Rise Advisors Market Update January 2026

Transcript Below 

Hi everybody, this is Zach Harrington from Rise Advisors, and I want to thank you for joining us for our January market update here in January of 2026. What I want to do is play the hits a little bit here. So you go back to last year with a lot of these market updates, and it's important to keep in mind that for investors like ours at Rise Advisors, we're looking at the long-term time horizon. And so there's always things when you look at, you know, markets and periods of time, there's always uncertainty. There's always times where you go, this is where you have to get out. And most of the time you're better off just staying invested in the market and committing to that. And there's a lot of what we're going to talk about today.

So if you go all the way back to last January, we had a slide in our presentation called “Expect the Unexpected” and a lot of that was you have these market analysts or fund managers and things like that who put out their year-end price targets. And the funny thing with year-end price targets is the vast majority of them are completely wrong. That's just a testament to over the years we've preached about it. SPIVA data, being time in the market, not timing the market, and just committing to an allocation and over long periods of time, the market rewards you for being an investor. Let's look at last year for example. You go back and look at 2025 as a market year. The market starts off really strong. For the first six weeks. You had the presidential election resolves transition to power. Some of the policies that Trump was going to implement under Trump 2.0 and where they were headed.

In February, we start to have some market instability. You have concerns over the Fed being incredibly hawkish and continuing to keep rates higher for longer. Some growth scares, the market starts to sell off. And then we have that liberation day celebration in the rose garden where in a very quick three or four trading days, markets sell off, you know, close to 20%. from the April 9th bottoms through year end though you had a massive, massive recovery of US equities and asset prices across the board. And if you just remained invested from January 1st to December 31st, your US equities were up around 17% for the year.

And that's a story as old as time. So if you look at approximately the last a hundred years, you're looking at about an average return of 11% in the S&P 500. But in any of those given years, your average intra-year decline, meaning the average basically declined from peak to trough is around 14%. So you're going to ride the wave, but you're going to be rewarded it for having ridden it. The other thing too is we had a slide in the market update back in January of last year too that outlined basically when it came to, when you look at average return, the market returns are far from average. So when people predict there's going to be an average year of a 10% rate of return, but that's with a 16% standard deviation, which means, you know, almost 70% of the time the market's going to be anywhere from down 6% to up 26%. It's a very wide range, and that's really important when it comes to asset allocation and just being committed to your overall financial plan.

Looking at 2025 kind of recap of equity performances and things like that, it goes without saying that the three best sectors for 2025 make sense, right? The biggest theme playing out were large cap tech, the extensive, extensive spending on CapEx for generative AI build out, whether that's data farms, things like that. So communication services, predominantly alphabet there, tech and industrial's, three top performing sectors. Here to start 2026, we started to see some rotation out of those names with a little bit of a broader participation, but that was the real story of the fourth quarter. A lot of the more defensive names that have underperformed for the better part of the last couple years, like healthcare, energy, so on and so forth, had really strong fourth quarters and good stars to the year. There's been a broader participation in markets, which tends to be a really healthy sign. The other thing too, and you'll see on the chart here, is when you look at that peak to trough and return for the year, that dispersion is really, really important to look at.

So yes, when you look at communication services, you look at industrials, you look at technology. Yes, the performance of those sectors for the year, very, very strong three best performing sectors. They also have the broadest range of peak to trough for the year. So the highest point they were up during the year, the lowest point they were down during the year. When you look at some of those more defensive names like healthcare and energy, which we have an overweight to in our model portfolios, the returns really picked up in the fourth quarter. But more importantly, that spread between peak and trough, much, much tighter. So for investors who are looking for asset returns, buying things that may be undervalued, things that haven't really been part of this crazed market, runup, we really like healthcare and energy moving forward. In energy it's this push for U.S. energy independence, obviously there's a lot that's taking place in the news in January when it comes to Venezuela and what that looks like. That's really helped not only energy producers, but also the energy infrastructure names.

And then we look at the healthcare space. A lot of people were super concerned with are these Affordable Care Act credits going to be extended. And a lot of the insurers sold off around concerns of breakup and FDA guidelines and things like that. But I think people lost sight of the broader theme and that's AI's impact in healthcare. So our overweight to healthcare we've had for about a year now, and our themes remain consistent. AI is going to make practitioners more efficient, it's going to make our hospital systems more efficient and it's going to make the research and development pipeline more efficient. The amount of money that get gets wasted in our healthcare system on an annualized basis doing research and development, I think gets cut down as AI makes that process more efficient. So we really like those sectors here moving forward.

The other thing too is looking at election years. So you'll see on the slide here that we have shown traditionally when we look at market performance in election years, it's a big difference between the every two year cycle. So you have your presidential election like we had in 2024, and here in 2026 we're sitting looking at midterms and there's close to a 5% dispersion. When you look at the average annual performance at midterm elections. A lot of this comes down to pretty significant uncertainty of does the policy of the current administration get to be continued if there's a loss of power within the legislative branch. And so our recommendation for 2026 is just to continue to expect some volatility in chop. We know in an average year the market is going to be up somewhere around 11%. It's going to have a correction throughout that year. And there's plenty of reasons that this market will correct in 2026.You have can, you know, earnings expansion continue at the clip it has with the large cap tech companies, you have a transition of power, the Federal Reserve coming in May. What does that look like when it comes to interest rate expectations, what's going on geopolitically, so on and so forth. But the important thing remains when you remain invested in the market over long enough periods of time, you will have positive asset returns. And that's really, really important.

And that's what I want to close with here is just reiterating the importance of not worrying about price targets and where asset prices are going to be in three months or six months or 12 months, but focusing on where they're going to be over three years, six years, 12 years. It's really important to have your financial plan in order. A lot of financial planning and understanding what are your cash flow needs from your portfolio as you're not only in the accumulation phase, but in the decumulation phase is paramount when it comes to having an adequate portfolio construction.

When we're constructing portfolios, we look at two real things. What's your risk tolerance? So how much risk can you stomach? But also looking at risk capacity, how much risk can your plan afford to take on? And now sitting here in January, 2026 is probably a really good time to reevaluate that. So if you are sitting there and your stocks have massively, massively outperformed your bond assets over the last three years and you find your portfolio having drifted; meaning perhaps originally you were at a 60/40 or a 70/30 and now you're sitting further up the risk spectrum, it's really important to rebalance this while markets sit at highs so that when periods of uncertainty hit, you don't have to worry about selling, you're at an allocation and you just rebalanced your allocation on a regular basis. I think that's really important, focus on the planning, controlling the controllables, which is a very persistent message we provide to investors at Rise Advisors. And with that being said, if you'd like to have a conversation further about how your portfolio fits your financial plan, we're here for you here at Rise Advisors. So on behalf of all of us, we wish you a very happy New Year and a healthy 2026, and thank you for taking the time to watch this market update. Thank you and have a great day.