thousands of securities in other parts of both the U.S. and international stock and bond markets. Your portfolio is positioned to take advantage of periods when outperformance may come from an unexpected source, and diversification smooths out the investment ride.
The following table summarizes the performance of major asset classes through 01/31/2026:
Note: Return data obtained from Dimensional Fund Advisors database. Returns include dividends and reinvestments.
Regards,
The Milestone Team
1 https://www.supremecourt.gov/oral_arguments/audio/2025/25A312
2 https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20260128.pdf
3 https://www.wsj.com/opinion/donald-j-trump-my-tariffs-have-brought-america-back-2248391b?mod
4 https://www.conference-board.org/topics/consumer-confidence/
5 https://www.wsj.com/finance/commodities-futures/gold-and-silver-plunge-in-worst-day-since-1980-df812b73?mod
6 https://www.nytimes.com/2026/01/30/business/stock-market-concentration-risk.html
Reminders
Please contact us if your financial goals or circumstances have changed or if we can address your needs. Also, please let us know as soon as possible about any change to your contact information.
SEC regulations require us to remind you to compare our reports with the statements provided by the independent custodian that holds your accounts (Fidelity). Please let us know if there are any discrepancies, or if you are not receiving separate statements (or notification of their online availability) directly from the custodian. Please remember that past performance does not predict future results.
Disclaimer: This is not to be considered investment, tax, or financial advice. Please review your personal situation with your tax and/or financial advisor. Milestone Financial Planning, LLC (Milestone) is a fee-only financial planning firm and registered investment advisor in Bedford, NH. Milestone works with clients on a long-term, ongoing basis. Our fees are based on the assets that we manage and may include an annual financial planning subscription fee. Clients receive financial planning, tax planning, retirement planning, and investment management services and have unlimited access to our advisors. We receive no commissions or referral fees. We put our client’s interests first. If you need assistance with your investments or financial planning, please reach out to one of our fee-only advisors. Advisory services are only offered to clients or prospective clients where Milestone and its representatives are properly licensed or exempt from licensure. Past performance shown is not indicative of future results, which could differ substantially.
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