Newsletter and Quarterly Update June 2026

Greetings from the Northwest!
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I hope everyone is enjoying a wonderful start to summer. Here in the Portland area, the season kicked off early in May, though we’ve had a few surprise visits from early spring right up until this week. Planning outdoor activities (and the right wardrobe) has kept us on our toes!

Summer is usually when minds drift from the financial markets toward vacations, family time, and the simple joys of the season. The stock market often takes a similar break until after Labor Day, when Wall Street’s “serious professionals” return from the Hamptons and elsewhere.

This year feels different. Despite elevated risks and valuations that remain a core concern (more on that from Patrick shortly), investors have stayed resilient. The underlying economy continues to show strength, although the “green” signals are a bit dimmer than we’d like. People seem determined to keep buying stocks, and bright red warning lights have been notably absent so far.

Cairn Investment Group has once again been named one of the Portland and Vancouver area’s “100 Fastest Growing Private Companies” by the Portland Business Journal. This kind of sustained growth happens only with an outstanding team, and I’m incredibly proud of everyone at Cairn. Each person plays a vital role in delivering the service and results you deserve.

Most of you already know Stefanie, the friendly voice who answers most of our calls and smoothly connects you with me, Mark, or Patrick. Behind the scenes, though, a tremendous amount of work happens to keep everything running efficiently and fully compliant with state and SEC regulations.
Driving much of that excellence is our Director of Operations and Compliance (and Shareholder), Cherie King. We want you to know more about her background and the critical role she plays at Cairn.

​Cherie grew up in the San Francisco Bay Area and studied business at Pacific Union College in the rolling hills above Napa Valley. While in school, she trained on those same hills and went on to complete the LA Marathon in 2001. She launched her financial services career at Merrill Lynch in Southern California, where she earned her Series 7, Series 66, and Life & Health licenses while serving clients across the Inland Empire for nearly five years.

A desire to be closer to family brought her to the Pacific Northwest. She joined a local investment advisory firm in its early days and spent more than a decade helping it grow to nearly $1 billion in assets under management. Cherie played a pivotal role in building its operations and compliance infrastructure from the ground up and worked closely with two colleagues who would later become her partners at Cairn. Sixteen years after they first met, the three reunited here, bringing the same collaborative spirit that continues to define our firm today.

Cherie holds the IACCP® designation for compliance professionals and is in the final stages of earning her CFP® certification.

Outside the office, Cherie stays active with Lagree Fitness, aerial yoga, biking, and sports. She has a rich background in performing hula and Tahitian dance at festivals and cultural events, which have deepened her love of community connection. She’s also deeply involved in charitable causes, including the SW Washington chapter of the Boys & Girls Club and the Northwest Association of Blind Athletes. At home, she enjoys cooking with family, cheering on her two college-aged children (who share her love of music), and spending time with the family Goldendoodle.
We’re truly fortunate to have Cherie’s talent, versatility, and positive energy on the team. Next time she picks up the phone, be sure to say hi.

One final note: Our rebrand is nearly complete! We’re putting the final touches on the new website as I write this. It’s too important to rush, so we’ll announce it as soon as everything is perfect. Stay tuned… you’re going to love it!
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Now, on to Patrick:

Patrick's Perspective

​Equity markets rebounded sharply during the second quarter as fears surrounding the Iranian conflict eased and enthusiasm surrounding artificial intelligence (AI) stocks pushed markets higher. Large-cap U.S. stocks, measured by the S&P 500, gained over 15% during the quarter, while international stocks were not far behind with returns exceeding 10%. Bond returns were mostly flat as investors continued weighing the prospects of persistent inflation and the possibility of interest rates remaining higher for longer.

We have talked at length about valuations and expected returns, given how expensive U.S. stocks have become, relative to historical standards. This quarter, I want to focus more specifically on the technology sector, since much of the current market enthusiasm and news flow is centered around AI and semiconductor companies.
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First, I believe the technology sector, and specifically the semiconductor industry, is experiencing a significant valuation bubble. Over the years, I have read many definitions of what constitutes a bubble, but the best explanation I have found comes from Dr. John Hussman, which I shared at the end of last year:

“Bubbles are generated when investors drive valuations higher without simultaneously adjusting their expectations for future returns lower.”

