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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.

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.

Advances in the S&P 500’s underlying fundamentals marginally outpaced the improvement in price. Our “New-Era” downside-to-median estimate narrowed from -32% to -30%, while the 1957 to date figure was unchanged month-over-month.

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.

Read this week's Major Trend. 

Read this week's MTI

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.

Read the latest MTI update

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.

Read this week's Major Trend. 

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.

Given the convergency of three key risks related to AI, Bitcoin, and private credit, caution is certainly warranted.

Major market indexes show largely favorable patterns for 2026, but complacency is the real risk after a rare “three-peat” in S&P 500 annual performance.

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.

2025 was a year where “abnormal” became the new normal. From fiscal dominance and stubborn inflation risks to renewed credit stress and a shifting global leadership map, our favorite charts from the past year reveal the forces likely to shape markets in 2026—and where the next opportunities and risks may lie.

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.