Stock Talk - 2026 Surprise of the Year? Stock Talk Update, Friday February 13, 2026

Episode Date: February 13, 2026

Is the biggest surprise of 2026 already happening, and almost no one sees it yet?   I break down what investors should be watching in the S&P 500, earnings growth trends, AI-driven capital spending, and potential Federal Reserve policy shifts. You’ll learn how mid-term election cycles typically impact market volatility, what current earnings data may be signaling about valuation compression, and why this year could unfold very differently than many strategists expect.   If you’re age 50 or older and focused on retirement income, portfolio growth, and tax-efficient planning, this video will help you better understand risk, opportunity, and how volatility may create strategic advantages for long-term investors.   About Chris Perras, CFA®, CLU®, ChFC®, Chief Investment Officer: As CIO, Chris is the lead investment strategist and director of research at Oak Harvest Financial Group. Chris develops the firm's core market outlook, putting his decades of experience and expertise to work for our clients. He hosts Oak Harvest's podcast, "Stock Talk," available on the website with new episodes each week. He completed his undergraduate studies at Georgia Tech, and went on to obtain an MBA from the Harvard Business School. Driven by a desire to maximize his knowledge and skill set, he acquired financial planning and investment management qualifications, becoming a Chartered Life Underwriter (CLU®), a Chartered Financial Consultant (ChFC®), and a Chartered Financial Analyst (CFA®).   Stock Talk is a weekly vlog/podcast dedicated to discussing the Oak Harvest Financial Group Investment Team's perspective on what's happening in the market. Hosted by Chief Investment Officer Chris Perras, each episode brings you our views on stocks, the market, and the economy with a little education thrown in for good measure. Listen each week and help stay connected to your money!   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   Important disclosures: Content of Oak Harvest podcasts expresses the views of the speaker and is for informational purposes only. Oak Harvest believes that any data, articles, or information cited are reliable at the time of creation, but does not warrant any information contained herein to be correct, complete, accurate, or timely. References to third-party analysts should not be seen as an endorsement of their views or recommendations, and you should do your own research before investing. The views and opinions expressed herein may change without notice. Strategies and ideas discussed may not be right for you, and nothing in this podcast constitutes personalized investment, tax or legal advice, or an offer or solicitation to buy or sell securities. Indexes such as the S&P 500 are not available for direct investment and your investment results may differ when compared to an index. Any specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing involves the risk of loss, and past performance is not indicative of future results.

Okay, investors, like many other advisory groups, the team here at Oak Carbus likes to release our market outlook for the year. Team has historically split the year into the first and second half as things can change rather dramatically as we saw on the first quarter of 2025. This year's release was titled Being a Bull Riter is Harder Some Years. We laid out two positives and two negatives we saw that might affect stock market returns while producing higher volatility in 2006 than in prior years. The bullish tailwinds and arguments for 2026 stock returns center around the S&P 500 earnings and earnings growth rates throughout the year. Large and accelerating AI cap-ex investments by the largest market cap companies, helpful tax policies with a big beautiful bill from a business accelerated depreciation standpoint, consumer tax refunds and cash flow tailwinds set the overall S&P 500 up for high and accelerating quarterly earnings from the first quarter through the fourth quarter throughout the year. Add in a likely more Dovish Federal Reserve and or a treasury department come that second quarter.

Historically, first quarter EPS are the low bar for the quarterly earnings in the U.S. for the year. Currently, bottoms up fact set earnings forecast have fourth quarter, quarterly earnings expectations of about 83 and a third dollars per share, up over 13% year-to-year from the quarter. We are currently in the fourth quarter, 2025. While this is a touch lower than the projected 17,000, percent growth a few months ago, this slowdown in growth rate is entirely due to the fourth quarter 25 earnings coming in significantly higher than projected just a few months ago. This higher base rate and earnings for the fourth quarter would make up the fourth quarter 26 comparable growth

rate at up over 13 percent, slightly lower, off a much higher base. The two negative themes for 2006 were the normalcy of higher sustained volatility due to it being a second year of a presidential term midterm election cycle and at some point the market's likely testing the new Fed chairman within the first year of his sitting term. We ventured to guess it would be over a shock of sustained higher inflation prints. Our team usually also gets the question of what could be surprised for the markets. Of course, most people think negative surprises first and we listed the usual suspects of negative surprises around geopolitics in China or the Middle East or Federal Reserve missteps. However, the last six weeks of price action of the overall S&P 500 got me thinking,

is there perhaps a positive surprise lurking out there around the corner? One, no one's thinking of, one on no one's rate of. And if so, what might it be? Investors, 2006 started off fast and furious in a negative way with much higher volatility. With that said, the overall S&P 500 says, that's about $6950, pretty much the same level as it was late October of last year four months ago. Here's the volatility curve as of this writing. One can see it's pretty pricey to buy puts to help cushion one's portfolio beyond the first quarter.

