Welcome back to another edition of the Smart Wealth Newsletter!

I’m Chris McLaughlin, joined by my sons Trip and Frankie. Trip is a junior at the Freeman School of Business at Tulane University, and Frankie is a National Merit Scholarship Finalist who will be attending Georgetown University's McDonough School of Business this Fall. Each week we share our thoughts on investing, real estate, and wealth-building strategies that have helped our family navigate changing markets.

This week served as a powerful reminder that even the strongest bull markets experience periods of volatility. After reaching new highs earlier in the week, investors were forced to confront concerns about interest rates, inflation, and valuation levels as the market experienced its sharpest pullback of the year.

The major indexes finished Friday, June 5, sharply lower. The Dow Jones Industrial Average closed at 50,866.78. The S&P 500 closed at 7,383.74, while the Nasdaq Composite finished at 25,709.43 after suffering one of the largest point declines in its history. Technology and semiconductor stocks bore the brunt of the selling as investors rushed to lock in profits following an extraordinary rally that had carried many artificial intelligence-related stocks to record highs.

Ironically, the selloff was triggered by strong economic news.

The May employment report showed the U.S. economy continues to create jobs at a healthy pace. Unemployment remains low, consumer spending remains resilient, and businesses continue hiring despite elevated interest rates. While this would normally be viewed as positive news, Wall Street interpreted the report differently. Investors immediately worried that a stronger labor market could keep inflation elevated and force the Federal Reserve to maintain higher interest rates longer than previously expected.

For much of the past year, investors have anticipated a series of interest rate cuts. Those expectations helped fuel the powerful rally in growth stocks, particularly companies tied to artificial intelligence. When economic data comes in stronger than expected, however, the likelihood of rate cuts often decreases. That is exactly what happened this week.

Federal Reserve Chairman Kevin Warsh continues to face a difficult balancing act. Inflation has declined substantially from its peak levels, but it remains above the Fed's long-term target. At the same time, the economy continues growing and the labor market remains healthy. The Fed wants to avoid reigniting inflation while also ensuring economic growth remains intact.

As a result, investors are increasingly preparing for a scenario where interest rates remain elevated throughout much of 2026.

The bond market responded quickly. Treasury yields moved higher following the employment report, with the 10-year Treasury yield climbing as investors adjusted their expectations for future monetary policy. Rising yields typically create headwinds for growth stocks because future earnings become less valuable when discounted at higher interest rates.

Nowhere was this more apparent than in the technology sector.

Semiconductor stocks experienced a sharp correction. Nvidia, Broadcom, AMD, and numerous artificial intelligence infrastructure companies declined significantly. The magnitude of the move surprised many investors, but the reality is that these stocks had enjoyed tremendous gains over the past year. Some degree of profit-taking was inevitable.

Importantly, nothing fundamentally changed regarding the long-term outlook for artificial intelligence.

Data center spending continues growing.

Cloud computing demand remains strong.

Corporate investment in AI infrastructure continues accelerating.

Software companies continue integrating AI capabilities into their products.

The long-term investment thesis remains intact.

What changed was investor sentiment and expectations regarding interest rates.

This distinction is important because market corrections driven by valuation concerns often create opportunities for long-term investors. Companies with strong earnings growth and durable competitive advantages frequently emerge from these periods stronger than before.

Another major factor investors continue monitoring is energy.

Oil prices remain volatile as geopolitical tensions persist throughout the Middle East. Any disruption to global supply chains or energy production could quickly place upward pressure on crude oil prices. Higher oil prices eventually affect transportation costs, manufacturing expenses, airline profitability, and consumer spending.

If energy prices rise substantially, inflation could become more difficult for the Federal Reserve to control.

This is why investors continue monitoring developments in the region so closely.

One encouraging development during this week's volatility was sector rotation.

While technology stocks declined sharply, defensive sectors held up relatively well. Consumer staples, utilities, healthcare, and energy companies attracted investor capital. This rotation suggests that investors are repositioning rather than exiting the market entirely.

