The Wednesday Weekly
Financial Market Insight May 20th, 2026
Weekly Market Insight
Welcome to our weekly market update. This newsletter is designed to provide you with current market data, investment insights, and educational information about market trends and strategies. The content herein represents our observations and analysis of market conditions and is intended for informational and educational purposes only. It does not constitute personalized investment advice or a recommendation for any specific security or strategy.
Major Market Indexes
Closing Price as of 05/19/2026
The Strong Tower Difference
Ask Yourself…
What do you own?
Why do you own what you own?
Do you know what you’re truly paying for your investment management and advice?
If you can’t answer these three questions, watch this video
Items of Interest
What is the Sharpe Ratio?
The Sharpe Ratio is a statistical measure used to evaluate an investment’s historical return relative to its volatility. It helps assess how efficiently risk has been compensated over a given time period.
In simple terms:
The Sharpe Ratio answers this question:
“How much additional return did an investor receive for each unit of risk taken?”
A higher Sharpe Ratio generally indicates better risk-adjusted performance.
Important Considerations:
The Sharpe Ratio assumes volatility is an appropriate measure of risk.
It works best when returns are relatively normally distributed.
Comparing Sharpe Ratios is generally most useful among similar investment strategies or asset classes.
A higher return alone does not necessarily imply better performance if significantly more risk was taken to achieve it.
Modern Portfolio Theory and Stock Market Efficiency
I have always asked myself a few questions:
Is a computer-generated asset allocation model able to evaluate a client’s risk tolerance, when the volatility spikes? Or do they need to have an investment process that can move them to cash? What good is a pie chart when the volatility spikes beyond a +2 or even +3 standard deviation?
What exactly is an efficient market?
Most financial planning software is built around principles associated with Modern Portfolio Theory (MPT) because the framework provides a structured and widely accepted approach to balancing risk and return within diversified investment portfolios. Developed by Harry Markowitz, MPT focuses on the idea that investors can potentially improve portfolio outcomes by combining assets with different risk and return characteristics rather than evaluating investments individually.
I have been a critic of Efficient Markets and Modern Portfolio Theory for almost three decades now. The investment management processes at Strong Tower have been built upon Relative Strength and Momentum strategies. Yes, they underperform at times, when sector rotation occurs and adjustments are made to the portfolios. However, we attempt to keep the strongest and best performing sector and individual investments in our clients account at all times.
Common Criticisms of MPT-Based Planning:
Critics argue that MPT and related planning software can have limitations, including:
Reliance on historical data and assumptions.
Difficulty modeling extreme market events.
Assumptions regarding investor behavior and rationality.
Sensitivity to projected return assumptions.
Limited ability to predict future market conditions.
Because of these limitations, financial plans should generally be viewed as dynamic planning tools rather than precise forecasts.
Current Strong Tower Model Allocation
Clients Only — Allocation as of 05/19/2026
Bottom Line:
57.00% of our model is currently in the top 4 Industry Groups.
92.00% of our model is currently in the top 8 Industry Groups.
About Us
At Strong Tower Wealth Management, we offer comprehensive wealth management services using a goal-focused and holistic approach that considers each client’s overall financial situation, including their family, circumstances, and objectives. Our services include investment management, insurance planning, and estate planning coordination, provided with an emphasis on clarity and transparency.
Not a client yet? We invite you to schedule an introductory assessment with Brett to discuss your financial goals and learn more about how we can support you.
Brett Lewis
Founder / Managing Director
Strong Tower Wealth Management
www.strongtowerwealthmanagement.com