Given realized volatility sits around 8 to 10 most weeks now, and bond volatility is in a downtrend still below 65. All that volatility contracts out in the future hover between 20 and a half and 22 currently. Currently, S&P 500 earnings have grown almost 4% quarter to quarter from third quarter to fourth quarter. That's up over 12% year to year. The 10-year nominal treasury interest rates are essentially flat at 4.15% since Lacked October. And the S&P 500 is, yes, flat as well since October 2025. That doesn't scream irrational exuberance to me. It's saying P-E compression, not expansion.

To me, if anything, the first six weeks of 2006 price out. action in the SAP 500 with stock breadth broadening in the indexes, small caps and foreign stocks leading, and continued elevated cost of hedging already in the 21 to 22 range beyond the first quarter, first realized volatility below 10. That strikes me as somewhat quite the opposite of bearish. It strikes me quite possibly as more bullish for the second quarter through fourth quarter of this year, and that possibly the biggest surprise to myself and others might be slowly happening. What's that? That would be a first quarter of more or less churning price. action in the overall market. That would be a correction in the overall SMP 500 based on time,

not so much percent price decline. Remember that an average decline in this index, the S&P 500 in any 12-month period is over minus 5 percent. Anything less than 5 percent peak to shop would be a surprise and run counter to pass corrections. Any strategists I read are looking for at minus 10 to minus 15 percent first half correction. So far, we've only had a minus 3.15 percent declined peak to trough in the first quarter, and that's if you were perfect buying and selling the cash index. The biggest surprise I could think of for first half of 2006, what would that be? That we've already seen the first half lows in the S&P 500 cash markets, somewhere between 6750 and 6780. I posted how we are trading versus two prior periods many times since the tariff

traded some lows last year. One comparing Trump 1.0 versus 2.0. And secondly, comparing the AI build first the dot-com period from 1997 through 2000 here's the updated overlays at the s&p 500 the nassadine's industrials for you large-cap value fans and one of the most volatile but leading groups off the bottom almost a year ago the semiconductor equipment group first that time period back in the dot-com build-out as that continues to seem to be the most logical analogy investors this pattern continues to hold what would that mean that no one has to rush to buy in stocks right now No, of course not.

But it would be that the overall markets would once again frustrate those predicting the most dire negative outcomes, at least for a few more quarters, that the more likely outcome than a big market dive would be another six plus weeks of churning around in the SEP 500 between, say, 6750 and 6950 before investors exhale and start to believe those accelerated earnings and growth numbers for the second through fourth quarter of this year. The good news is that our investment team has experience in these types of sloppy churning markets. as well as those with higher levels of volatility. Remember investors, that elevated volatility also means elevated opportunity for longer-term investors. Historically, investors' biggest incremental returns come from investing when volatility is high, not low, the markets are down, and others are either acting emotionally or worse yet, being forced to sell when they really should be pushing their chips into the center of the table and adding to investments.

Investors, what does this mean to you? Our advice to you, keep following our investment content here at O'Carvis website. none of our YouTube channels, investors, whether you desire growth or income or combination of both in your portfolio. The entire Oak Harvest team is here for our clients, doing what you can to plan for you and your family's future, regardless of what stage you're at in your career or in your retirement. All content contained with an Oak Harvest podcast expresses the views of the speaker and is for informational purposes only. It is based on information believed to be reliable when created, but any cited data, indicators, statistics, or other sources are not guaranteed.

The views and opinions expressed herein may change without notice. Strategies and ideas discussed may not be right for you, and nothing in this podcast should be considered as personalized investment, tax or legal advice, or an offer or solicitation to buy or sell securities. Indexes such as the S&P 500 are not available for direct investment, and your investment results may differ when compared to an index. Specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing involves the risk of loss and past performance is not indicative of future results.