Stock Market & Economic Commentary – September 2026

Old-Fashioned Valuation Rules (OFVRs)

“Valuation is the investor’s best defence against the market losing its head.”

In the National Gallery in London hangs Paul Delaroche’s painting “The Execution of Lady Jane Grey”. It is dramatic, meticulously composed, and almost photographic in its realism. For investors, it also offers a useful warning.

Delaroche was among the most admired painters of post-Napoleonic France. His reputation rested on technical precision, historical drama, and striking realism. Then photography arrived. Whether or not he truly declared that “from today, painting is dead”, the sentiment captured something important: new technology had changed the terms on which an established skill was valued.

Delaroche did not cease to be talented, nor did his paintings lose their intrinsic interest. The world around him changed. The scarcity value of his particular skill diminished, and taste moved on. In investment terms, that distinction matters. It is possible to buy quality, popularity, and achievement, yet still pay too high a price.

That brings us to SpaceX and Anthropic, and to a lesson learned, forgotten, and relearned throughout market history: valuation matters.

SpaceX is an extraordinary business by almost any operational measure. It has changed the economics of space launch, built a global satellite communications platform, and established a position that would have seemed improbable a generation ago. Anthropic is also a striking business whose recent growth has attracted considerable attention.

None of that is in dispute. The question for investors is different: at what price does even an exceptional business become a poor investment?

This is where old-fashioned valuation rules retain their force. Markets change. Technologies change. The language of investment changes. The arithmetic of return changes rather less.

Income investors look at yield. Growth investors focus on future cash flows. Value investors examine assets, balance sheets, and the margin of safety. Sensible investors should consider all three. Each is a different way of asking the same question: what are we paying, and what might we reasonably receive in return?

The discounted value of future cash flows should remain central to the price paid for a business. Investors should be compensated for time, uncertainty, and risk. Where a company is asset-rich, its underlying asset value may provide some protection against excessive optimism in the market price. In either case, price should remain anchored to economic reality rather than narrative alone.

Applied to highly valued technology businesses, the conclusion can be uncomfortable. Elevated valuations assume a great deal of future success: continued execution, durable competitive advantage, substantial profit pools, supportive regulation, access to capital and sustained demand. Some of those assumptions may prove correct. At a demanding entry price, however, there is little room for disappointment.

That is the central risk. A very good business can still be a poor investment if its price already capitalises too much of the future.

The recent concentration of market returns among a small number of large technology companies has made this discipline uncomfortable. Some active managers have lagged market indices, not because they failed to understand the excitement around technology, but because they were reluctant to pay prices that left too narrow a margin for error.

Valuation discipline can be uncomfortable. It can also be lonely.

The challenge is not to react to every headline or to guess which company will dominate the next decade. It is to remain disciplined when enthusiasm and valuation begin to part company. History suggests that this separation can persist for longer than valuation-minded investors would like. It also suggests that it rarely persists indefinitely.

Many global equities still meet sensible tests of valuation, cash flow, and balance sheet strength. A moderation of enthusiasm in parts of the technology market would not necessarily imply weakness across equities as a whole. It may simply allow leadership to broaden and price to matter again.

For Clarion clients, the practical implication is measured rather than dramatic. Our portfolios remain widely diversified across regions and sectors, with a deliberate tilt towards value, smaller companies, and profitable businesses. We are confident in that disciplined approach, while recognising that no investment style leads in every market phase.

Why Britain Needs a “Messi” Budget

Statistics from the recent World Cup suggest that Lionel Messi topped the performance rankings, even though he spent much of the match walking or standing still. Less activity, properly directed, produced more.

Britain’s last two Budgets were preceded by months of speculation about tax rises, borrowing, and spending. Faced with uncertainty, households increased precautionary saving; businesses delayed investment and growth stalled.

