When bombs fly, the reward for bravery is rarely paid on schedule. We do not think this is the time to heroically outguess geopolitics or to confuse short-term fortitude with long-term clarity.

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AI disruption-hysteria sent a stock market scare across waves of industries, with headlines pointing to serious adverse consequences for those firms’ business models. We examine the impact on prominent industry victims to ascertain if stock prices are still distressed and/or the extent to which any have recovered.

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If the dot-com boom was a tale of public markets eagerly underwriting a technological future and then abruptly withdrawing that support, the AI fervor looks like a story of private capital and corporate balance sheets quietly doing the same—but with far less accountability.

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Those complaining about the “Top 1%” controlling all the wealth may finally be getting some satisfaction. Since Halloween, it has been mostly rough sledding for our five-member “4% Club” contingent.

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Employment growth across sectors is now highly concentrated, indicating the job market is being held up by an ever-dwindling cohort of prosperous industries. Coupled with lackluster growth in 2025, this is cause for concern. Yet, history suggests that relief could be just beyond the horizon.

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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.

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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.

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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.

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The Transports saw a huge increase in demand during Covid, as individuals and businesses, alike, stockpiled products. That pressure brought along a spike in capacity just as demand waned—resulting in the freight recession we’ve seen over the last few years. Today, however, there are signs of a recovery.

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No, Virginia, there wasn’t a 2025 Santa Claus rally. It came down to the final few ticks, but the last five trading days of 2025 plus the first two trading days of the new year go in the books as a lump of coal.

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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.

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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.

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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.

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We’ve had five consecutive years with momentum performing better among small caps than large caps. One reason for the sizable difference in 2025—and what may be concerning—is that the bulk of last year’s gains were driven by speculative, unprofitable companies (which are disproportionately small cap).

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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.

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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.

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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.

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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.

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As we tickle the October high, the present bull has already achieved something quite special. This iteration has posted the largest price gain (+93%) of any bull market that wasn’t born in a recession.

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Whenever the market’s thematic leadership hits an air pocket, it is instructive to discover where investor interest shifts. In November, those evacuating big tech found refuge in the Health Care sector, which staged a remarkable comeback from its extended weakness this summer.

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