We hope you had an enjoyable 4th of July! We are so grateful to be able to live, work, and raise families in such an amazing country.
The First Half of 2026: A Case Study in Staying Invested
Imagine that on January 1st, someone handed you a newspaper from July and told you everything that was coming this year. A war involving Iran, the effective closure of the Strait of Hormuz, oil spiking, inflation reaccelerating, a new Fed chair taking over a divided committee, and rate cut expectations replaced by markets pricing in rate hikes. Knowing all of that in advance, would you have predicted the S&P 500 would finish the first half up more than 9%*?
This is the lesson we keep trying to share with clients. Markets are predictably unpredictable and often what you feel like doing is the opposite of what you should be doing. The investor who moved to cash in March locked in the drawdown and missed the recovery and now faces the psychologically brutal task of buying back in at higher prices. This is why we so firmly believe that time in the market is so much more powerful than trying to time the market.
*Morningstar. Data as of 6/30/2026.
AI and Jobs: What Meta Just Taught Us About Overestimating the Short Term
One of the most interesting news stories we saw from this last week was the news from an internal town hall in Menlo Park where Mark Zuckerberg told Meta employees that the pace of the company’s AI agent development had not accelerated the way executives expected, acknowledging that the company misjudged the timing of its sweeping AI reorganization. Why do we think this matters?
Earlier this year, Meta laid off roughly 8,000 employees, about 10% of its workforce, and reassigned another 7,000 to AI focused teams, all in service of a strategy backed by approximately $145 billion in AI infrastructure spending this year alone. If any company on the planet had the resources, the talent, and the motivation to prove that AI could rapidly replace human workers, it was Meta. And the sobering reality is that AI is proving far harder and far slower than previously believed.
We think there is a timeless lesson in this, often attributed to the futurist Roy Amara: we tend to overestimate the impact of a new technology in the short run and underestimate it in the long run. The internet in 1999 was supposedly going to make every brick and mortar business obsolete within a few years, and instead the dot com bubble burst while the truly transformative changes, from e-commerce to cloud computing to the smartphone economy, played out over the following two decades. The ATM was supposed to eliminate the bank teller, yet banks employed more tellers a decade later because cheaper branches meant more branches and the job simply evolved. Time and again, new technology has reshaped work gradually and enhanced what people do rather than eliminating the people doing it.
We hope that people who were worried about AI taking over all of our jobs will find some solace in this writing. Our view continues to be that AI is following a similar path as other technological advancements. The engineer using AI to write code, the analyst using it to research, and the advisor using it to prepare for client meetings are all becoming more productive, and productivity gains have historically been the raw material of economic growth and rising living standards rather than mass unemployment. Meta’s experience argues for a healthy dose of skepticism toward both extremes of the AI narrative, whether it is the promise that labor costs are about to go to zero or the fear that the labor market is about to collapse.
Jobs Report: Bucking the Recent Trend
Speaking of jobs, the June employment report, released last Thursday ahead of the holiday, broke a three-month streak of upside surprises. Nonfarm payrolls rose just 57,000, well below the consensus estimate of 115,000 and down from a downwardly revised 129,000 in May. Adding to the softness, April and May were revised lower by a combined 74,000 jobs. Professional and business services led with 36,000 new jobs, followed by social assistance and health care, while leisure and hospitality shed 61,000 positions on weaker than usual seasonal hiring
Additionally, the unemployment rate fell to 4.2%, which may sound good, but the decline was driven by a drop in the labor force participation rate to 61.5%, its lowest level since March 2021, with household employment falling by 507,000. We call this the denominator effect, where the driver of a number changing isn’t the numerator, but the denominator increasing or decreasing. Overall, we don’t see a cause for concern, and that the data continues to support a higher-for-longer interest rate stance from the Fed.
Hope you have a great week, and remember, volatility is the price of admission.
Best,
Park City Investment Solutions Team
