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The return landscape has been good for a passive “own-everything” asset allocation policy. Our hypothetical “All Asset No Authority” (AANA) portfolio has seen a few more cylinders firing this year. In fact, YTD, none of AANA’s asset class constituents have negative performance.

As AI-growth heavyweights keep pushing the S&P 500 to new all-time highs, value investors have been completely left out. Usually, buying high-quality value names is the best defense, but that has been a disaster in the current cycle. Junky value is substantially outpacing quality value.

November ushers in a tropical breeze for risk-seeking investors. The six-month stretch from November through April has proven to be an exceptionally profitable time, particularly for those exposed to factors, such as size, value, and volatility.

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.

At the market trough back on April 8th, using history from 1995 forward, our downside-to-median calculation showed a potential loss of 13% for the S&P 500. Today, that risk measure sits at -34%, a contemporary extreme.

S&P 500 Q3 estimated bottom-up operating EPS shot 5% higher with results for the first month of reporting (Chart 1). This pop is much more impressive than the 2% gain we saw in July (after the first month of reporting for Q2). The current Q3 estimate of $70.27 is about a percent better than the last reading prior to the “Liberation Day” announcement. The tariff-induced bottom-line reckoning feared this spring has yet to materialize. We’d surmise that the still L-shaped EPS snail-trail for Q4 will bounce higher, too, come January.

Read the week's Major Trend.

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From its December 1989 inception through the end of 2022, the Dividend Aristocrats (DA) Index handily outperformed the S&P 500, posting an 11.8% annualized return compared to the parent index’s 9.7% gain. However, the AI mania driving the market today has erased much of that 33-year advantage, and Dividend Aristocrats rank as the worst performing style since the beginning of 2023. We were intrigued by this turnabout and what it means for investing in dividend growers going forward.

Read this week's Major Trend. 

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.

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Interest-rate cycles driven by Fed-policy changes can be the most powerful determinants of economic and market conditions. Decisions to raise or lower the fed funds rate impact sectors and styles differently; September’s rate cut prompted us to review equity winners and losers from prior episodes.

We’re in the third upleg of a cyclical bull market that began at full employment, yet  this rally is tracking the path of a bull market that launched in the aftermath of a recessionary bear market bottom.

While our traditional breadth and leadership studies advise the market is quite healthy, we’ve lately observed some broader disagreement from long-term leaders, including the Magnificent Seven—of which only two have made new 52-week highs over the last month.

Officially, as of September 30th, five of our eight bellwethers have confirmed the latest S&P 500 high. That’s typically good enough for the boat to stay afloat—and looks healthier than at February’s high.

FOMO is in full gear and—unlike the meme-stock mania of 2021—it’s been underpinned by an extremely compelling storyline: The seemingly limitless possibilities of artificial intelligence.

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.

With the second and third quarters’ results in the books, 2025 is back to following the exact same playbook seen the past two years. The eight largest firms in the S&P 500 posted an average return of +50% since the end of Q1. That octet—now a 37% index weight—has contributed a little over two-thirds of the S&P 500’s +20% return during the last six months.

Russell 2000 Growth gained 26% since the end of March—the largest two-quarter bump for that index measured back to 2020. It fell just short of eclipsing its all-time high set in February 2021.