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Motley Fool Hidden Gems Investing
What Matters About Market History, and the Worldwide Bull Market
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- [00:00]
Ryan Dietrich
Foreign.
- [00:05]
Robert Brockamp
What we can learn from market history and the worldwide bull market. That and more on this Saturday personal finance edition of Motleyful Money. I'm Robert Brockamp and this week I speak with Ryan Dietrich, the chief market strategist at Carson Group and a consistent source of data about the market's past and what it could say about the future. But first, some news from this week. According to Callum Thomas of top down charts, 80% of the 70 companies he tracks have stock markets that are up at least 20% off their 52 week lows. He writes that this indicator has rarely been above 50% over the past couple of decades and a surge like this is usually a good sign. Previous spikes have happened in 2003, 2009 and 2020, which were all good times to be an investor. Looking more locally, a recent graphic from Bloomberg illustrates that the year to date rally in US Stocks is the broadest ever, as there's a record number of individual stocks in the S&P 500 that are outperforming the index. That said, not every stock is doing well, including some of the biggest tech oriented names, which has resulted in lower valuations for those stocks. In fact, according to Matt Serminaro of Ritholtz Wealth Management, the forward pe of the Mag 7 minus Tesla is now below the forward PE of the consumer staples sector, which has returned almost 15% so far this year. Next up, mortgage rates are dropping. The current 30 year fixed rate is 6%, down around 80 basis points from a year ago and the lowest level since 2022. Lower rates might make homeownership more affordable for some buyers, especially as price growth is slowing. This past week, Standard Poor's announced that the Case Shiller National Home Price Index rose an annualized 1.3% in December, down from 1.4% in November. In other home loan news, a report from the Federal Reserve bank of New York published on Tuesday says that the total amount in home equity lines of credit, otherwise known as HELOCs, rose in the fourth quarter of 2025, which was the 15th consecutive quarterly increase. The total amount in HELOCs is now $434 billion, up 36% over the past four years. According to Bankrate, the current average interest rate on a heloc is is 7.3%. And now the number of the week, which is 12. That is the number of calendar years that The S&P 500 has lost more than 10% since 1928, according to a report from Barry Gilbert of Carson Group. In other words, the market has been profitable or lost less than 10% in almost 88% of calendar years. There are four decades that didn't see any years of 10% plus declines, those being the 1960s, 1980s, 1990s and the 2010s. How much does that history matter? Well, that's the topic of my next conversation when Motley Fool Money continues.
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- [03:56]
Robert Brockamp
we at the Motley fool believe that the stock market is the best path to long term wealth and we have the historical data to back it up. But how much does history matter in our ever changing world and what past trends are likely to persist? Here to talk about that and much more is Ryan Dietrich, the chief market strategist at Carson Group, the co host of the Facts vs. Feelings podcast, and one of my favorite sources of insightful or just fun stats about the market. Ryan welcome to Motley Fool Money.
- [04:22]
Ryan Dietrich
Robert, thank you so much for having me. Obviously a big fan of you and then the Motley Fool. I mean, I mean, geez. Like a lot of people, I started reading Motley Fool a long time ago when I got into this industry. So it's a real honor. You quote me all the time, so thank you for that. But it's an honor to get to talk to each other about how we see the world. So thank you again for having me.
- [04:40]
Robert Brockamp
Thank you for those kind words and it's great to have you here. You know, in your podcasts, your articles, your social media posts, your you provide just a regular stream of facts about historical Trends with much of that data going back to 1950s, sometimes as far back as the 1920s. What do you say to someone who says things are different today? Way back then they didn't have the Internet, they didn't have low cost index funds, commission free trading apps in our pockets. We've transitioned from an industrial to a surfaces economy. How much does history matter?
