Quarterly Client Update Q3 2026
Lately, we have both been reminded just how quickly time moves. Eric's oldest is driving and beginning to look at colleges. Mike's oldest will start high school next year. Many of you know the feeling: one day they are little, and seemingly overnight you find yourself wondering where the years went.
There is actually a theory for why this happens. Sometimes called the “proportional theory” of time, the idea is simple: as we age, each year represents a smaller percentage of the life we've already lived. A year to a 10-year-old is 10% of everything they have experienced. To a 50-year-old, it's just 2%. Time isn't actually moving any faster—it just feels that way.
In the financial world, however, things really are moving faster.
Consider just some of what investors have absorbed over the past year: the largest initial public offering in history,¹ the largest equity raise by a public company,² the largest private funding round,³ and the first exchange-traded fund (ETF) to surpass $1 trillion in assets.⁴ Any one of these stories might once have dominated financial headlines for weeks. Today, they receive our attention for a few days before the next consequential development takes their place.
The investment industry is keeping pace. Over the twelve months ending in August, 1,508 new ETFs were launched in the United States. That’s 126 per month, or nearly 29 every week.⁵ Each arrives with an investment thesis, a strategy, and presumably a reason why it deserves a place in someone's portfolio. Of course, not every new idea proves quite so enduring.⁶
Even private investments, historically available primarily to institutions and wealthy investors, may increasingly find their way into everyday retirement accounts. We aren't particularly enthusiastic about that development and share some of the skepticism expressed recently in The Wall Street Journal.⁷
None of this means innovation is bad. Far from it. Financial innovation has made investing less expensive, more diversified, and more accessible. In fact, years ago our client portfolios were invested overwhelmingly in mutual funds; today, we primarily use ETF versions of many of those same investment strategies. The vehicle evolved because a better option became available. The underlying investment philosophy did not.
But more choices also create more decisions. More information creates more to process. And a world moving at an increasingly rapid pace creates an understandable temptation to believe our portfolios need to move just as quickly.
For long-term investors, the opposite may be true.
The faster the world changes, the less confidence we should have in our ability (or anyone else's) to predict exactly where that change will lead.
Artificial intelligence may profoundly reshape our economy. Today's largest technology companies may continue to dominate, or some of the greatest businesses of the next decade may barely exist today. Fortunately, successful investing does not require us to know those answers in advance.
By broadly owning markets rather than continually trying to predict their next winners and losers, we participate in the value created by thousands of businesses competing, innovating, and adapting around the world.
More to react to doesn't mean more reasons to react.
Which brings us to the third quarter.
After all the headlines, innovation, predictions, and new investment products, the U.S. stock market gained 1.41%. For perspective, its average quarterly return since 2000 has been approximately 2.4%.8
In other words, amid an extraordinary amount of activity, investors experienced a rather ordinary quarter.
There has been very little ordinary, however, about the market's recent run. U.S. stocks gained 25.96% in 2023, 23.81% in 2024, and 17.15% in 2025. Through the first nine months of 2026, the Russell 3000 Index has added another 12.42%.9
We don't know how long that remarkable run will continue, and we don't expect markets to move higher without interruption. Our responsibility is to understand what is changing without feeling compelled to react to every change - to remain broadly diversified, disciplined, and focused on the long-term plan we have built together.
The world may be changing faster than ever. That doesn't mean your portfolio needs to.
¹ SpaceX, the largest-ever initial public offering.
² Google, the largest-ever equity raise by a public company.
³ OpenAI, the largest-ever private funding round.
⁴ Vanguard, the first ETF to surpass $1 trillion in assets.
¹-⁴ The Economist, “The era of speedball capitalism has dawned,” September 30, 2026.
⁵ ETF.com/FactSet, U.S. ETF launches, September 1, 2025–August 31, 2026.
⁶ Of the 518 single-stock ETFs included in the study, 13% had closed by August 2026. Among those that closed, the median lifespan was 206 days and the median return was -25%. ETF.com/FactSet.
⁷ Jason Zweig, “Private Equity Has a Problem. Uncle Sam Says Your Wallet Can Fix It,” The Wall Street Journal. Former SEC investment-management official Robert Plaze told Zweig: “These new rules aren’t about giving retail investors more access to private funds. They’re about giving private-fund sponsors more access to retail investors.”
8 Dimensional Fund Advisors Quarterly Market Review Q3 2026
9 Russell 3000
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