Healthy bull markets often experience this type of rotation.

Money simply moves from one sector to another as investors adjust to changing economic conditions.

Perhaps the most exciting story developing beneath the surface is the growing list of anticipated initial public offerings.

Leading that list is SpaceX.

For years, investors have waited for an opportunity to own shares in Elon Musk's revolutionary space company. SpaceX has transformed the economics of space exploration through reusable rockets and has become one of the most valuable private companies in the world.

Many market participants believe institutional investors are already preparing for a potential SpaceX IPO by raising cash and reducing exposure to other technology positions. Whether or not that is occurring, there is little doubt that a public offering would become one of the most anticipated investment opportunities in decades.

Beyond SpaceX, investors are watching several other private companies that may eventually seek public listings. The health of the IPO market is often an important indicator of investor confidence and risk appetite.

Looking ahead, investors should focus on three key areas.

First, monitor inflation data closely. Any signs that inflation is accelerating could increase pressure on the Federal Reserve.

Second, watch Treasury yields. Continued increases in yields may create additional volatility in growth stocks.

Third, pay close attention to corporate earnings. Ultimately, earnings growth remains the single most important driver of long-term stock performance.

While the Nasdaq experienced a historic decline this week, long-term investors should remember that corrections are a normal part of every bull market. Artificial intelligence, cloud computing, cybersecurity, infrastructure modernization, autonomous transportation, robotics, and space exploration remain powerful secular growth trends.

Periods of fear often create opportunities.

Patient investors who focus on quality businesses rather than short-term headlines are often rewarded over time.

One of the most anticipated investment events in modern financial history is the potential public offering of SpaceX.

Founded by Elon Musk in 2002, SpaceX was created with an ambitious goal: dramatically reduce the cost of space travel and ultimately make humanity a multi-planetary species.

At the time, many industry experts considered the idea unrealistic.

Today, SpaceX is widely viewed as one of the most successful private companies in the world.

The company revolutionized the aerospace industry through reusable rocket technology. Prior to SpaceX, rockets were largely disposable. By successfully landing and reusing rocket boosters, SpaceX dramatically lowered launch costs and fundamentally changed the economics of space exploration.

The Falcon 9 rocket has become the workhorse of the global launch industry.

Meanwhile, the company continues developing Starship, a next-generation spacecraft designed to transport cargo and eventually humans to the Moon and Mars.

In addition to its launch business, SpaceX operates Starlink, a rapidly growing satellite internet network.

Starlink may ultimately become one of the company's most valuable assets.

Thousands of satellites currently orbit the Earth, providing internet access to customers across the globe. Revenue from Starlink continues growing rapidly and provides a recurring subscription business that complements the company's launch operations.

Many analysts believe Starlink alone could eventually justify a valuation exceeding $200 billion.

Combined with SpaceX's launch business, government contracts, defense applications, and future space initiatives, total company valuations ranging from $300 billion to $500 billion have become increasingly common among private market investors.

This creates enormous excitement among potential shareholders.

Few companies possess the combination of innovation, market leadership, visionary management, and long-term growth potential that SpaceX offers.

However, investors should also recognize the risks.

Valuation matters.

Even great companies can become poor investments if purchased at excessive prices.

SpaceX operates in a highly capital-intensive industry that requires continuous investment. Regulatory risks remain significant. Competition continues increasing. Technological challenges remain substantial.

Furthermore, investor enthusiasm surrounding Elon Musk could potentially push valuations to levels that limit future returns.

This is not unusual.

History shows that many highly anticipated IPOs initially trade at valuations that exceed their near-term fundamentals.

Investors should approach any future offering with discipline and patience.

That said, SpaceX remains one of the most compelling growth stories in the world.

The company sits at the intersection of aerospace, defense, communications, artificial intelligence, robotics, and advanced manufacturing.

Few businesses have such a broad range of potential opportunities.