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Ryan Dietrich
Ooh, that's a good one there. I love the quote by Mark Twain. History doesn't repeat itself, but it often rhymes. And you look at history. Yes, there was no Internet 50 years ago. Now of course we have AI and there's, there's always something out there. I think what's always true though is fear and greed. Right In April when the stock market was down almost 20 and crashing, there was a lot of fear out there. In the late 90s, there's a lot of greed out there. Those are things that are never going to go away. Maybe some of the, I don't know, the people at the table, so to speak, whether it be computers or algorithms or hedge funds or high frequency trading, all that stuff, it is different than the past. But what gets us places and we're going to get into some more of this is, you know, earnings and profit margins and the Fed and all that stuff that hasn't really changed in my opinion. So we love using history. I think what I like about using history is it does show a guide. Right. It's not gospel. I mean it's a midterm year. Historically midterm years don't do that well. Well listen, we're still pretty optimistic when we get into that stuff, but it shows a guide. We've been through a lot of bad stuff before. We've had a lot of good stuff before. That's why I think it helps your average investor. I work with advisors, a Carson Group of financial advisors every single day and their cl and I think that's why it's so important to kind of show. We've been through this before. Yeah, it's different, but at the same time, is it really that different? Fear and greed is still what drives markets.
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Robert Brockamp
A lot of what you do in your writing is to say, okay, this is a current set of circumstances and based on history, this is the likelihood that the market will go up. Here's the median and average return. How do you distinguish between trends that are valid versus a spurious correlation? Which is borrowing from the title of one of your recent articles.
- [06:45]
Ryan Dietrich
Well, so you're saying the fact that the NFC team just won the Super bowl by more than 10 points. The S&P 500 is higher. 19 out of 21 years. You're saying that's not a reason to be bullish? I know. Playful. Playful. I get it.
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Robert Brockamp
By the way, the median return, almost 15%. Very good news.
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Ryan Dietrich
Yeah, very good news there or. This is the year of the horse and when animals walk on four legs, the market does a lot better than the times. Animals either you use two or like a snake, a crawl, but nonetheless, nonetheless. Or slither. I guess a snake slithers. Is that what we call it? It doesn't matter. It doesn't matter. Yeah, that's the fun stuff. But at the end of the day, we look at a lot of data. I work with a guy named Son our Geese, our chief macro strategist and he's my co host on Facts versus Feelings. And we, we look at the macro backdrop and we look at all these different factors and it's not like one thing matters, right? I mean we took a big top down approach and focus on all this different stuff. And to us, you know, again, it's like what drives long term stock gains? Well, I think it's earnings. I, I think it's earnings. Right. And, and we have seen record earnings, we have seen record profit margins. We continue to see positive things. I get it. I know a lot of listeners probably feel this way because consumer confidence is very, very low. We just got some data and it's still very low. In some cases, consumer confidence is lower than it was during a 100 year pandemic. Yet retail sales are still strong. You know, auto sales are still strong. So it's this interesting dichotomy. People feel one way and do another. And to put a bow on this, we think following the hard data, three years ago, Carson Group was pretty optimistic. Not many people were. We were laughed at, we were mocked for that optimistic view. We said follow the hard data. The hard data continues in our opinion, to suggest things are strong. And again, that is what the Fed is up to. That is what fiscal policy is up to. That is earnings things. All these different things we pay attention to. And it's fun to talk about animals on four legs, I get it. But no, we don't invest in that. We focus on the fundamentals.
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Robert Brockamp
As you just hinted out there, you cover a lot of ground in your articles, podcasts, on social media, macro, some fundamental, even some technical analysis. You mentioned earnings. But if you had to narrow it down to maybe three or five things that are most important to pay attention to, what would they be?
