Published December 29, 2025
“Investors are starting to sniff out the beginning of an improvement in cyclical areas of the economy. You want to be positioned for finding names that are going to see an incremental benefit to their earnings picture in the next year as we expect cyclical data to improve and lead to value outperformance in 2026 for the first time in a long time” said Michael Kantrowitz, chief investment strategist and head of portfolio strategy at Piper Sandler.
You know, I was playing golf with a friend who has professional money management and a large diversified portfolio. “You know what was my best performing stock in 2025? Caterpillar…like 60%.”
I’ve seen this many times over the years. When investors have wrung out the towel on Growth, they get high wire vertigo and so, maybe IBM instead of Broadcom, or Honeywell instead of Lumentum? They shift, keeping money at risk but as a perceived lower risk.
Where do you go? Financials, Industrials, sellers of non-essential consumer products. You know, the kind of stuff I like to buy. 70 economists were interviewed by Bloomberg recently, they believe 2% economic growth in 2026. Nothing to write home about, but certainly steady enough to move the Value side of the market. New trend?
A Goldman Sachs basket of cyclical stocks has climbed 9.3% over the last month. That advance is twice as fast as the broader market, with the S&P 500 Index rising just 4.2%.
The rotation feels as though its begun.