If SpaceX eventually becomes publicly traded, it will likely attract tremendous interest from both institutional and retail investors.

For long-term investors, the key question will not be whether SpaceX is a great company.

The key question will be whether the valuation provides an attractive opportunity.

Regardless of when an IPO occurs, SpaceX represents the type of transformational company that defines entire generations of investing.

Much like Microsoft, Amazon, Apple, and Nvidia before it, SpaceX has the potential to become one of the defining growth stories of the next several decades.

One of the simplest yet most effective tools I have used throughout my real estate investing career is the 1% Rule.

The concept is straightforward.

A rental property should ideally generate monthly rent equal to at least 1% of its purchase price.

A $200,000 property should generate approximately $2,000 per month in rent.

A $300,000 property should generate approximately $3,000 per month in rent.

A $500,000 property should generate approximately $5,000 per month in rent.

The rule is not perfect, but it serves as an excellent screening tool that allows investors to quickly evaluate opportunities.

Over the years, I have purchased rental properties ranging from long-term rentals to vacation rentals and Airbnb properties. Before I analyze financing, taxes, insurance, maintenance expenses, or appreciation potential, I first ask one simple question:

Does the property meet the 1% Rule?

If the answer is no, I immediately become much more cautious.

One of the biggest mistakes investors make is focusing exclusively on appreciation.

They assume property values will continue rising indefinitely.

While appreciation is wonderful when it occurs, appreciation does not pay the mortgage.

Cash flow does.

The 1% Rule helps investors identify properties that have a realistic chance of producing positive cash flow.

Positive cash flow creates flexibility.

Positive cash flow provides protection during economic downturns.

Positive cash flow allows investors to continue acquiring additional properties over time.

I have found that some of my best investments met the 1% Rule from the very beginning.

The numbers worked immediately.

There was no need to hope for appreciation or speculate about future rent increases.

The property simply made financial sense.

In today's environment, finding true 1% Rule properties can be more challenging than it was a decade ago.

Home prices have increased significantly across many markets.

In some areas, rents have not kept pace.

As a result, investors often encounter properties generating only 0.6% or 0.7% of purchase price in monthly rent.

These properties are not automatically bad investments.

However, they require more detailed analysis and often rely more heavily on appreciation.

The 1% Rule also helps investors avoid emotional decision-making.

Beautiful kitchens, updated bathrooms, and attractive curb appeal can distract investors from weak financial performance.

Numbers do not lie.

If a property cannot generate sufficient income to justify its purchase price, investors should proceed cautiously.

The rule is especially useful when evaluating Airbnb and vacation rental opportunities.

Instead of using traditional monthly rent, investors can estimate average monthly revenue.

If projected revenue exceeds 1% of acquisition cost, the opportunity may warrant additional analysis.

The beauty of the 1% Rule is its simplicity.

It requires no spreadsheet.

It requires no advanced financial training.

It takes less than a minute to calculate.

Yet it can prevent costly mistakes and improve investment outcomes.

The most successful real estate investors I know consistently focus on fundamentals.

They buy properties that generate income.

They maintain adequate reserves.

They control expenses.

They think long term.

The 1% Rule remains one of the most valuable tools available to investors seeking cash-flow-producing assets.

It is not a guarantee of success, but it provides a simple framework that encourages discipline and sound decision-making.

For me, it has been one of the most important filters I use when evaluating potential investments, and it continues to play a major role in my real estate acquisition strategy today.

Alphabet (GOOG) closed at $365.76 and is up 112.96% since inception. Alphabet is a global technology company whose businesses include Google Search, YouTube, Google Cloud, and artificial intelligence solutions. The average analyst rating is Strong Buy with a 12-month target range of $400-$475. Chris Rating: Strong Buy. Alphabet continues to benefit from its dominant search franchise and expanding artificial intelligence capabilities. The company remains one of the most attractive large-cap technology investments in the market.

