# Brasada Capital Q3 2026 Client Letter

> Brasada Capital highlights market bifurcation and AI investment strategy amid rising interest rates.
- Title: Brasada Capital Q3 2026 Client Letter · Seekingalpha
- Summary: Brasada Capital highlights market bifurcation and AI investment strategy amid rising interest rates. Brasada Capital advises long-term investors to focus on…
- Keywords: brasada capital, s&p 500, ai investment, fixed income, interest rates, market bifurcation, tech stocks, heico, money, business, Brasada, Capital
- Source: Seekingalpha — https://seekingalpha.com/article/4955933-brasada-capital-q3-2026-client-letter
- Author: Brasada Capital
- Published: 2026-10-21T15:27:00+00:00
- Read time: 1 min
- Topics: brasada capital, s&p 500, ai investment, fixed income, interest rates, market bifurcation, tech stocks, heico, money, business
## Market Performance
The S&P 500 returned 2.30% including dividends while its equal-weighted counterpart declined 1.87%.
## Market Divergence
Smaller companies (Russell 2000) continued to lose ground to larger companies.
## Historical Context
The internet transformed the world more than early evangelists envisioned but capacity was built out too quickly.
## Cisco Systems Example
Cisco Systems briefly became the most valuable company before plummeting nearly 90% once excess capacity choked off customer orders.
## Investment Strategy
We anchor investments to intrinsic value rather than chasing short-term price momentum.
## AI Investment Focus
We believe AI remains a long-term opportunity but investment winners will be harder to predict than the market suggests.
## GDP Growth
Second-quarter real GDP expanded at an annualized 2.2% with private domestic demand up 4.6%.
## Consumer Spending
August real consumer spending advanced 0.6% year-over-year.
## Inflation Impact
August PCE rose 3.4% year-over-year prompting Fed to lift policy rates to 3.75%-4.00% in September.
## Energy Costs
Brent crude remained near $100 per barrel tightening corporate margins and consumer budgets.
## Election Impact
S&P 500 has been higher 12 months after every midterm election from 1950 through 2022.
## Tariff Adjustments
September U.S.-China discussions recommended more favorable tariff treatment on $30 billion of non-sensitive goods.
## Infrastructure Investments
We focus on mission-critical 'picks and shovels' for AI and infrastructure expansion.
## Non-Tech Holdings
We find value in essential franchises outside technology including pharmaceuticals and senior living.
## Heico Performance
Heico has reported record results but is down for the year while S&P 500 is up.
## Fixed Income Strategy
Treasury yields at 5.3% for 10-year and 5.6% for 30-year hover near 24-year highs.
## Key takeaway

Brasada Capital advises long-term investors to focus on businesses with durable competitive advantages despite market volatility.