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Ryan Dietrich
Well, one of them I already kind of talked about. So we'll get that out of the way right now. Earnings, right? I mean earnings are hitting record highs. Profit margins are hitting record highs. We're looking at some of the best revenue this fourth quarter. That's wrapping up since we've seen in like four years. So that's an important one. That's number one. I'll probably do three. So that's number one. Now I do have a, what we call a cmt. I'm not a country music person. That's not what that means. I'm a chartered market technician. So I do like to look at technicals, right? Relative strength, the seasonality stuff that I'm kind of known for, market sentiment, all these different things. And when you do that, there's something called an advanced decline line Robert. It's a cumulative basis how many stocks going up versus down every single day. Now keep this real simple. That's market breath. Market breath leads price. Now in the late 90s, market breath peaked and started to roll over. That was a warning that something was wrong. Under the service is literally the only thing going up was tech stocks, right? In 2006, 2007 financial started to go down. A lot of other groups started to go down. There were warnings when market breath was weak. Where are we right now? Literally a week ago, the S&P 500s advanced decline. I hit a new all time high. The New York Stock Exchange advanced decline. I hit an all time high. Mid caps, all time high. Small caps, 52 week high. What am I getting at? This is still a healthy strong bull market being led by a lot of stuff. I get it. Technology has lagged, we understand that. But the lifeblood of bull markets rotation, we are seeing that. So earning strong, that's good. Advanced decline lines, market breadth still solid, that's good. The third one that I would say is very important we follow every day are the credit markets right? If the credit markets see a monster under the bed, there'd be more stress in things like high yield spreads, triple B spreads kind of keep this high level really simple. We're not seeing that at all. I mean in 2023, the regional bank crisis, high yield spreads really didn't move that much. It was saying, you know, it's not as scary as they're telling you on TV. 2024 when we had the yin carry trade unwind. And I know maybe some people remember this, trust me, for a few days In August of 24, it was a pretty scary period. Japan was crashing, gold markets crashing. The Credit markets weren't worried. Even during the crash, we had around Liberation Day the bottom line credit spreads hung in there. I mean the credit markets weren't worried. So right now worry credit spreads are just fine. Okay, I know the A and the worries about software, yes, maybe some credit spreads on some of the more specific technology companies I've blown out a little bit. But overall the credit markets are functioning just fine. Credit to me are the smartest people in the room. So credit is strong, breadth is strong, earnings are strong. Those are three things that we've seen for honestly three years now and knock on wood, they're going to continue to be strong. That's why we remain overweight equities and optimistic in 2026.
- [11:24]
Robert Brockamp
So you're optimistic about the market, you're also optimistic about the economy. You don't see a recession on the horizon. You just highlighted many reasons for the optimism. Anything el people should be looking at or that you're factoring into the fact that you think the economy is probably going to be okay? Yeah.
- [11:39]
Ryan Dietrich
You know we talked a lot about the US obviously because we're US centric. But around the globe, I think it's really important to point this out. I mean most investors know this rest of the globe's done really well relative to the US over the past year or so. But on an economic front, we've seen a lot of growth coming from emerging markets, coming from developed international around the globe. I mean we, we are seeing that. So it's really a kind of global story in terms of economic growth and stock market returns. And I think that's a real POS thing. You know, things that we like to look at. Business investment, I mean business investment is strong, AI investment. I mean I know a lot of people talk about this AI capex. Spending continues to be strong, showing virtually no slowdown. Consumption is still solid. You look at all these things together. Yeah. Housing's taken away from GDP six out of seven quarters. Okay, we get it. That's a weak part out there. But the reality is is we're what, 37, $38 trillion economy. There's some cracks out there, sure. But overall I think our economy is still really on firm footing. And the great part about it, the rest of the globe is really on firm footing also. Last comment here. Look at copper called Dr. Copper. Copper is flirting with all time highs. People are gobbling up copper. It's hard to be bearish. The overall kind of global economy. If copper was weak, you could be bearish. It was weak. It's Not. And that's an important thing from our point of view as well. So overall, it's a nice global bull market and economy out there.
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Robert Brockamp
One thing related to the economy that of course is of concern or that people pay attention to, both economically and politically, is inflation. Talk a little bit about why you think inflation will likely stay closer to 3% than the Fed's target of 2%.
