Articles by Greg Swenson, CFA Director of Equities

The Major Trend Index has shifted to Neutral as technical and cyclical conditions soften, while geopolitical risks and rising cross-asset correlations add new uncertainty to the outlook. In this webcast, the team discusses how conflicts, liquidity trends, and evolving risks across AI, private credit, and crypto are shaping today’s investment landscape. They also review current portfolio positioning, sector themes, and the disciplined approach guiding allocation decisions in an increasingly volatile market.

February delivered solid gains across strategies, though the underlying signals are becoming more mixed. The Core strategy trimmed equity exposure in early March following a Major Trend downgrade, Select Industries benefited from strengthening leadership among mid- and small-cap groups, and the Grizzly strategy continued to target industries facing pressure from AI disruption and private credit stress.

Big Tech was added to the portfolio during February. The group has lagged since the fall, but looks outstanding from a fundamental perspective.

Dispersion remains elevated among factors, with growth selling off and momentum turning in extreme performance spreads. Low-volatility names finally did well after a long stretch of underperformance.

January marked a constructive start to 2026 across the platform. Core benefited from strengthening breadth and solid fixed income returns, while Select Industries continued to capitalize on the rotation away from narrow mega-cap leadership. Even Grizzly, despite a modest decline, identified pockets of disruption and cyclical opportunity. As market leadership broadens and momentum leadership shifts, our strategies remain positioned to adapt.

Markets are changing and our strategies are adjusting accordingly. Core gained from improving breadth and balanced positioning, Select Industries navigated a decisive rotation toward cyclicals and commodities, and Grizzly continued uncovering structural disruption themes beneath the surface. With mega-cap momentum fading and leadership broadening, flexibility remains our advantage.

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.

2025 was a year where discipline mattered. Core delivered equity-like returns with far less risk, Select Industries thrived on a handful of high-conviction thematic winners, and Grizzly held its ground in a very tough environment for short strategies. As we head into 2026, trends remain supportive, positioning is intentional, and portfolio exposures reflect both opportunity and caution in a market still defined by extremes.

We sold two long-term group holdings last month: Big Communication Services and Systems Software. This continues our shift from growth into cyclical and defensive industries.

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).

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.

November delivered a welcome shift in style leadership, helping Core and Select post solid results while Grizzly defended well in a rising market. With valuations stretched and a potential year-end rally in play, our positioning across strategies reflects disciplined risk management and selective opportunity—especially in Health Care, Biopharma, and value-oriented industries.

Select Industries added a new group position in Pharmaceuticals, looking to take advantage of historically low relative valuations and recent momentum. 

Contrarian investing is difficult; from both an emotional and implementation standpoint, but our disciplined industry-scoring process periodically endorses segments that glaringly conflict with consensus (and our own) views. When an industry at odds with the conventional narrative materializes as highly-rated, it often turns out to be one of our more successful portfolio allocations.

Core, Select Industries, and Grizzly each navigated October’s mega-cap–driven market in distinct ways, with diversified positioning and disciplined risk management leading to resilient year-to-date results.

With equities trading at extreme valuations, Select Industries remains diversified among styles and themes.

S&P 500 performance is being propelled by its disproportionate concentration in the Magnificent Seven stocks, while the Russell 2000’s leadership is powered by unprofitable small caps, thereby resulting in breadth of quantity, not quality.

Markets continued their late-year rally in September, and all three Leuthold strategies delivered positive results. Core stayed competitive with net equity exposure under 60%, Select Industries benefited from broad sector strength and a new Biotechnology allocation, and Grizzly Short found opportunities even in a strong tape.

Biotechnology has reentered the Select Industries portfolio as improving fundamentals and a sharp sentiment rebound lifted the group into Attractive territory. While policy risks remain, the backdrop of stronger earnings revisions and reasonable valuations supports a renewed allocation to the sector.

Core gained 3.2% with year-to-date returns now at 10.5%, as equities and bonds both advanced. Select Industries rose 4.9%, led by standout strength in Precious Metals (up 90% YTD) and renewed momentum in Auto Parts & Equipment. Grizzly slipped 1.8%, but continued to benefit from short exposure in richly valued industries.