Green Book January 2026
Santa Hits Snooze
No, Virginia, there wasn’t a 2025 Santa Claus rally. It came down to the final few ticks, but the last five trading days of 2025 plus the first two trading days of the new year goe in the books as a lump of coal.
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Featured Articles
Three-Peat & The Risky Trinity
SPX pulled off a rare three-peat in 2025, returning +15%-plus for three consecutive years. What often follows is much higher volatility. Yet, strong returns alone do not cause major volatility events. Today’s bigger risk is the unprecedented convergence of three long-running themes: AI, Bitcoin, Private Credit.
S&P 500: The Good, The Bad, And The Ugly
Any hint of an Equal Weighted S&P 500 resurgence ignites a spark of optimism in active managers’ hearts. An EW run similar to the Tech Bubble aftermath doesn’t seem too farfetched. The downside? A bear market would probably be involved.
A State Of Perpetual Bliss
Sentiment, traditionally a contrary gauge of stock performance, was acutely bullish entering 2025—the 3rd most optimistic level in history, and therefore worthy of concern. Nevertheless, SPX’s 2025 return logged the 3rd best outcome for a year starting with such elevated confidence.
Low Enough For Low Vol?
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.
Factor Fundamentals
Investment management requires making decisions between alternatives, and the goal of fundamental analysis is to compare “what you pay” with “what you get.” We evaluated factors using metrics like valuation, profitability, and growth to lay out a menu of tradeoffs in the factor world heading into 2026.
2026 Time Cycles—Mostly Favorable
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.
Annual Asset Class & Sector Bridesmaids
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.
Leuthold’s Industry Group “Dreams” And “Nightmares”—Annual Update
Historically, the momentum plays of our Dreams and Nightmares have worked both ways, and 2025 was a “confirmation” year for this study. The best performing groups from 2024 beat the S&P 500 in 2025, and the worst performers of 2024 trailed both the Dreams and the S&P 500 in 2025.
2025 Cheapskate Sector
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.
Table of Contents
Stock Market
- A State Of Perpetual Bliss
- Three-Peat & The Risky Trinity
- Santa Hits Snooze
- S&P 500: The Good, The Bad, And The Ugly
- Annual Asset Class & Sector Bridesmaids
- 2025 Cheapskate Sector
- Low Enough For Low Vol?
- One Factor To Rule Them All
Of Special Interest
Macro Monitor
- Top Charts Of 2025 & Persistent Themes For 2026
- 2026 Time Cycles—Mostly Favorable
- Risk Aversion Index: A New “Higher-Risk” Signal
The Leuthold Refresh
Equity Strategies
- Leuthold’s Industry Group “Dreams” And “Nightmares”—Annual Update
- Leuthold Portfolios Update - December 2025
Market Internals
- Recession Risk Low
- Valuations: Small Cap Vs. Large Cap
- Leadership Dynamics: Growth/Value/Cyclical
- Other Market Undercurrents
Portfolios
Major Trend
Estimating the Downside
At Random
Three-Peat & The Risky Trinity
SPX pulled off a rare three-peat in 2025, returning +15%-plus for three consecutive years. What often follows is much higher volatility. Yet, strong returns alone do not cause major volatility events. Today’s bigger risk is the unprecedented convergence of three long-running themes: AI, Bitcoin, Private Credit.
S&P 500: The Good, The Bad, And The Ugly
Any hint of an Equal Weighted S&P 500 resurgence ignites a spark of optimism in active managers’ hearts. An EW run similar to the Tech Bubble aftermath doesn’t seem too farfetched. The downside? A bear market would probably be involved.
A State Of Perpetual Bliss
Sentiment, traditionally a contrary gauge of stock performance, was acutely bullish entering 2025—the 3rd most optimistic level in history, and therefore worthy of concern. Nevertheless, SPX’s 2025 return logged the 3rd best outcome for a year starting with such elevated confidence.
Low Enough For Low Vol?
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.
Factor Fundamentals
Investment management requires making decisions between alternatives, and the goal of fundamental analysis is to compare “what you pay” with “what you get.” We evaluated factors using metrics like valuation, profitability, and growth to lay out a menu of tradeoffs in the factor world heading into 2026.
2026 Time Cycles—Mostly Favorable
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.
Annual Asset Class & Sector Bridesmaids
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.
Leuthold’s Industry Group “Dreams” And “Nightmares”—Annual Update
Historically, the momentum plays of our Dreams and Nightmares have worked both ways, and 2025 was a “confirmation” year for this study. The best performing groups from 2024 beat the S&P 500 in 2025, and the worst performers of 2024 trailed both the Dreams and the S&P 500 in 2025.
2025 Cheapskate Sector
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.
Stock Market
- A State Of Perpetual Bliss
- Three-Peat & The Risky Trinity
- Santa Hits Snooze
- S&P 500: The Good, The Bad, And The Ugly
- Annual Asset Class & Sector Bridesmaids
- 2025 Cheapskate Sector
- Low Enough For Low Vol?
- One Factor To Rule Them All
Of Special Interest
Macro Monitor
- Top Charts Of 2025 & Persistent Themes For 2026
- 2026 Time Cycles—Mostly Favorable
- Risk Aversion Index: A New “Higher-Risk” Signal
The Leuthold Refresh
Equity Strategies
- Leuthold’s Industry Group “Dreams” And “Nightmares”—Annual Update
- Leuthold Portfolios Update - December 2025
Market Internals
- Recession Risk Low
- Valuations: Small Cap Vs. Large Cap
- Leadership Dynamics: Growth/Value/Cyclical
- Other Market Undercurrents
Portfolios
Major Trend
Estimating the Downside
At Random
Perception for the Professional
March 2026 Issue
Featured Articles
Sector Navigator
March 2026 Issue
