Welcome back to traditional investing:

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The start of a new year shouldn’t change stock movement but it often does.  Last year’s laggards are now leading.  This year through January 21 small-cap stocks soared 8.3 percent, far outpacing the S&P 500’s 0.5 percent return.

Consider the Schwab US Dividend Equity ETF (SCHD).  This ETF holds 102 stocks but dividend paying companies were out of favor last year so the ETF only rose 0.4 percent in 2025. In 2026 it has jumped 6.3 percent.  ProShares S&P 500 Dividend Aristocrats (NOBL) has a similar story.  NOBL rose 4.5 percent in 2025 and has already gained 5.3 percent in 2026.

The new year has arrived with a fleet of positives in place to trigger economic growth.  That includes rising profits, a more business-friendly regulatory environment and lower marginal tax rates to encourage risk taking and investments.  Many investors have been buying in anticipation.

There will be more.  Business taxes will fall.  AI will make most companies more efficient and in all likelihood more profitable.  We hear a lot about ending taxes on tips, overtime and Social Security, but not enough about the benefits of the immediate expensing of business investments that used to be depreciated over many years.

For those reasons and others the bull market has room to run.  4th quarter GDP would probably exceed 5.5 percent had the government not shut down.  Because it did first quarter growth will be that much better.  The cap-ex boom will make things even better for longer.  And trillions remain in money-market funds and will unless falling rates make them unattractive.  I don’t expect that.  In short the positives are impressive with benefits both short term and long.

There are still some potential negatives, including unpredictable daily social media postings, but all considered the picture for the stock market is good and improving.  I am not surprised.  The investment world belongs to the optimists, not the naysayers who have built their careers, such as they are, insisting that what is happening in the real world shouldn’t be happening in theory.  But not everything always works out as expected.  AI could be a bust.  Inflation can rebound under the weight of massive federal debt and deficits.  Maybe the current rise in profits, driven by productivity gains, will fade.  Rates could rise.  There are always negatives for those that see the glass as half empty.  I’m an optimist and rising corporate profits will win the day.

— David Vomund is an Incline Village-based fee-only money manager.  Information is found at www.VomundInvestments.com or by calling 775-832-8555.  Clients hold the positions mentioned in this article.  Past performance does not guarantee future results.  Consult your financial advisor before purchasing any security.

Most analysts, including myself, began the year with trepidation.  Economists were on recession watch.  Surely stocks would fall.  Wrong!

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While every day seems to bring sharp moves in a handful of stocks that doesn’t mean the bull market is on its last leg:

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The market marches along unfazed by shutdown, deficits, inflation, tariffs, and sky-high valuations.  No matter.  It’s a bull market:

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