The commencement of Trump’s two terms were separated by eight years, a global pandemic, trillions in stimulus, and the quiet burial of several macroeconomic and civic assumptions once thought indestructible. While the personalities and rhetoric remain familiar, the economic backdrop, policy constraints, and market sensitivities of 2025 bore little resemblance to those of 2017.

Financial markets mimicked Mother Nature in the fourth quarter, drifting into a kind of hibernation. Style returns were rangebound around zero, and the spread between returns was about as narrow as we can recall. Active portfolio performance shows there wasn’t much to pick from to add significant value.

With structural economic and market changes, and influences of ever-evolving tech advances, years ago we introduced our “New-Era” median valuation metrics (1995-present). For the last decade, we’ve drifted further away from those “New-Era” benchmarks, which compelled us to take a look at today’s stock valuations compared to “New-New” Era median levels based on data from 2018-forward.

Annual style rebalancing triggered a sizable trim to IT exposure in the S&P 500 Value Index, but it is still the largest weight, followed closely by Financials. Revisions in the S&P 500 Growth Index caused its top-heavy concentration to become even more pronounced: Tech and Comm Services comprise 65% of the total weight. If counting the Mag 7 from Discretionary, tech titans make up 71% of the index.

In January, a surge in Japanese Government Bond yields occurred simultaneously with a selloff in the Yen—a sign of intensifying market concern about fiscal stability. Interestingly, collective stress in both the JGB and Yen has yet to spill over into the Nikkei Index, but if history is any guide, it is doubtful that Japanese equities will continue to be immune.

After the first month of Q4 reporting, S&P 500 estimated bottom-up operating EPS are now 4.5% higher than at the end of December. This bounce follows the initial script of the previous two quarters, which saw projections jump 2% July and 5% in October. Final figures for both Q2 and Q3 continued to climb as reporting progressed, so we’d presume Q4 to follow suit, increasing somewhat more before earnings season is finished. Also, Q4 has now finally shot above its pre-“Liberation Day” estimate set back in March.

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Wise investors have long understood that fear and pessimism often create excellent buying opportunities, while exuberance and greed often produce an environment that leads to poor future returns. Sentiment is one of the four pillars of our Major Trend Index, and a wide variety of approaches to gauging the mood of investors have evolved over the years. One set of metrics within our Sentiment category focuses on the level of volatility implied in option prices, and our research shows that option volatility is a reliable, contrary indicator of sentiment, which in turn is a useful regime indicator for future returns.

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The latest CPI numbers were largely in-line. The powerful alignment of fiscal and monetary policies will certainly alter the path of inflation this year, but for now, our discipline still suggests a mostly benign inflation picture.

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With recent extremes, both in underperformance and relative valuation, it feels like Low Vol could be near a turning point. At the very least, the margin for error is wider for this space than it has been in quite some time.

Last year’s Energy results earns an entry in the Cheapskate blooper reel, the sector will tie its personal best for the most consecutive years of underperformance against the S&P 500. However, this year’s delegate, Financials, offers a rare bright spot; it is the only Cheapskate sector to have beaten the S&P 500 during the last decade—pulling off that feat four times.

When we first published this work in 2011, the Bridesmaid’s alpha, both for asset classes and sectors, looked almost too good to be true. Since then, the performance edge for each has narrowed significantly—it’s still meaningful, but no longer magical.

Any hint of an Equal Weighted S&P 500 resurgence ignites a spark of optimism in active managers’ hearts. An EW run similar to the Tech Bubble aftermath doesn’t seem too farfetched. The downside? A bear market would probably be involved.

Investment management requires making decisions between alternatives, and the goal of fundamental analysis is to compare “what you pay” with “what you get.” We evaluated factors using metrics like valuation, profitability, and growth to lay out a menu of tradeoffs in the factor world heading into 2026.

SPX pulled off a rare three-peat in 2025, returning +15%-plus for three consecutive years. What often follows is much higher volatility. Yet, strong returns alone do not cause major volatility events. Today’s bigger risk is the unprecedented convergence of three long-running themes: AI, Bitcoin, Private Credit.

Sentiment, traditionally a contrary gauge of stock performance, was acutely bullish entering 2025—the 3rd most optimistic level in history, and therefore worthy of concern. Nevertheless, SPX’s 2025 return logged the 3rd best outcome for a year starting with such elevated confidence.

Historically, the momentum plays of our Dreams and Nightmares have worked both ways, and 2025 was a “confirmation” year for this study. The best performing groups from 2024 beat the S&P 500 in 2025, and the worst performers of 2024 trailed both the Dreams and the S&P 500 in 2025.

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The timeline of American economic development is punctuated by episodes of intense capital spending to build out a new and revolutionary concept that transforms the entire country.  The investment plans of hyperscalers Microsoft, Alphabet, Amazon, and Meta have captured the public’s attention this year as the release of ChatGPT in November 2022 ignited a quantum shift in capex spending, with the third quarter of 2025 coming in at a run rate of $97 billion, or nearly $400 billion annualized.  The astronomical amounts being spent to build AI capacity are almost hard to fathom, and today, we take a closer look at the data center phenomenon.

The latest CPI numbers were softer than expected, but it doesn’t solve the affordability issue. The powerful alignment of fiscal and monetary policy tools will play a major role in shaping the path of inflation next year.

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It’s been five long years since Small Caps had their last sustained relative-strength rally: From November 2020 through March 2021, the S&P 600 gained an astounding 51% versus the S&P 500’s +22%.

More than halfway through the decade, a lot of things have changed. We revisit several decade-defining charts from the 2010s and consider where these long-running trends stand today.

The index’s monthly win streak looked as dead as Disco as November progressed. Then, SPX rallied to close the month with its best five-day run since mid-May to attain a 7th consecutive monthly win. In the majority of prior cases, the index proceeded to post above average results for the next three- and six-month periods.

We examine several baskets of equities focused on distinctively speculative, high-risk market segments. Such traits are apt to be qualities investors try to avoid—but when animal spirits are running high, they can generate prodigious returns during short but powerful speculative outbursts.

The third quarter of 2025 produced the strongest earnings results in recent memory, paced by revenue gains in all eleven S&P 500 sectors. Sales registered 8.7% growth over 3Q24, leading to improvements in profit margins across the income statement.

The index gained 5% in the last five trading days of November to eke out a minuscule gain—but it was enough to score its seventh-consecutive monthly advance. The S&P 500 is back within spitting distance of its all-time high set in late October.

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With the second month of Q3 reporting complete, S&P 500 estimated bottom-up operating EPS continued to scream higher (Chart 1). At $72.40, it is now 8.2% above the level at the end of September (before Q3 earnings reports began). Percentage-wise, this is double the bounce we saw two months into the still historically very good Q2 earnings period. Q3’s YOY growth stands at 22%—the highest rate since the 2021 surge out of the pandemic.

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Tracking revenue and earnings beats to identify conditions where the Equal Weighted S&P 500 may outperform the Cap Weighted S&P 500 (or vice versa). Original study by Brian Weisenberger, guest contributor, along with Scott Opsal.

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Read this week's Major Trend. 

There is consistent evidence that bank stocks behave like macro proxies. Both domestically and in other major economies across the globe, there is a strong and steady link between lending conditions and subsequent economic activity.