Feb, 2026 Investing Update: 50% Annualized Return
Everything did what its paid to do
I’m starting a new monthly feature for 2026 focusing on investing, estimating where we are in the business cycle and how this impacts your investments. Updates and portfolio tweaks go to Subscribers on the first Monday of each month.
For the month of January returns were 3.5% in the aggressive portolio, and 4.0% in the market-neutral portfolio. This was 5 times higher than the S&P500, and it translates to between 50% and 60% annualized returns.
Macro Thesis as of February, 2026
My macro thesis for 2026 remains strong GDP growth — and therefore strong stockmarket performance — driven by consumer spending and a tsunami of money pouring in from:
Tariff re-shoring,
Ongoing federal deficits,
AI infrastructure build-out,
The Fed now turning solidly inflationary with even faster rate cuts
Warsh’s appointment as new Fed chair slammed gold and silver because markets see him as hard-money compared to the other candidates. Which lowers expected inflation.
The kicker is CBOE interest rate expectations actually fell on his appointment. Suggesting he’ll actually run even easier rates, but probably draining liquidity (QT). So it’s still a tossup what that means for gold and silver.
As for potential storm-clouds, recession odds are still around 20% for the year, and things could change fast if we see a collapse in investment and job growth or some external disaster. So it’s prudent to carry hedges, or even to run shorts if you’re risk-averse.
Core Strategy
I used to teach an MBA course on investment analysis using Austrian Economic Theory to assess where we are in the business cycle, which is the single most important factor in how investments perform.
In short, if we’re in the boom part of the cycle you buy growth assets — right now AI stocks are a peak growth asset.
And if we’re in a bust you either short the bubble if you’ve got balls of steel or — more prudent — put some into hedges like gold and so-called “defensive” stocks like utilities or canned soup.
With all that, here’s the picks:
