A disciplined weekly review of the forces shaping risk and return.

Key Points

• U.S. equities moved higher over the week, with growth stocks leading the advance.
• Inflation remains the central constraint on monetary policy, keeping the Fed cautious.
• Recent retail sales data suggests continued consumer resilience despite geopolitical uncertainty.
• Roblox announced changes aimed at long-term platform quality and creator economics.

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Markets

• The market rose this past week with the S&P 500 and the Nasdaq 100 rising 1.8% and 3.8% respectively.
• Crude saw weakness with a ~9% downturn after a historic rise of ~64% in the last year, possibly signaling an expected decline in oil prices.

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Macro

Federal Funds Rate

The federal funds target rate decision came in at 3.75%, no change:

This signals the Fed’s approach to inflation. In my view, had inflation not been an issue, I believe the Fed would have lowered rates. We are not out of the woods yet concerning inflation.

Retail Sales Jump

A couple weeks ago retail sales numbers came in.

From census.gov:

Advance estimates of U.S. retail and food services sales for March 2026, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $752.1 billion, up 1.7 percent (±0.4 percent) from the previous month, and up 4.0 percent (±0.5 percent) from March 2025. Total sales
for the January 2026 through March 2026 period were up 3.7 percent (±0.4 percent) from the same period a year ago. The January 2026 to February 2026 percent change was revised from up 0.6 percent (±0.4 percent) to up 0.7 percent (±0.2 percent).

Retail trade sales were up 1.9 percent (±0.5 percent) from February 2026, and up 4.2 percent (±0.5percent) from last year. Nonstore retailers were up 10.1 percent (±1.8 percent) from last year, while foodservices and drinking places were up 2.4 percent (±1.9 percent) from March 2025.

So What?

The consumer seems to be unfazed by the geopolitical tensions involving Iran.

Remember: pessimists often sound smart, but long-term investors are often rewarded for discipline.

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Equities

Roblox (RBLX) Rolls Out Age Check and Increases Developer Payouts

Starting on June 8, creator earnings for in-game spend generated by age checked 18 and up users in the U.S. will increase . . . up to 37.8% from 26.6%. I want to highlight what made this possible is age check.

David Baszucki, CEO

Then from Naveen, the CFO:

Now even though those investments are incremental to our prior margin expectations for this year, in future periods, we plan on them being funded by the capture of additional operating leverage. And even more importantly, we are highly enthusiastic about what they can unlock in terms of long-term growth, which, of course, continues to be our North Star.

Naveen Chopra, CFO

Source: Roblox earnings transcript, Koyfin

Two things are interesting here:

1. Leadership is willing to endure short-term pain for potentially a long-term growth strategy.
2. Stating a North Star is powerful. It lets the market know just what exactly is driving decisions.

While this is all great, they have incredible headwinds ahead of them concerning online safety, and attracting developers to make high-quality content on their platform.

(Mentioned for illustrative purposes only; not a recommendation.)

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Education

What Creates Investment Returns Over Time?

Investment returns come from three main things:

1. Income
2. Fundamental Growth
3. Changes in Valuation

The main thing that many investors get wrong is confusing speculative changes in expectations with fundamental growth: confusing short-term movements with long-term implications.

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Wealth

Planning for a Business Sale Before You’re Ready to Sell

Too often a business owner will get the idea of selling their business by simply initiating a conversation with a broker. The reality is, selling a business begins way before that conversation ever happens.

One of the best things to do when considering selling is talking to a legitimate strategist before going down that road. Little changes over the course of a dedicated implementation period can have extraordinary effects in the outcome of the sale.

Here’s why:

Selling a business involves the potential buyer analyzing the finances and probable outcomes, so the natural incentive is to show healthy positive change in the finances under the hood. This shows potential.

Then there’s the broken window theory.

If someone is looking to buy a business and sees a broken window, they’ll start to notice things that are wrong. Conversely, if they see a buttoned up tidy business, they’ll start seeing things they like.

The trick is to pay attention to detail and look for “broken windows” early, to make sure the business isn’t just solid under the hood, but looks and feels like a good investment.

This is where design and atmosphere play a big role. You may have heard of “user experience” but what about “buyer experience”?

Unexpected Outcome:

What started as a plan to sell ends as a new way of operating with less hassle, more pride, happier stakeholders, customers, and employees.

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Quote of the Week

Luck plays a role in success, but the harder you work and the more you prepare, the luckier you get

Jim Simons

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Michael’s Corner

Circle of Competence

It’s a double-edged sword.

This quote explains the ugly half:

“I want to think about things where I have an advantage over other people. I don’t want to play a game where people have an advantage over me. I don’t play in a game where other people are wise and I am stupid. I look for a game where I am wise and they are stupid. And believe me it works better. God bless our stupid competitors. They make us rich.“

Charlie Munger

But when you flip it, it becomes a great warning that boils down to “Don’t play games without an upper hand” because you’ll inevitably run into people like Mr. Munger. This is true for business and life. Circle of competence is everywhere.

Here’s the positive half from Mr. Munger:

You have to figure out what your own aptitudes are. If you play games where other people have the aptitudes and you don’t, you’re going to lose. And that’s as close to certain as any prediction that you can make. You have to figure out where you’ve got an edge. And you’ve got to play within your own circle of competence.

If you want to be the best tennis player in the world, you may start out trying and soon find out that it’s hopeless—that other people blow right by you. However, if you want to become the best plumbing contractor in Bemidji, that is probably doable by two-thirds of you. It takes a will. It takes the intelligence. But after a while, you’d gradually know all about the plumbing business in Bemidji and master the art. That is an attainable objective, given enough discipline. And people who could never win a chess tournament or stand in center court in a respectable tennis tournament can rise quite high in life by slowly developing a circle of competence—which results partly from what they were born with and partly from what they slowly develop through work.

There is immense value in knowing where the edge of our circle of competence is, and how to slowly expand it.

The great news is it is very possible to expand that circle of competence over time through discipline and work.

I think this is incredibly exciting.

Have a great weekend.

— Michael

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PS

If this week’s note prompted a question about your own situation, reply anytime. I read every message personally and will do my best to point you in the right direction.

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Disclosures

This newsletter is provided for informational and educational purposes only and does not constitute investment advice, an offer, or a solicitation to buy or sell any security. Walsh Financial is a Registered Investment Adviser.

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