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Dust in the Wind

Song by Kansas (1977)

“I close my eyes,

only for a moment, and the moment’s gone

All my dreams

pass before my eyes with curiosity

Dust in the wind

All they are is dust in the wind”

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Introduction

“All we are is dust in the wind.” Kansas wasn’t thinking about financial markets in 1977, but the line fits 2026 about as well as anything on a Bloomberg terminal. This year we watched fortunes that felt permanent blow away in a matter of days: MicroStrategy, a small-cap crypto sub-sector, and twenty years of Chinese real estate gains. The theme of the song, and of this letter, is humility: almost nothing in markets lasts as long as the people riding it believe it will.

In our Q1 Letter, “All Along the Watchtower,” we walked through the long history of military conflict and the stock market just as the Iran war began. Here is what we wrote:

“Markets are amoral. Wars tend to produce short-term disruptions that, historically, create buying opportunities. Right now, I rank the Iran war as #3 on the 2026 risk scale, behind the private equity / credit bear market at #2 and the ‘known unknown’ of the AI buildout at #1. We expect volatility to remain elevated through 2026 due to the midterm elections and the new Fed chair appointment.” (Q1 2026 Letter)

Once again, stocks delivered after the bombs dropped, but I never would have guessed the pace of the rally. How about the fastest V-shaped recovery in history? The S&P 500 sold off -10% at the start of the Iran conflict and made back every point just 11 days later. Dust in the wind.

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Disclosure

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