The More Things Change, the More They Trade the Same

Almost 50 years in the market taught me one truth: the headlines change, the patterns don’t.

If you’ve been around this business as long as I have (over 45 years), you know one thing for sure: markets change, people don’t. The headlines get louder, and the technology gets flashier, but the behavior? It’s the same movie on repeat — just with better special effects. As a mentor once told me, “If you trade on the headlines, at some point you are going to end up delivering newspapers.”

2025 proved that point again.

After a spring pullback, the market marched right back to record highs. And for once, it wasn’t just the “Magnificent Seven” carrying the load. Companies big and small — from Utilities to Financials to Industrials — finally got invited back to the party. For the year ended December 31, 2025, the Dow gained 14.9% and the S&P 500® returned 17.9%, proving what I’ve said for years: a steady consumer and resilient economy beat any headline narrative.

Domination by seven stocks? Historically unsustainable. No group holds nearly 40% of the S&P 500® forever. Stars fade. New leaders rise. It happened in the ‘80s and ‘90s, and I believe it’s happening again.

Even better? The Federal Reserve is hinting at more rate cuts, the tariff noise has faded, and consumers are still spending.

But before anyone breaks out the champagne, let’s be clear: this isn’t euphoria for main street companies.This is fundamentals doing their job.

Corporate earnings are strong.

Cash is everywhere — $7 trillion on the S&P 500® company balance sheets, $7 trillion in money markets, and
$18 trillion sitting in bank deposits. That’s not fear, it’s dry powder.

It’s no wonder the markets have the potential to run. That said, I do believe we will encounter periods of volatility this year, with the Dow likely trading within a range of approximately 43,500 to 47,500.

And yes — AI is still the star of the show, but remember: every bubble in history pops the same way… when too many people decide “this time is different.” Spoiler alert: it rarely is.

Here’s the good news: America runs on optimism, invention, and sheer stubbornness.

Even in a divided moment, innovation is happening everywhere. Companies are cutting costs, raising prices smartly, protecting margins, and finding new ways to grow through earnings and cash flow.

Will we hit some bumps?

Of course. Housing is sluggish, inflation remains an ongoing concern, and unemployment may tick up. But the math still says the positives outweigh the negatives.

So where do we go from here?

Forward — as we always do.

Stay invested. Stay rational. And ignore the noise — most of it is reruns anyway.

Neil Hennessy
Chairman, Chief Market Strategist
Hennessy Advisors, Inc.