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.

Read this week's Major Trend. 

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

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.

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.

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.

The final quarter of 2025 produced blockbuster sales growth of 9.4% for S&P 500 companies. This strength was broad based, led by the Technology sector’s 22% sales gain and an 11% jump in revenue for Communication Services.

We tackle the challenge of appraising an investment that doesn’t produce income or cash flow by weighing the price of gold against other familiar investments and concepts that can be quantified—like home prices and inflation.

Read this week's Major Trend. 

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.

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.

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.

On a total return basis, the S&P 500 posted its first monthly loss since last April. Downside to median levels narrowed slightly but remain very close to contemporary extremes.

While the powerful alignment of fiscal support and monetary easing continues to be favorable for risky assets, the ongoing conflict with Iran has considerably muddled the picture for the economy and inflation.

Equity market resilience against war headlines, AI disruption fears, and private credit stress have so far been largely supported by a rare “Goldilocks” macro setup. Enter the three bears: Software stocks, private credit/BDCs, and bitcoin.

On a total return basis, the S&P 500’s February loss of 0.8% was its first monthly decline since last April. However, the equal-weighted S&P 500 advanced 3.5%. The resulting performance gap, in favor of the average stock, is the largest since April 2009, when the market blasted off the GFC lows.

Since Halloween, RB Value (+14%) has dominated RB Growth (-7%); it was the best four-month stretch for RB Value relative to RB Growth since April 2022. During that time, the change in valuation is unmistakable—with Large Value now much less of a bargain.

The equal-weighted S&P 500’s +4% return in February outperformed the S&P 600’s +2%, pushing the Ratio of Ratio’s valuation gap to its widest margin since September 2024. A declining P/E multiple for the median Small Cap in our L3000 universe was also at play, migrating from 21.4x to 20.0x.

The Up/Down ratio for the second month of Q4 reporting is 1.80. Aside from a slight hiccup last spring, this Up/Down work has consistently grown for the past nine quarters. The vignette has now reached a level that has previously been very difficult to maintain, especially since the GFC.

With S&P 500 Q4 reporting winding down, estimated operating EPS is now 6.9% higher than at the start of the year.