5 Things We Learned This Week - 3/29/2026

Deer don’t freeze in headlights because they’re careless. They freeze because they lock onto the light—and can’t adjust fast enough when danger shows up.

Investors do the same thing. We anchor to a story early. A thesis. A narrative that feels right. And even when new information comes in, we’re slow to adapt. Behavioral finance has a name for this: anchoring and adjustment conservatism.

Many investors today are behaving like deer in the headlights. Professional and retail investors have sold a little bit, but their actions do not reflect the full scale of what's likely ahead. We saw something similar in early 2020. As Covid spread and China—the world’s second-largest economy—effectively shut down, markets initially drifted along as if nothing had changed. For several strange weeks, investors remained anchored to prior growth assumptions even as COVID was clearly spreading. Investors underestimated how quickly supply disruptions would ripple globally. By the time reality set in, the stock market fell 34% in just 23 trading days.

Today, the International Energy Agency (IEA) is warning the Iran War could be the largest oil supply shock in history—exceeding the disruptions of the 1970s. The potential impact of a pickup in inflation on central bank policy and disruption of trade flows threatens a longer-term equity market selloff. The consensus view assumes the Iran conflict will be resolved quickly, but this is not a conventional war. It is an economic war of endurance, where prolonging uncertainty itself becomes leverage. By keeping the Strait of Hormuz shut and global trade suppressed, Iran can exert asymmetric pressure on energy markets and Western economies. Iran’s leverage increases the longer economic strains persist, which could make this war hard for President Trump to abruptly end. We hope the war does end as soon as possible, but we just don't currently see a realistic path for that to happen.

Despite the negative macro risks associated with the war, current market pricing reflects a benign path to resolution. For example, stocks are still historically expensive. The Shiller PE (CAPE) ratio is at 36.7, which is more than double the long-term average of 17.4. Does it really make sense for S&P 500 investors to pay a premium for corporate earnings when there are obvious risks to the inflation and growth outlook?

Credit markets also show signs of complacency. High-yield corporate bond spreads are 3.2%, which is below the long-term average of around 400 basis points. Goldman Sachs recently upgraded its probability of a U.S. recession to 30%, which probably means credit spreads are too low and the selloff in risk assets will continue.

It's easy to be blinded by the fog of war. Information comes fast and propaganda machines run on overdrive. Most regional wars don't cause bear markets because they are contained affairs that don't hurt global GDP much. This war pits a global superpower against a much smaller adversary, but Iran won't surrender easily. A prolonged economic disruption is Iran's primary weapon. They probably want to see the S&P 500 go down more in order to extract better terms in negotiations with the U.S. Thus, the gap between perceived and actual risk may be wider than most investors appreciate. Buckle up. We recommend staying defensive and are positioned accordingly in Silverlight managed portfolios.

When First Brands’ executives discovered how easy it was to borrow against “adjusted” receivables, they did what many people tend to do in forgiving environments: they pushed it. 

For a time, easy money covered up bad behavior. Credit was abundant. Lenders were eager. And that combination made it easy for fraud to hide in plain sight. Fake invoices.
Double-pledged collateral. Off-balance-sheet loans. All of the typical red flags were part of a multibillion-dollar Ponzi scheme.

Then the environment changed. Funding tightened and scrutiny increased. A structure that once looked innovative suddenly looked fragile. That’s when the truth came out—and federal charges followed. The indictment reads like a case study in how easy money hides bad behavior until conditions turn.

Markets rhyme with that story. Warren Buffett’s line about finding out who is swimming naked when the tide goes out is really about liquidity: when credit is cheap and plentiful, weak business models and reckless underwriting can stay afloat for years; when liquidity recedes, the fundamentally weakest firms are particularly vulnerable.

Michael Howell argues the global liquidity cycle already peaked around late-2025 and is now fading as central bank support slows. This comes at a time when working capital and capex budgets are rising in tandem with higher energy bills. The combined effect of these input cost pressures will be to soak up a lot of cash that was previously supporting asset prices. The Iran war accelerates this process by pushing oil and gas prices higher, forcing central banks to stay tighter for longer and diverting incremental liquidity toward defense and energy rather than financial markets. In a declining liquidity environment, there is scope for the S&P 500 to trade materially lower. Hence, we are defensively positioned with extra cash and mostly non-cyclical investments.

