Artificial Intelligence (AI) is a curiosity for me for several reasons.

1. My bachelor’s degree was in computer science, and these things interest me.
2. There are almost an infinite number of potential unintended consequences on society due to AI.
3. As I contemplate my 12-year-old son’s future, I imagine it will be very different from mine, especially when it comes to his career. Pretty soon, I’m going to find a program of study for him that relates to multi-agentic coding.

I also think about AI as it relates to my role and interactions with clients. Certainly, AI can be helpful on occasion for specific facts, but facts are not necessarily helpful unless they have context. The only way to have context in a trusted relationship is to get to know someone by having conversations with them. I need to understand their emotional state, their hopes, their fears, and their concerns in order to give clients meaningful advice. And this is not a static condition as people’s perspectives change daily due to situations that occur with them personally, to friends and family that are close to them, and in far off places that they read about. Conceptually, AI could perhaps achieve this context at some point in the future but the way to get there and the potential problems are very troubling.

First, from a confidentiality standpoint, I don’t feel comfortable giving any of my information to a computer. I assume if it’s on the computer, the world has eyes on it. And that’s just the data. I am definitely not going to be disclosing deep personal information and inclinations to a computer as well. I keep a very close circle of family, friends, and advisors that I share personal information of this type with. So that right there is a no-go for me for having a trusted relationship with an AI. 

So, privacy is definitely an issue as related in this IBM article: 

“For example, tools that enhance data collection and analysis also increase the likelihood that personal data and sensitive information will appear where it doesn’t belong. This particular risk, privacy risk, is especially prevalent in the age of artificial intelligence (AI), as sensitive information is collected and used to create and fine-tune AI and machine learning systems. And as policymakers rush to address the issue with privacy regulations around the use of AI, they create new compliance challenges for businesses using AI technologies for decision-making.”

But it gets worse. For example, AI hallucinations. This article by IBM defines AI hallucination as, “… a phenomenon where, in a large language model…perceives patterns or objects that are nonexistent or imperceptible to human observers, creating outputs that are nonsensical or altogether inaccurate.” I’m sorry (not sorry), but I wouldn’t want to have to factor in hallucinations, as a rule, as a given attribute that I would have to deal with for any advisor that I have. 

The National Center for State Courts recently published an article entitled “A Practitioner’s Guide To AI & Hallucinations” and states that “LLM’s predictive nature generates text that sounds right rather than text that is right. This creates hallucinations that can be dangerously convincing.”  Actual fabricated non-existent case names, statutes, or legal authorities are part and parcel of AI legal advice. This is quite eye-opening and certainly not the type of advice I’d be paying for.

You might not know this, but some AI bots have deemed human language to be too inefficient for communication. So, how about they develop their own language to communicate with each other that we cannot understand? Well, it’s happened, for example, with GibberLink. This opens up a quagmire of issues, especially when it comes to auditing a communications trail when clarity in communication is needed, or there are disagreements or disputes. 

I could go on, but I think you get my point.

As the pendulum swings towards AI, I think there will be a countering movement for “Human-Only” interactions, content, and certifications, giving people peace of mind with whom (or what) they are dealing with. To be fair, humans have and can hallucinate, act improperly, and, in fact, act criminally and fraudulently. The difference is that we have thousands of years of embedded social, legal, and professional standards to influence human behavior towards trusted relationships.

Finally, I think we’ve evolved genetically to be able to get a read on someone’s character by interacting with them over time, looking into their eyes, and getting a read on them. This is really my final test. Unfortunately, I’m still getting a blank, unreadable stare from my computer camera…maybe someday.

Market Review: 2026 Q1

Love him or hate him, I think part of President Trump’s strategy is to create more chaos as a negotiating strategy. Today, there is a truce, tomorrow not a truce; etc. I think you’ve seen the speed at which the markets react, which can easily put market-timers and prognosticators on the wrong side, as it’s nearly impossible to keep up. Chalk that up as another reason to build long-term strategic portfolios that don’t try to bet on fast-changing socio-economic headlines with your hard-earned money.

With that in mind, it’s helpful to keep a long-term perspective when it comes to geopolitical risk. Wars such as the one unfolding in Iran are always disturbing. For investors, there’s additional concern over whether these conflicts will spill over into their investment performance. But it’s important for investors to be cautious about making asset allocation changes in response to such events.

Markets are forward-looking. Prices move in response to changes in information. When unexpected developments arise that investors deem to be poor for markets, markets often drop. But the flip side is that markets always set prices for positive expected returns. Once the news gets reflected in market prices, investors can still expect positive returns even amid worrisome circumstances.

This is borne out in historical stock returns. Global equity markets have continued an upward climb even in the face of economic and political upheavals. We don’t have to look far for illustrative examples. During the past few years, stock markets have had positive returns despite multiple wars being fought around the world.

This is not to trivialize the destruction wars bring and their impact on geopolitical risks. But history suggests investors may not help themselves by divesting from stocks. For long-term investors, the best bet is usually to stay the course.

MARKETS HAVE REWARDED DISCIPLINE

Growth of $1—MSCI World Index (net dividends), 1970–2025

For Q1, the U.S. stock market was down the most among the indicated indexes below. Global real estate was up slightly. Bonds were relatively steady with very slight downturns.