In essence, investors extrapolate recent success indefinitely into the future while underestimating the possibility that conditions can change. Looking at current market data, this appears to be what is happening with many large-cap technology and semiconductor companies.

The following two charts show the price-to-sales ratios for the S&P 500 semiconductor and information technology sectors. As you can see, investors are currently paying historically high prices for these businesses, in many cases exceeding the valuations reached during the late 1990s technology bubble.

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​​In essence, investors extrapolate recent success indefinitely into the future while underestimating the possibility that conditions can change. Looking at current market data, this appears to be what is happening with many large-cap technology and semiconductor companies.”
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—Patrick Mason

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The challenge is not whether these are good companies. Many of today’s leading technology companies are among the most profitable and innovative businesses in the world. AI has the potential to create meaningful productivity improvements and reshape industries. The technology is real.

The challenge is the price investors are paying.

When valuations become elevated, future returns become increasingly dependent on everything going right. Companies must continue growing at exceptional rates, profit margins must remain strong, and investors must remain willing to pay premium valuations. Even a slowdown in growth or a change in sentiment can have a significant impact when expectations are already extremely high.
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Another way to view this environment is through market concentration. The chart below shows the percentage of the S&P 500 represented by the largest technology companies over time. At the peak of the dot-com bubble, the largest technology companies represented approximately 33% of the S&P 500’s market capitalization. Today, that concentration has moved beyond those levels, reaching nearly 38%.

Again, this does not mean today’s market will repeat the events of 2000. There are important differences. The largest technology companies today generally have real earnings, strong balance sheets, and established business models. They are not the speculative companies of the late 1990s that were often valued on little more than future promises.

However, concentration at these levels does highlight an important risk: the broader market has become increasingly dependent on a small number of companies continuing to deliver exceptional results.

This brings us back to the late 1990s. The comparison is not that today’s companies are the same as those from the dot-com era. The comparison is investor psychology.

On September 30, 2000, the S&P 500 was trading near an all-time high. At the time, the economic data did not suggest an obvious crisis ahead. Revenue growth was positive, earnings expectations were strong, GDP was expanding, and the services sector was growing. The market appeared to be supported by healthy fundamentals.
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Yet, only one year later, conditions had changed dramatically.

The lesson is not that today’s market is destined to experience the same outcome. Markets can remain expensive, and no one can consistently forecast when sentiment will change. The lesson is that market conditions can shift quickly when expectations and valuations become stretched.

Today, the S&P 500 remains heavily influenced by a small number of technology companies. Investors are assuming continued above-average growth, strong profitability, and sustained enthusiasm for AI-related businesses. Those outcomes may occur, but history has shown that expectations themselves can become the greatest risk.
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Our approach remains unchanged. We are not attempting to predict the next market decline. Instead, we continue to focus on owning high-quality investments at reasonable valuations, maintaining diversification, and preserving flexibility so we can take advantage of opportunities when they arise. When opportunities are limited, as they are now, we will hold extra cash in interest-paying money markets and T-Bills. Valuation discipline and patience remain at the center of our investment process. Thank you for your continued trust and support and please reach out to me if you want to discuss any topic in greater detail. —Patrick Mason

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Thanks, Patrick, for an excellent summary of market conditions.

I hope you all have a wonderful summer, and if you need anything, we’ll be here no matter how sunny it gets.
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Happy Trails,
Tim Mosier, President,
Cairn Investment Group, Inc.

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…we continue to focus on owning high-quality investments at reasonable valuations, maintaining diversification, and preserving flexibility so we can take advantage of opportunities when they arise. When opportunities are limited, as they are now, we will hold extra cash… Valuation discipline and patience remain at the center of our investment process.”
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—Patrick Mason

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