As the liquidity tide continues to go out, areas we think are likely to struggle include private credit, meme stocks, and mega cap stocks. Areas we think are likely to hold up relatively well include long/short alternative strategies, quality stocks, and stocks in defensive sectors like Energy, Utilities, Health Care and Consumer Staples.

In the 1970s, while equities struggled under stagflation, Midwestern farmers quietly thrived. Corn prices surged amid supply shocks and rising input costs, turning farmland into one of the decade’s best-performing assets. It was a reminder: even in hostile macro environments, scarcity creates opportunity.

Commodities sit at the intersection of supply constraints and inelastic demand. When inflation rises and growth slows, traditional risk assets compress—but real assets tied to physical shortages often reprice higher. Agriculture is particularly sensitive, as weather, geopolitics, and input costs can rapidly tighten supply.

Today’s setup echoes that dynamic. Global grain inventories remain fragile, while geopolitical tensions threaten energy markets. Higher oil prices translate directly into elevated fertilizer and transportation costs, constraining supply while demand remains steady.

To capitalize on expected inflation in the agriculture sector, we’ve recently added John Deere, CF Industries, and the CORN ETF to Silverlight managed portfolios. Deere benefits as higher crop prices boost farmer income and equipment demand; CF Industries gains from rising nitrogen fertilizer prices tied to natural gas; and CORN provides direct exposure to tightening corn markets driven by energy linked supply shocks. 

There's always a bull market somewhere, and we think the agriculture sector is poised to prosper. 

ARK Innovation ETF (ARKK), run by Cathie Wood, is one of the market’s most high-profile actively managed ETFs. The fund targets “disruptive innovation” via a concentrated portfolio of long-duration, often pre-profit growth stocks at extreme valuations. By design, this makes ARKK highly sensitive to rising discount rates and deteriorating liquidity. Across the last five S&P 500 corrections greater than 10%, ARKK has fallen between 1.07x and 3.15x the S&P drawdown.

Tradr 1x Short Innovation Daily ETF (SARK) offers a straightforward, unlevered way to express a bearish view on ARKK by seeking the inverse of its daily performance. In a scenario where higher energy costs tied to the Iran War push inflation and force further rate hikes, long-duration growth names should again bear the brunt of multiple compression. Based on our review of ARKK’s holdings, we estimate its overall portfolio trades at a price-to-sales multiple above 19x, a P/E above 200x, and negative blended ROE of roughly -4.8%. This type of fundamental profile leaves little margin of safety if the S&P 500 declines by 10% or more. In that kind of environment, SARK offers a liquid way to benefit if ARKK once again underperforms during a fundamental, rate-driven correction. Silverlight is long SARK in managed portfolios.

Dashrath Manjhi was a poor laborer in rural India. In 1959, his wife died because the nearest hospital was 34 miles away—blocked by a mountain. Most people would have called it fate. Manjhi reframed it as a time problem.

He didn’t have money, influence, or help. But he had decades.

With a hammer and chisel, he started carving a path through the mountain. Neighbors laughed. For the first few years, there was no visible progress—just dust and noise. But Manjhi wasn’t measuring days or months. He was measuring direction.

Twenty-two years later, the mountain was gone. The path reduced the distance to the hospital from 34 miles to 9.

What changed wasn’t his resources. It was his time horizon.

Investors often think in quarters when the real game is played in decades. Like Manjhi, the edge comes from aligning your actions with a horizon long enough that compounding can do the heavy lifting.

Extending time horizon is not about learning to love waiting; it is about choosing games where time is an ally instead of an enemy. Three places where that shift pays off:

• Equity compounding. A business that compounds earnings at a modest rate for 15–20 years will usually beat a thrilling story stock that needs to “work” in six months to keep you happy. Over decades, valuation noise tends to matter less than return on capital and reinvestment runway.
• Tax efficiency. Stretching your horizon lowers turnover, which means fewer realized gains and a smaller annual “tax drag” on the portfolio. Over 10–20 years, that gap in after-tax compounding can generate meaningfully different outcomes.
• Career and human capital. For high achievers, the biggest asset is often future earning power and relationships, not the current balance sheet. Playing a 20-year game with reputation and trust tends to open opportunities no quarterly bonus can match.

A practical tip: before major financial decisions, explicitly ask, “How will I feel about this choice in 10 years?” Then write down an answer. That small act forces the mind out of the news cycle and into the compounding cycle, which is where the biggest rewards tend to accrue.