Amazon (AMZN) closed at $246.03 and is up 18.27% since inception. Amazon is the world's leading e-commerce and cloud computing company through Amazon Web Services. The average analyst rating is Strong Buy with a 12-month target range of $280-$330. Chris Rating: Strong Buy. Amazon continues generating strong growth in both cloud computing and retail operations. Long-term opportunities in artificial intelligence and logistics remain substantial.

Apple (AAPL) closed at $307.34 and is up 104.81% since inception. Apple develops consumer electronics, software, and digital services used worldwide. The average analyst rating is Buy with a 12-month target range of $325-$380. Chris Rating: Buy. Apple's ecosystem continues to produce exceptional customer loyalty and recurring revenue. Its balance sheet and cash flow remain among the strongest in corporate America.

Costco Wholesale (COST) closed at $971.87 and is up 105.28% since inception. Costco operates membership warehouse clubs throughout North America and internationally. The average analyst rating is Buy with a 12-month target range of $1,000-$1,150. Chris Rating: Buy. Costco continues demonstrating exceptional execution and customer retention. The membership model remains one of the strongest competitive advantages in retail.

Deere & Company (DE) closed at $583.44 and is up 66.14% since inception. Deere manufactures agricultural, construction, and forestry equipment worldwide. The average analyst rating is Buy with a 12-month target range of $620-$700. Chris Rating: Buy. Precision agriculture and automation continue creating long-term growth opportunities. Deere remains a leader in agricultural innovation.

GE Aerospace (GE) closed at $328.00 and is up 231.63% since inception. GE Aerospace manufactures aircraft engines and aviation systems for commercial and military customers. The average analyst rating is Strong Buy with a 12-month target range of $350-$400. Chris Rating: Strong Buy. Global airline demand continues supporting a strong aerospace cycle. Service revenues provide recurring cash flow and earnings visibility.

GE Vernova (GEV) closed at $933.61 and is up 813.57% since inception. GE Vernova provides power generation, grid modernization, and renewable energy solutions. The average analyst rating is Buy with a 12-month target range of $1,000-$1,200. Chris Rating: Strong Buy. Electrification and power demand continue accelerating globally. Few companies are better positioned to benefit from grid modernization trends.

Kroger (KR) closed at $63.57 and is up 29.35% since inception. Kroger operates supermarkets and grocery retail businesses throughout the United States. The average analyst rating is Hold with a 12-month target range of $65-$75. Chris Rating: Hold. Kroger remains a stable defensive holding with consistent cash flow. The company benefits from its large market presence and loyal customer base.

Meta Platforms (META) closed at $593.00 and is up 2.29% since inception. Meta owns Facebook, Instagram, WhatsApp, and multiple artificial intelligence initiatives. The average analyst rating is Strong Buy with a 12-month target range of $650-$800. Chris Rating: Strong Buy. Meta continues generating enormous free cash flow while investing aggressively in AI. Advertising fundamentals remain strong.

Microsoft (MSFT) closed at $416.67 and is up 828.39% since inception. Microsoft develops software, cloud computing platforms, cybersecurity solutions, and artificial intelligence technologies. The average analyst rating is Strong Buy with a 12-month target range of $475-$550. Chris Rating: Strong Buy. Microsoft's leadership in cloud computing and artificial intelligence continues driving earnings growth. It remains one of the highest-quality businesses in the world.

Palantir Technologies (PLTR) closed at $135.53 and is down 3.33% since inception. Palantir develops advanced data analytics and artificial intelligence software for government and commercial customers. The average analyst rating is Buy with a 12-month target range of $145-$190. Chris Rating: Strong Buy. Palantir remains one of the fastest-growing AI software companies in the market. Commercial adoption continues accelerating across multiple industries.

Procter & Gamble (PG) closed at $146.54 and is up 78.84% since inception. Procter & Gamble manufactures consumer products sold around the globe. The average analyst rating is Buy with a 12-month target range of $155-$180. Chris Rating: Buy. PG provides stability during market volatility and continues increasing dividends. Its portfolio of brands remains exceptionally strong.