Source: Dimensional Fund Advisors
Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Market segment (index representation) as follows: US Stock Market (Russell 3000 Index), International Developed Stocks (MSCI World ex USA Index [net dividends]), Emerging Markets (MSCI Emerging Markets Index [net dividends]), Global Real Estate (S&P Global REIT Index [net dividends]), US Bond Market (Bloomberg US Aggregate Bond Index), and Global Bond Market ex US (Bloomberg Global Aggregate ex-USD Bond Index [hedged to USD]). S&P data © 2026 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. MSCI data © MSCI 2026, all rights reserved. Bloomberg data provided by Bloomberg.

Long Term Markets Summary: Returns USD as of March 31, 2026

Despite the recent quarter adjustment, the indexes have done well for every longer period of time indicated below.

Source: Dimensional Fund Advisors
Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Market segment (index representation) as follows: US Stock Market (Russell 3000 Index), International Developed Stocks (MSCI World ex USA Index [net dividends]), Emerging Markets (MSCI Emerging Markets Index [net dividends]), Global Real Estate (S&P Global REIT Index [net dividends]), US Bond Market (Bloomberg US Aggregate Bond Index), and Global Bond Market ex US (Bloomberg Global Aggregate ex-USD Bond Index [hedged to USD]). S&P data © 2026 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. MSCI data © MSCI 2026, all rights reserved. Bloomberg data provided by Bloomberg.

Finally, for those of you tracking factors or dimensions of risk and return, small-value stocks actually had a positive return for the quarter while large-growth stocks were the worst performers.

Source: Dimensional Fund Advisors
Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. Market segment (index representation) as follows: Marketwide (Russell 3000 Index), Large Cap (Russell 1000 Index), Large Value (Russell 1000 Value Index), Large Growth (Russell 1000 Growth Index), Small Cap (Russell 2000 Index), Small Value (Russell 2000 Value Index), and Small Growth (Russell 2000 Growth Index). World Market Cap represented by Russell 3000 Index, MSCI World ex USA IMI Index, and MSCI Emerging Markets IMI Index. Russell 3000 Index is used as the proxy for the US market. Dow Jones US Select REIT Index used as proxy for the US REIT market. MSCI data © MSCI 2026, all rights reserved. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes.

Morgan H Smith Jr. is an investment advisor with WorthPointe, LLC, a registered investment adviser  in San Diego, Calif. WorthPointe is registered with the Securities and Exchange Commission (SEC). Registration of an investment advisor does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the commission. WorthPointe only transacts business in states in which the firm is properly registered or is excluded or exempted from registration. A copy of WorthPointe’s current written disclosure brochure filed with the SEC, which discusses among other things, WorthPointe’s business practices, services, and fees, is available through the SEC’s website at https://adviserinfo.sec.gov/firm/summary/143996.

Please note, the information provided in this document is for informational purposes only and investors should determine for themselves whether a particular service or product is suitable for their investment needs. Nothing provided in this document constitutes tax advice. Individuals should seek the advice of their own tax advisor for specific information regarding tax consequences of investments. All investments involve risk and are not suitable for all investors. 

This document may contain forward-looking statements relating to the objectives, opportunities, and the future performance of the U.S. market generally. Forward-looking statements may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential,” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of any particular investment strategy. All are subject to various factors, including, but not limited to general and local economic conditions; changing levels of competition within certain industries and markets; changes in interest rates; changes in legislation or regulation; and other economic, competitive, governmental, regulatory, and technological factors affecting a portfolio’s operations that could cause actual results to differ materially from projected results. Such statements are forward-looking in nature and involve a number of known and unknown risks, uncertainties and other factors, and accordingly, actual results may differ materially from those reflected or contemplated in such forward-looking statements. Prospective investors are cautioned not to place undue reliance on any forward-looking statements or examples. None of WorthPointe or any of its affiliates or principals or any other individual or entity assumes any obligation to update any forward-looking statements as a result of new information, subsequent events or any other circumstances. All statements made herein speak only as of the date they were made.

1 Past performance is no guarantee of future results. Any indices and other financial benchmarks shown are provided for illustrative purposes only, are unmanaged, reflect reinvestment of income and dividends and do not reflect the impact of advisory fees.  Investors cannot invest directly in an index.  Comparisons to indexes have limitations because indexes have volatility and other material characteristics that may differ from actual trading.

Neither Dimensional Fund Advisors LP nor Avantis Investors are an investment advisor registered with the Securities and Exchange Commission with no affiliation to WorthPointe. Index performance does not reflect the expenses associated with the management of an actual portfolio. References to specific company securities should not be construed as a recommendation or investment advice. 

Market segment (index representation) as follows: US Stock Market (Russell 3000 Index), Developed ex US Stocks (MSCI World ex USA IMI Index [net div.]), Emerging Markets (MSCI Emerging Markets IMI Index [net div.]), US Bond Market (Bloomberg US Aggregate Bond Index), and Global Bond Market ex US (Bloomberg Global Aggregate ex-USD Bond Index [hedged to USD]), Global Stock Market (MSCI All Country World IMI Index [net div.]). 

Sector returns are derived by using constituent data from the MSCI All Country World IMI Index. Returns for specific securities are sourced from the MSCI All Country World IMI Index using daily security returns. Securities without a Global Industry Classification Standard (GICS) sector are excluded. Sectors are classified according to GICS Industry code. GICS was developed by and is the exclusive property of MSCI and S&P Dow Jones Indices LLC, a division of S&P Global. S&P data © 2025 S&P Dow Jones Indices LLC, a division of S&P Global. All rights reserved. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. MSCI data © MSCI 2025, all rights reserved. Bloomberg data provided by Bloomberg.