GW&K Investment Review 2Q 2026

ECONOMIC COMMENTARY

The 250th anniversary of our amazing country is upon us. Many will focus on the angst and frustrations in this moment of time, but I want to redirect that energy. America has been a savior for all those reading this. Many of us, our parents, or their parents, left another country; here, they and you found opportunity and success. Few of us would choose to go back. Every day there is another story of new success. Even within our own company, we have many inspiring examples of people who came to this country and went on to achieve remarkable success. In most countries, it is very important to go to the “right” school or have a certain pedigree. In that world, credentials are critical to open doors and opportunities. Not so in America. A decent education is helpful, but not critical. Many of those who have succeeded didn’t go to college or dropped out.

What is America’s secret sauce? It’s the ability for a person to develop their skills and pursue their dreams. Success is often built on dedication, perseverance, and honest work. Another important factor is a market-based economy, which encourages innovation, entrepreneurship, and competition. At its best, capitalism rewards hard work, creativity, and the ability to create value, giving people the opportunity to achieve more than they may have imagined.

This environment has helped attract talented people from around the world, each bringing unique perspectives, skills, and ideas. It is because our talent came from so many backgrounds that this country is so powerful, and the freedom to think creatively without enforced structures allows technology to blossom. This country allows us to wonder what might be, not what is, and critical to that process is the ability to find capital to invest and pursue new ideas. Risk capital is available not just for established businesses but for new ones as well. That is why we are a leader in innovation.

We are in the early stages of an AI technological revolution and capital is flowing into this change with complete abandon. Naysayers will argue that we will overspend and many companies will fail. Both are probably true, and that is exactly my point. Investors are willing to invest in ideas, knowing full well that some will work and others will not. That is the key — a willingness to take risks and understand the benefit of early investing. No one thinks all new capital will be successfully deployed, but they also believe much will. The key is the willingness of investors to lose. It is America’s ability to raise venture funds at different stages of development that leads to great success. So I argue, don’t get bogged down in the political environment or allow it to dissuade you from seeing these important changes. In the 250 years of American independence, there have been many periods of deep hostility, anger, and frustration. Yet here we are.

Some of the pessimism that has penetrated our political life has also impacted the current investment environment. As we are on the cusp of this next wave of innovation, many will see this as a bubble. Back in the 1960s there was a mindset that 50 companies would dominate the economic landscape. They were called the Nifty Fifty, much like today’s Magnificent 7. Many of these Nifty Fifty companies no longer exist, but many still do. The survivors are industry leaders. Of course, there are always winners and losers, but in the end the majority of these great companies not only survive, they flourish, and investing in these companies back then would have provided great wealth.

The AI boom will change our lives. I believe this revolution could only happen in America, where capital, innovation, and opportunity are readily available. Young kids are now fabulously wealthy because of their creativity and access to capital. Investors are blind to everything but great ideas and talent.

Talent and ingenuity matter. So, as we celebrate our country’s 250th anniversary, please take time to reflect on what is working in this wonderful land. Smell the roses, see the beauty as we move forward, and appreciate that our country will be in a perpetual state of change, growth, and opportunity.

Harold G. Kotler, CFA