Rotation Nation – Look Before You Leap: Stock Talk Update, Friday February 20, 2026

Year to date, the U.S. equity market — as measured by the S&P 500 — is essentially flat as of this filming.

However, beneath that flat headline number, we’ve seen one of the widest dispersions in returns that I’ve witnessed in over 30 years of managing money.

But underneath that flat headline number, we’re seeing one of the widest dispersions in returns I’ve witnessed in over 30 years of managing money.

Let’s look at the table.

We’re comparing year-to-date returns for the S&P 500, the Nasdaq Composite, the Dow 30, the Russell 2000, the Russell 1000 Growth Index, and the Russell 1000 Value Index.

I’ve selected the S&P 500 as a broad, market-cap-weighted benchmark most investors understand which is essentially flat.

The Nasdaq Composite serves as a large-cap growth proxy is down -2.75%

The Dow 30, which is price-weighted rather than market-cap-weighted, tends to represent more dividend-oriented and stable growth companies is up over 3%.

The Russell indexes capture small-cap exposure and growth versus value distinctions. These are often found in 401(k) lineups and broad equity allocations.

What Does the Table Show?

Smaller-cap value stocks are leading the U.S. performance tables — up over +6% year to date.

Large-cap growth stocks, on the other hand, are negative — down approximately -2.75% year to date.

That’s significant dispersion — in just the first seven to eight weeks of the year.

Factor Perspective

Now let’s take this one level deeper.

Instead of looking at indexes, let’s examine returns through a factor lens.

By “factor,” I mean characteristics of stocks — not industry or market cap — but traits like: Value, Growth, Quality, High dividend, and Low volatility

Here is the year-to-date performance table based on factor groupings from Seeking Alpha, using publicly traded factor ETFs.

What stands out?

The best-performing factor year to date is high dividend yield.
Second best: dividend growth.

What do these share in common?

They are defensive.

These areas tend to be defensive. They typically include companies in slower-growth industries that offer immediate shareholder returns through dividends. When investors sense slowing economic growth or rising volatility, they often rotate into these areas — staying invested, but “hiding” in more defensive exposure.

But Isn’t the Economy Strong?

You may be thinking:

“Chris, all I hear on TV is that GDP growth is running at 4–5%, and policymakers want to run the economy hot.”

I understand that narrative.

However, markets don’t trade headlines — they trade expectations.

Year to date, both the bond market and equity factor rotation are signaling that economic growth likely peaked at year-end 2025 and has slowed in early 2026.

The Q4 2025 growth spurt was likely temporary, driven by:

• Consumer purchases pulled forward ahead of tariff concerns
• Federal employees returning to work after the extended government shutdown

That boost appears to be fading.

Sector Rotation

Now let’s look at sector performance.

Investors are favoring lower organic growth industries:

• Consumer Staples
• Energy
• Utilities
• Materials

These sectors are materially outperforming traditional high-growth areas:

• Technology
• Communication Services
• Healthcare
• Consumer Discretionary

This pattern began in Q4 2025 and has continued into 2026.

Should You Chase It?

Some investors may feel the urge to shift allocations:

• From growth to value
• From appreciation to income
• From technology to defensive sectors

I’ve heard this many times.

“I need more growth.”
“I want more income.”

But shifting styles quickly — and tax-efficiently — is rarely simple.

At Oak Harvest, we generally advise clients to pause before making emotional allocation shifts based on short-term performance.

These changes often feel satisfying initially, but historically they have detracted from long-term financial plans.

If you feel the urge to make changes, call your advisor first.

The Bond Market Signal

Let’s bring in another data point.

Here is the 2-year real interest rate — the 2-year TIPS yield.

Notice the move from mid-December through early February.

Real rates moved down and to the right — signaling slowing real growth expectations.

Down and to the right: slower real growth.
Up and to the right: accelerating growth.

The bond market has been signaling moderation.

The key question is:

Do you want to change your entire financial plan based on eight to twelve weeks of data?

Longer-Term Perspective

Let’s zoom out.

Over the last year, large-cap indexes are close to a dead heat.
In small caps, value has outperformed growth.

Now extend back to late 2022 — around the launch of OpenAI and ChatGPT.

Growth dramatically outperformed value — in some cases by 50–100%, depending on market cap.

Now go back 10 years.

The Nasdaq Composite has outperformed the S&P 500 by roughly 350 basis points per year over the last decade.

Meanwhile, Small-cap value and Large-cap value, represented by the Dow

have lagged the S&P 500 by roughly 150 to 400 basis points per year over that same period.

Short-term rotations can feel dramatic.

Long-term compounding tells a different story.

What Does This Mean for You?

Three key takeaways:

1. Diversification is the only free lunch in investing.

When growth struggles, dividend strategies may lead.
When technology falters, healthcare, staples, or utilities often provide ballast.

We don’t know when trends change.

So, it’s wise not to concentrate everything in one:

• Asset class
• Investment style
• Sector

2. Avoid reactive allocation changes.

Large shifts are best made when:

• Volatility is low
• Markets are calm
• Asset prices are strong

Not during short-term turbulence.

3. Investors should Stay aligned with longer-term goals.

In any given year:

• U.S. equities may outperform
• Or international stocks
• Or commodities
• Or fixed income
• Or even cash

Rotating aggressively year to year almost always leads to subpar long-term results.

Our Approach

At Oak Harvest, we manage diversified equity portfolios designed to balance risk and reward.

For income-oriented investors who prioritize growing dividends and lower volatility, we offer a dividend growth equity model.

For investors focused on long-term price appreciation, we offer a blue-chip growth model.

Our advisors combine market-based and insurance-based tools to support retirement planning and long-term financial security.

Closing Thoughts

So far, 2026 has been choppy for the S&P 500.

But our team has experience navigating:

• Slower growth environments
• Factor rotations
• Volatile markets

Our advice:

Stay disciplined.
Stay diversified.
Stay focused on long-term goals.

Continue following our investment insights on the Oak Harvest website and our YouTube channel.

Whether your priority is growth, income, or a combination of both, our team is here to help you plan for your family’s financial future — no matter where you are in your career or retirement journey.

Do you need a retirement plan that goes beyond allocating funds to truly fit your needs? We can help you create a retirement life plan customized for your retirement vision and legacy. Call us at 877-896-0040 or fill out this form for a free visit: https://click2retire.com/lets-connect