Amazon (AMZN) closed at $246.03 and is up 116.56% since inception. Analyst consensus remains Strong Buy with a target range of $280-$330. Chris Rating: Strong Buy. Amazon's cloud leadership and operational efficiency continue driving long-term growth.

American Express (AXP) closed at $310.66 and is up 86.38% since inception. American Express is a global payments and financial services company. Analyst consensus remains Buy with a target range of $325-$380. Chris Rating: Buy. Strong consumer spending and premium customer relationships support long-term earnings growth.

Kinder Morgan (KMI) closed at $31.68 and is up 112.42% since inception. Kinder Morgan operates one of North America's largest energy infrastructure systems. Analyst consensus remains Buy with a target range of $33-$38. Chris Rating: Buy. Growing natural gas demand supports stable cash flow and dividend growth.

Verizon (VZ) closed at $45.37 and is down 10.06% since inception. Verizon provides wireless and broadband communications services. Analyst consensus remains Hold with a target range of $48-$55. Chris Rating: Hold. Verizon's dividend remains attractive, although revenue growth has been limited.

Exxon Mobil (XOM) closed at $149.92 and is up 78.67% since inception. Exxon Mobil is one of the world's largest integrated energy companies. Analyst consensus remains Buy with a target range of $155-$180. Chris Rating: Buy. Rising global energy demand and disciplined capital allocation continue supporting shareholder returns.

Tesla (TSLA) closed at $494.42 and is up 22.95% since inception. Tesla develops electric vehicles, autonomous driving technology, and energy storage products. Analyst consensus remains Buy with a target range of $500-$650. Chris Rating: Strong Buy. Tesla remains a leader in transportation innovation and artificial intelligence. Chris continues viewing Tesla as a long-term compounder.

Apple (AAPL) closed at $307.34 and is up 183.31% since inception. Analyst consensus remains Buy with a target range of $325-$380. Chris Rating: Buy. Apple's ecosystem continues generating recurring revenue and exceptional profitability.

Nvidia (NVDA) closed at $205.10 and is up 107.73% since inception. Nvidia designs advanced graphics processors and artificial intelligence hardware. Analyst consensus remains Strong Buy with a target range of $240-$300. Chris Rating: Strong Buy. Nvidia remains at the center of the AI infrastructure buildout despite recent volatility.

Palantir Technologies (PLTR) closed at $135.53 and is down 5.86% since inception. Analyst consensus remains Buy with a target range of $145-$190. Chris Rating: Strong Buy. Palantir continues to benefit from increasing enterprise AI adoption and government demand.

Lam Research (LRCX) closed at $303.28 and is up 17.78% since inception. Lam Research supplies semiconductor manufacturing equipment used by chipmakers worldwide. Analyst consensus remains Strong Buy with a target range of $340-$400. Chris Rating: Strong Buy. Semiconductor demand and AI-related capital spending should continue supporting long-term growth.

GE Vernova (GEV) closed at $933.61 and is up 831.34% since inception. Analyst consensus remains Buy with a target range of $1,000-$1,200. Trip Rating: Strong Buy. Growing electricity demand and infrastructure investment continue creating significant opportunities for GE Vernova.

Costco Wholesale (COST) closed at $971.87 and is up 110.85% since inception. Analyst consensus remains Buy with a target range of $1,000-$1,150. Trip Rating: Buy. Costco's membership model and consistent execution continue driving shareholder value.

Wave Life Sciences (WVE) closed at $5.73 and is down 7.80% since inception. Wave Life Sciences develops genetic medicines targeting serious diseases. Analyst consensus remains Buy with a target range of $8-$12. Trip Rating: Buy. Clinical development success could provide substantial upside, although biotechnology investments remain volatile.

