The first week of June taught everyone a lesson.

The Nasdaq plunged more than 4% in a single session — its worst day of the year. The S&P 500 fell 2.6% and the Dow briefly shed nearly 700 points. Two triggers: Broadcom failed to raise its AI-chip outlook, sparking doubts about whether the AI arms race is cooling; and a much stronger-than-expected 172,000 jobs added in May made investors worry the opposite — that a hot economy could push the Fed to hike again before year-end, with those odds jumping from 26% to 43% in a month.

In a single day the story flipped from "AI can do no wrong" to "are rates turning back up?" That is what markets really look like.

1. The Fed: new chair, new rules

This is the first meeting under new chair Kevin Wash. Markets have grown used to "buy the dip, someone will rescue it" — but strategists warn the new chair may not be inclined to rescue a richly valued market at the first sign of stress. Stop taking the "Fed put" for granted.

2. Oil and geopolitics

Supply fears from the conflict involving Iran make oil one of the biggest swing factors for the second half. The path of oil could drive inflation, then rates — and therefore whether stocks soar or stall.

3. AI's concentration risk

AI is still the engine: an estimated ~40% of S&P 500 EPS growth this year comes from AI-related investment. But the flip side is that a handful of mega-caps carry most of the gains — both opportunity and risk. When everyone crowds onto one boat, a small wave rocks all of them.

4. Bonds are back

The decade of "there is no alternative" (TINA) to stocks is over. At higher rates, bonds' risk-adjusted returns are competitive again. Cash and fixed income are no longer just "waiting" — they're real choices.

5. Discipline is the variable you control

No one reliably calls the next candle. Howard Marks put it plainly: "You can't predict, but you can prepare." Buffett said it earlier: "Be fearful when others are greedy, and greedy when others are fearful."

In a selloff, what you rely on isn't prediction but rules set in advance — which is the heart of a Structured Note: KO, KI, coupon and observation dates, all agreed while you're calm. When markets panic, you look at the levels, not the emotion.

What investors should remember

  • Don't let a single down day scare you out — but don't pretend risk doesn't exist
  • Check your concentration: is everything riding on one theme?
  • Keep some cash / fixed income as optionality, so you have ammunition when others are forced to sell
  • Make decisions while calm, and let rules replace emotion

The second half will likely stay choppy. Whether you get through depends on how well you prepared before setting out.