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Ryan Dietrich
Well, yes, we can go down some rabbit holes with this one if you want. You know, The Fed's target's 2%. I. I mean, the Fed itself has said, yeah, that's, you know, wink, wink, nudge, nudge. It's probably not around 2%. We've been saying for a while that we think we're going to be in a 3% inflation world versus 2% inflation world. Now, to be very clear here, if inflation were to soar to 6% the next six months, yes, this would upset the apple cart. This would mean the markets are probably in trouble, probably gonna have higher interest rates, not as many Fed cuts. That wouldn't be a bullish scenario. But you look at history going back like 150 years, inflation's averaged about three and a half percent. All right, so we're right. Core PCE, the Fed's favorite measure of inflation, came in last Friday. Right. About 3% year over year. We don't think that's a bad thing. I mean, we've been flirting with 3% for a while now. And last I checked, the economy's doing pretty good. The stock market's hanging in.
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Robert Brockamp
Right.
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Ryan Dietrich
It. And the reality is, look around. The previous answer, commodity prices, as everybody knows on this show. How are commodity prices doing? Yeah, they're higher. Right. So that is kind of upward pressure on inflation. But the other part of this, something called shelter. Shelter is about 42% of core DCE. Keep this fairly simple. That is deflationary in a way. I mean, we are seeing housing prices, rent prices. Rent prices have been negative year over year from Zillow and apartment lists for like a couple years now. And then the government's data is delayed. Keep it easy here. We think the shelter is going to kind of put a lid on inflation. So we're going to have inflation right around 3% or so. That's okay. We've been seeing it. That's where we are. But again, we manage billions of dollars on the Carson team. Last comment here. And for years, we've been positioning for a world of a little bit more inflation, a little bit more being around 3% than 2%, maybe a little bit less bonds, maybe a little bit more stocks. We do have some gold, we have some managed futures. I say if you drop it, it hits your foot and it hurts. You might want to own a little bit more on that, your portfolio than you did say 10, 15 years ago. And that's how we position. It's been working honestly and we think it'll continue with a little bit higher inflation, world around 3%.
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Robert Brockamp
You mentioned the sell off in some stocks, some tech related software stocks, and in your podcast you reminded folks that a year ago we were all talking about Deep Seq and what happened then and that ended up being a pretty good buying opportunity. Is that generally what you think right now when you see some of these names going down 10, 15, 20%?
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Ryan Dietrich
Yeah, it is, yeah. So on facts versus feelings, Sona and I talked about that recently. Just a year ago right now we were all worried about Deep Seq and the worry was there's this cheap Chinese chatbot that's going to come in and mess everything up and people aren't going to be investing in AI anymore, aren't going to be investing in CapEx. That literally were the headlines a year ago. And now it's almost laughable when we see all the AI spending that we're still seeing now where we are now, we think it's somewhat similar. Right? We are throwing the baby out with the bathwater. Yes, there are companies, there are industries that are in trouble because of the revolutionary changes we're seeing with AI. But when it comes specifically to software, we have some really solid companies with some really solid moats that are still making a lot of money, that have really pulled back. I mean, people say all the time, well, the market's expensive. I mean, parts of the market are. But last I looked, software is the cheapest it's been relative to the S&P 500 since 2013. All right, so that's a doubt. They listen, I've tried to catch a falling knife before. You know, Robert, maybe you have. It's not very smart because sometimes you cut yourself. It looks cool when you do it, but I mean, I think it makes sense for someone who has been waiting for parts of the market that are going to be cheaper. Software is really cheap if you have some technology. What we did in the money we run, we sold a little bit of broad based technology, ETFs and bought a little bit of software because we think that's going to come back in six to nine months. We're going to look back and see once again our opinion. The large cap tech wasn't dead. The Mag 7 wasn't dead. Yes, this was volatile. Yes, this was unfortunate for a lot of investors that got over the top in large Cap Tech and Mag7 to start this year. But that's why we stay diversified. That's why we don't always chase a shiny object. If it's the best group for three years in a row like Mag7 was, it probably won't be the best group again. Last Comment this Time magazine had that cover. AI architects were the person of the year. All the big leaders in AI. When I saw that cover, I was like, you know, that's a pretty high bar. I mean AI is incredible. The technology we have is amazing. But that's a really, really high bar. And sure enough, you know, Mag 7's lagged a little bit. I don't think that's abnormal. But I do think there's some great opportunities for investors here to step up. What does the old saying, Stock market's the only place things go on sale. Everyone runs out of the store screaming. I'm seeing a lot of screaming running out of the store. I think savvy investors might use this opportunity and you look back and you're going to thank yourself down the road.