Intel (INTC) closed at $99.17 and is down 11.85% since inception. Intel designs and manufactures semiconductor products used globally. Analyst consensus remains Hold with a target range of $100-$125. Trip Rating: Hold. Intel faces competitive challenges but remains an important player in global semiconductor manufacturing.

Tesla (TSLA) closed at $391.00 and is down 6.79% since inception. Analyst consensus remains Buy with a target range of $500-$650. Trip Rating: Strong Buy. Tesla's long-term opportunities in autonomous driving and robotics remain compelling despite recent volatility.

Navitas Semiconductor (NVTS) closed at $25.08 and is up 237.09% since inception. Navitas develops advanced power semiconductor technologies used in electric vehicles and data centers. Analyst consensus remains Buy with a target range of $30-$40. Frankie Rating: Strong Buy. The company remains one of the most exciting small-cap semiconductor opportunities in the market.

GE Vernova (GEV) closed at $933.61 and is up 831.34% since inception. Analyst consensus remains Buy with a target range of $1,000-$1,200. Frankie Rating: Strong Buy. Growing global electricity demand continues supporting GE Vernova's long-term outlook.

Costco Wholesale (COST) closed at $971.87 and is up 110.48% since inception. Analyst consensus remains Buy with a target range of $1,000-$1,150. Frankie Rating: Buy. Costco remains one of the highest-quality retailers in the world.

Nebius Group (NBIS) closed at $227.81 and is up 168.74% since inception. Nebius provides cloud infrastructure and artificial intelligence computing solutions. Analyst consensus remains Buy with a target range of $250-$325. Frankie Rating: Strong Buy. Growing AI infrastructure demand continues supporting the company's growth potential.

Microsoft (MSFT) closed at $416.67 and is up 272.62% since inception. Analyst consensus remains Strong Buy with a target range of $475-$550. Frankie Rating: Strong Buy. Microsoft's AI leadership and cloud dominance continue driving exceptional long-term performance.

Amazon (AMZN) closed at $246.03 and is up 18.27% since inception. Analyst consensus remains Strong Buy with a target range of $280-$330. Frankie Rating: Strong Buy. Amazon remains a premier long-term growth company.

Tesla (TSLA) closed at $391.00 and is up 31.48% since inception. Analyst consensus remains Buy with a target range of $500-$650. Frankie Rating: Strong Buy. Tesla remains one of the most innovative companies in transportation and artificial intelligence.

Palantir Technologies (PLTR) closed at $135.53 and is down 5.80% since inception. Analyst consensus remains Buy with a target range of $145-$190. Frankie Rating: Strong Buy. Palantir's long-term AI opportunity remains intact despite recent weakness.

Aurora Innovation (AUR) closed at $6.31 and is up 61.79% since inception. Aurora develops autonomous trucking technology and self-driving solutions. Analyst consensus remains Buy with a target range of $8-$12. Frankie Rating: Strong Buy. Commercial deployment of autonomous trucking could become a major growth catalyst.

Meta Platforms (META) closed at $593.00 and is up 2.62% since inception. Analyst consensus remains Strong Buy with a target range of $650-$800. Frankie Rating: Strong Buy. Meta continues benefiting from strong advertising trends and significant AI investment.

The first week of June reminded investors that markets do not move in a straight line. While technology and semiconductor stocks experienced significant volatility, our family's portfolios remain focused on long-term themes including artificial intelligence, cloud computing, energy infrastructure, autonomous transportation, and space exploration. We continue to believe that patient investors who own high-quality businesses and maintain a long-term perspective will be rewarded over time. Market pullbacks often create opportunities, and we remain optimistic about the future despite short-term volatility.

The Smart Wealth Newsletter is provided for educational and informational purposes only and should not be considered investment, tax, legal, or financial advice. All investments involve risk, including the possible loss of principal. Past performance does not guarantee future results. Investors should conduct their own due diligence and consult qualified professional advisors before making any investment decisions. Chris McLaughlin, Trip McLaughlin, Frankie McLaughlin, and members of their families may own positions in securities discussed in this newsletter.