As the next Budget approaches, the early signals suggest an agenda involving reindustrialisation, devolution, greater state ownership, and more use of government purchasing power to favour UK producers. Yet Britain may benefit from a Budget that is more “Messi” and less messy: selective, precise and designed to strengthen confidence without adding unnecessary complexity.

The case becomes clearer when the public and private balance sheets are compared. The public finances are stretched, with high debt and substantial debt-servicing costs. The private sector presents a different picture. Many households and businesses retain liquidity and are running financial surpluses yet spending and investment remain subdued.

The constraint is not solely financial. Confidence also matters.

Successive shocks since the global financial crisis have left a lasting imprint. Higher precautionary saving, weak business investment and subdued risk appetite all reflect concern about the future. Research cited by the Productivity Institute suggests that UK managers display greater risk aversion than counterparts elsewhere despite comparable ambition. The result is weaker investment and slower growth.

The lesson is straightforward. If risk aversion is part of the problem, prolonged policy uncertainty is unlikely to be the solution.

Britain does not lack capital or entrepreneurial talent. It lacks sufficient confidence to put both to work. Economic policy should recognise that the private sector is carrying the stronger balance sheet and create a more stable setting in which households and businesses can plan.

The central task is therefore not simply to spend, tax or borrow more. It is to restore enough certainty for private balance sheets to do more of the heavy lifting.

Messi’s career offers an analogy. Precision often beats activity. Britain would benefit from fewer interventions, clearer rules, and greater confidence that policy will remain consistent.

Dollynomics: Ownership, Judgement and a Life Well Lived

Dolly Parton combined a warm public persona with unusual commercial judgement. As a songwriter and composer, she was prolific, but her achievement was not simply creative. She understood ownership, reputation, and the value of saying no.

Her refusal to surrender half the publishing rights to “I Will Always Love You” when Elvis Presley wished to record it, is an enduring lesson in the value of intellectual property. The decision may have appeared costly at the time but retaining ownership proved far more valuable than accepting the immediate opportunity.

The song itself offers a gentler lesson. Written as a farewell to her mentor, Porter Wagoner, it looks back with appreciation rather than dwelling on differences. It recognises what the relationship contributed, while accepting that there are times when moving on is the right course.

That idea has some resonance for investors. When an investment disappoints, there is little benefit in reliving past decisions or assigning blame. Markets are indifferent to our regrets. The more useful response is to understand what has changed, absorb the lessons and reassess the opportunity with a clear mind.

Successful investing depends not on winning arguments with the past, but on allocating capital intelligently for the future.

Parton also built a substantial business around her name while protecting the qualities that made it distinctive. Her philanthropy, including the Imagination Library, showed that commercial success and social purpose can reinforce one another.

Her advice, “Don’t get so busy making a living that you forget to make a life”, is close to the principle that guides good financial planning. Wealth is not an end in itself. It is a means of supporting the people, choices, and purposes that matter.

That is as sound a closing thought for investors as it is for business leaders: work hard (9 to 5!), retain ownership of what matters, exercise judgement and remember what the money is for.

What a brilliant way to make a living! RIP Dolly.

As always, we thank you for your continued support and we look forward to keeping you updated for the final few months of 2026.

Please click here to access The Clarion Investment Diary for September with full details of the Clarion Portfolio Funds including performance statistics.

Keith W Thompson

Clarion Group Chairman

September 2026

Creating better lives now and in the future for our clients, their families and those who are important to them.

Risk Warnings

Any investment performance figures referred to relate to past performance which is not a reliable indicator of future results and should not be the sole factor of consideration when selecting a product or strategy. The value of investments, and the income arising from them, can go down as well as up and is not guaranteed, which means that you may not get back what you invested. Unless indicated otherwise, performance figures are stated in British Pounds. Where performance figures are stated in other currencies, changes in exchange rates may also cause an investment to fluctuate in value.

The content of this article does not constitute financial advice and you may wish to seek professional advice based on your individual circumstances before making any financial decisions.