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

Episode Date: February 20, 2026

Why is the S&P 500 flat in 2026 while small-cap value stocks and high-dividend sectors are quietly outperforming? In this market update, you’ll gain clarity on what is really happening beneath a calm headline number and why this year has started with one of the widest return dispersions in decades. We walk step by step through the performance differences between growth and value, large caps and small caps, dividend strategies and defensive sectors, then examine what factor rotation and bond market signals may be telling us about shifting economic expectations. Most importantly, you’ll walk away understanding how short-term rotations can create emotional pressure to chase performance, why diversification remains essential for long-term investors, and how to think calmly and strategically about allocation decisions within a retirement plan.   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.

Investors, 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 and returns I've witnessed in over 30 years of managing money. It's been quite a year-year-to-date returns for the S&P 500, a NASDAQ composite, the Dow 30, the Russell 2000 growth index, and the Russell-1,000 value index. I decided to select the S&P 500 as a broad market cap weighted benchmarks. Most investors understand it's essentially flat as a pancake. The NASDAQ composite serving as a large cap growth proxy is down minus 2 and 3 quarters percent. The Dow 30, which is a price weighted index rather than market cap weighted. It tends to represent more dividend-oriented and stable growth companies.

It's over 3% higher this year. The Russell indexes capture small cap exposure and small-cap growth and value. Those are those distinctions. Those are often found in 401K plans and lineups for broad equity allocations. This table, what's it show? It shows smaller cap value stocks are leading the U.S. performance tables up over 6% year-to-date. Large-cap gross stocks, on the other hand, are negative, down 2 and 3 quarters percent. That's a significant dispersion in just the first six to seven weeks. Let's look one level deeper. Instead of looking at indexes, let's examine returns through a factor-length. By factor, I mean characteristics of stocks, not industry or market cap, but traits like value,

growth, quality, high dividend, or low volatility. Here is the year-to-date performance table based on factor groupings from seeking alpha using publicly traded factor ETFs. Investors, what stands out to me? Well, the best performing factor year-to-date is high dividend yield. The second best-performing factor? Dividend growth. What do these share in common?

They are defensive characteristics. areas tend to be defensive. They typically include companies with 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 trying to stay invested, but hiding in more defensive exposure areas. But is it the economy strong, Chris? You might be saying that to yourself. I hear that all the time that GDP numbers are running hot, 4 to 5%. Policymakers in D.C. are saying, let's run it hot. man, I understand that narrative. However, markets trade on headlines. They trade on expectations. Near to date, both bond market and equity factor rotations are signaling that economic growth

likely peaked at year in 2025 as it slowed in early 2006. The fourth quarter 2025 growth spurt was likely temporarily driven by consumer purchase pulled forward ahead of tariff concerns and federal employees returning to work after an extended government shutdown. That booed appears to be fading now let's look at sector performance investors are favoring lower organic growth industry such as consumer staples energy utilities materials here to date these sectors are materially outperforming traditionally higher growth areas like technology communication services which has become really internet services health care and consumer discretionary this pattern

beginning in the fourth quarter of last year and is continued this year Should you chase it as an investor, 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 so many times at eight years at O'Carvis. I need more growth. I want more income, but shifting styles quickly and tax efficiently is rarely simple. No Carvis, 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've often detracted from long-term financial plans. If you feel the urge to make changes, call your advisor first.

Let's bring in another data point. Here's the two-year real interest rate, the two-year tips spread. Notice it moved down in December through early February. Real rates move down and to the right signaling, slowing real growth expectations. Down into the right, slower real growth. Up into the right, accelerating growth. The bond market has been signaling a moderation. Key question is, do you want to change your entire financial plane based on 8 to 12 weeks of data?

I don't think so. Looking out farther in a longer term perspective, let's go ahead and zoom out. Over the last year, large cap indexes are close to dead heat. In small caps, value has outperformed growth. Now extend these charts back to late 2022 around the launch of Open A.I. And chat, GBT. Growth dramatically outperformed value in some cases by 50 to 100 percent. depending on market cap. Let's go back 10 years. The NASDAQ composite has outperformed the S&P 500

by roughly 350 basis points per year over the last 10 years. Meanwhile, small cap value and large cap value represented by say the Dow have lagged the S&P 500 by roughly 150 to 400 basis points per year over the same period. Short-term rotations can feel dramatic. Long-term compounding tells a different story. So investors, what does this mean to you? Okay, get three takeaways. Diversification is the only free lunch in investing. When gross struggles, dividend strategies may lead by technology falters, health care, staples, or utilities often provide ballast. We don't know when the trend's going to change. So it's wise not to concentrate everything in one asset class, investment style, or sector. Okay, the second point, try to avoid reacting emotionally and allocating changing in your portfolio.

Large shifts are best made when volatility is low, markets are calm, asset prices are up, not during short-term volatile turbulent times. Investors, your third point and final point, investors should stay aligned with their longer-term goals. In any given year, U.S. equities might outperform. In other years, it might be international stocks. Other years like recently commodities, sometimes it's fixed income or even just plain old cash. Rotating aggressively year-to-year almost always leads to subpar long-term. results. Our approach here at Oak Harvest, here 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. Investors focused on long-term price appreciation. We offer a blue chip growth model. We also manage a hedged equity mutual fund. Our advisors combine market-based and insurance-based tools to support retirement planning and long-term financial security. Investors, so far, 2006 has been a sloppy choppy mess for the S&P 500. But our team has experience navigating these types of markets, these types of slower growth environments, these types of markets that have factor rotations, and these types of markets that have been volatile year to date. Our advice to you, try to stay disciplined, try to stay diversified, and try to stay focused on your long-term goals. Continue to

follow our investment insights on the Oak Harvest website and our YouTube channels. Investors, whether your priority is growth, income, or a combination of both. Our team is here to help you plan for you and your family's future, no matter where you're at in your career or in your retirement journey. 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.