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Robert Brockamp
Final question here. We're long term investors here at the Motley Fool. They preach buy and hold. A lot of what you write about is short termish in nature. You talked about the seasonal stuff. You recently pointed out that we're in what you call the banana peel part of February. So it's all very interesting. But to what degree should long term investors factor those types of things into their investing strategies?
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Ryan Dietrich
Oh, I'd say very little. That's a great question because you way we put it, is this for long term investors? That's awesome. The best investors I've ever met are the long term investors that put money in their 401k, that put money in investing every two weeks, every month, and they look up in a couple decades and made a lot of money. But it's not that easy. I mean, when you have a bear market like we did last April, even if you're a long term investor, it's uncomfortable. It's so important to know that volatility is the toll we pay to invest. It's something we say a lot on the Carson team. The reality is on average you see a 10% correction once a year. You see a bear market about every three, three and a half years. You see a 5% mild pullback four times a year. And a 3 percenter seven times a year. A bunch of numbers. I get it. Just know that it will be scary, it will be uncomfortable. But. But long term investing is one of the best ways to create wealth. One of the best ways to beat inflation and a lot of times when it's scary is when you want to really kind of step up or at least what's the old saying, Eisenhower plans are useless. Planning is everything. If you come into the year expecting a 15 peak to trough corre some point because by the way, that's the average peak to draw corrections since 1980. That's normal when it happens. Don't panic when it happens. Don't make a rash decision. You're not going to feel comfortable when you see your 401ks down a whole bunch. I mean, I get it, everybody felt that way back in April. But the people that didn't panic didn't sell. Maybe use this opportunity for those long term gains. When you buy something on the cheap, that's the way to invest.
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Robert Brockamp
All right. And this has been an enlightening conversation, as expected. Thanks so much for joining us.
- [19:15]
Ryan Dietrich
I appreciate it. Robert. Thank you. And thanks to all the listeners out there. I can't wait to come back.
- [19:19]
Robert Brockamp
Thank you.
- [19:20]
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- [20:22]
Robert Brockamp
It's time to get it done. And I mean really get stuff done. Just as we did this past week at the Motley fool because last week was our 16th annual financial health Week, during which we encourage employees to use company time to tackle personal finance tasks. During the week, we hold classes taught by both internal and external experts, we offer a checklist of money related to do items, and we offer rewards to fools who complete at least seven of those tasks. And those classes and to do items cover just about everything, including budgeting, workplace benefits, investing, retirement insurance, college planning, estate planning and wealth defense. Now, you may not work at a company that has a financial wellness program like we have here at the Motley fool, but you can hold your own Financial Health Week or even just a day when you clear your calendar, limit distractions and devote a few hours to those lingering money related items on your to do list. That investment of time will pay off for years to come in the form of a bigger portfolio, a stronger safety net, better awareness of the current state of your finances, and what you can do today to get you closer to where you want to be. To quote productivity guru James Clear, your net worth is a lagging measure of your financial habits. And that, my friends, is the show. Thanks for listening, and thanks as always to Bart Shannon, the engineer for this episode. People on the program may have interest in the stocks they talk about, and the Motley fool may have formal recommendations for or against. So don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our show Notes. I'm Robert Brockamp. Full on everybody.