Dear Clients & Friends,
We are happy to share with you an update from Sage Rhino Capital LLC for Q2 2026.
Markets
Second quarter was quite strong. The S&P 500 rose 15.20% for the period, reversing meaningful losses in
the first quarter and bringing its YTD gain to 10.21% through the first half of 20261. S&P 500 Equal Weight Index advanced 11.39% for the period and 12.13% year to date1. Smaller stocks did even better: mid-caps gained 14.47% in the quarter and 17.34% year to date, while small-caps knocked it out of the park with 19.70% climb in the quarter and 23.90% year to date1.
Fixed Income held its own, with the U.S. Aggregate Bond Index up 1.16% year to date1.
International equities kept pace: Developed Markets ex-U.S. returned 13.61% for the first six months of the year, while Emerging Markets climbed 8.77% for the same period1.
Gold was a notable outlier, dropping approximately 12% during the quarter1. As previously communicated, we are cautious on gold’s near-term outlook.
Your performance net of fees is posted to your Sage Rhino client portal.
Looking Ahead
We are growing increasingly cautious about broader market valuations. Assets across the board – U.S. equities, international developed, emerging markets, private markets, and real estate – look expensive. Pockets of the private market show the kind of exuberance and valuation excess we associate with prior bubbles, and history suggests similar outcomes are likely. More on that in the section below.
There is little obvious value anywhere. After the recent rally in small-cap, mid-cap, and international equities, the thoughtful investor faces a genuine challenge: where to deploy new capital? Frankly, we are not particularly excited about most opportunities at current prices.
That said, we don’t know what markets will do in the short term, and we could certainly be wrong. The rally may continue. We are not predicting a crash or market bust, though of course that is always possible.
What we are saying is that near-term equity returns are likely to be far more modest than those of the past decade. More importantly, a significant and protracted market decline, say, one lasting 3 to 5 years, remains a reasonable scenario. Your portfolio should be structured to withstand extended weakness without distress and to deploy capital opportunistically if attractive prices emerge.
For clients with new capital to deploy, whether from bonuses, liquidity events, or savings, we recommend a cautious and staged approach. Resist the urge to deploy everything immediately. Given valuations, dry powder is not a liability; it is optionality. Build positions gradually and maintain meaningful reserves for opportunities at lower prices.
Market timing remains extremely difficult. We cannot predict whether weakness arrives tomorrow or five years hence. This is why asset allocation remains your dominant framework. The right diversified portfolio that is properly weighted across equities, bonds, and cash, will perform in virtually any outcome. Your allocation is not a trade. It is the bedrock of long-term wealth building, and it is what matters most. Stay disciplined to it. Let valuations and your personal needs drive adjustments, not market sentiment.
Secondary Markets: Exuberance is an Opportunity
While public equity valuations have extended meaningfully, the secondary market for private company shares has become arguably even more frothy. Abundant dry powder, elevated pricing for secondary stakes, and unusually high transaction velocity continue. We are seeing extraordinary activity, far more than normal market conditions would suggest. In our view, this is where the exuberance we noted above is most pronounced. But it’s also an opportunity, though almost certainly a transient one.
Over the past decade, we have become an active player in the secondaries space on behalf of our clients. This has allowed us to build deep relationships with the major buyers, platforms, and intermediaries, and more importantly, to develop genuine pattern recognition about where value sits, how multiples shift, timing, and execution. We now see nuances that most advisors miss.
For founders and early employees of late-stage private companies, this environment offers an unusual selling window. Buyer demand is robust and pricing is favorable. Unlike public equities, where you are a price-taker, the secondary market can reward thoughtful, well-informed sellers with negotiating leverage and optionality. We understand those dynamics intimately.
Lately, we have been unusually active in navigating secondary opportunities for our clients. The combination of elevated multiples, abundant capital, and high transaction velocity creates genuine risk/reward asymmetry favoring the informed seller.
This is precisely where we devote significant time and add meaningful value: understanding tax impact, execution timing, size, pacing, and capital redeployment. Our relationships and pattern recognition in this space give us an edge that is material.
If you have secondary holdings, or know someone who does, now is the moment to have a serious discussion about opportunity. Reach out, we would welcome this conversation.
Thank you for your continued support.
Warmly,
Sage Rhino Capital LLC
1 “Index Dashboard: U.S.,” S&P Dow Jones Indices, June 30, 2026
Sage Rhino Capital, LLC is a Registered Investment Adviser. This report is solely for informational purposes. Advisory services are only offered to clients or prospective clients where Sage Rhino Capital, LLC and its representatives are properly licensed or exempt from licensure. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Sage Rhino Capital, LLC unless a client service agreement is in place. Account statement from the custodian is the official record of holdings, balances and security values. Sage Rhino Capital does not provide tax advice.