Written By
Rodrigo Lopez, Partner | Director of Due Diligence
In Part 1, we drew the parallel between Tiger Woods’ improbable 2019 Masters victory and the setup facing quality, earnings-driven companies today — written off, underestimated, and, we believe, quietly more compelling than the market has been willing to admit. Now, the course conditions.
When Every Club Stops Working
Here is what has made 2026 particularly disorienting: it hasn’t just been one strategy that failed. It has been all of them, one after another, like a round where you chunk the driver, blade the wedge, and then three-putt for good measure.
The Magnificent Seven — the backbone of U.S. equity returns for the better part of three years — came into 2026 carrying the weight of enormous expectations and delivered a stumble instead. The AI buildout narrative that carried markets through 2023, 2024, and much of 2025 ran into a wall of valuation reality, geopolitical noise, and the uncomfortable question that eventually follows every technology wave: yes, but when does it become profitable?
So investors pivoted to momentum strategies — and momentum stopped working. They rotated into defensives, and the defensives didn’t defend. Private credit, which had earned a reputation as the sophisticated all-weather alternative, found itself contending with tighter spreads, rising credit stress, and the dawning recognition that not all lenders navigated the last rate cycle with equal skill. Even the traditionally stalwart corners of the portfolio — utilities, low-volatility, the perennial safe harbors — found that safety is a relative concept when the whole map is being redrawn simultaneously.
Then came the geopolitical curveballs. Conflict in the Middle East rattled energy markets. Trade policy swung like a pendulum, creating whiplash for any strategy built on a stable international backdrop. And sitting above it all was the specter of inflation that refused to fully cooperate — not catastrophic, just stubborn enough to keep everyone on edge.
This is the part of the round where most players lose their composure. The birdies have dried up, the safe shots aren’t saving par, and the leaderboard looks nothing like what you expected at the turn. Every club in the bag has let you down at least once. It’s disorienting. It is also, historically, where the most interesting opportunities quietly take shape.
Trusting the Club
Factor leadership doesn’t change all at once. It shifts quietly — like a Sunday leaderboard where you don’t notice the name creeping up until it’s already three shots clear. In an environment where nothing has worked cleanly, the market eventually stops asking what’s exciting and starts asking what’s real. And we believe that question has a reliable answer.
Companies with durable earnings, strong free cash flow, and balance sheets that don’t require a perfect macro backdrop to stay solvent start to look very different when the alternatives may be disappointing. Not because they suddenly got better — they were always good — but because the market finally remembers why that matters. When chaos runs the leaderboard, boring becomes beautiful.
Tiger didn’t win in 2019 because the world suddenly decided he was capable again. He won because the work had been done, the conditions aligned, and the people who had stayed patient — who hadn’t fully abandoned the idea — were rewarded.
Quality companies with real earnings may be setting up for a similar round. The relative performance record may have been humbling. The headlines have not helped. But we believe the fundamentals are intact, the valuations are compelling, and a market that has tried everything else is beginning to run out of alternatives.
The caddy has been right before. It might be time to trust the club.
Disclaimer: This material is provided for informational purposes only and should not be construed as investment, legal, or tax advice. Sendero Wealth Management, LLC is an SEC-registered adviser; registration does not imply skill. Views are as of the date noted, may change without notice, and forward-looking statements are not guarantees of future results. References to market events, asset classes, or investment strategies are general in nature and do not constitute a recommendation or solicitation. Any discussion of private credit, interval funds, or alternative investments is for educational purposes only. Such investments may involve heightened risks, including illiquidity, valuation uncertainty, leverage, and limited transparency. Data from third-party sources is believed to be reliable but is not guaranteed; indices are unmanaged and not available for direct investment. Past performance is not indicative of future results. All investments involve risk, including possible loss of principal. Consult your professional advisers regarding your specific circumstances. For additional information about Sendero, please review our Form ADV & Form CRS at www.sendero.com.
