2026 | February Risk Odometer

For the eighth consecutive month, our Risk Odometer remains at +3 and our Current Outlook at its highest level of “Positive”.  The consistency in our Risk Odometer and outlook in positive territory is not unusual.  It is common for bull markets to stay elevated for long periods of time.

The economy continues to remain resilient and grow at a healthy pace.  Its latest official reading was an annualized quarterly growth rate of 4.4%, well above expected and trend growth rates near 2.0%.  Earnings growth is confirming economic growth, also growing above average long-term growth rates. 

In addition to strong economic growth, the markets are getting support from both monetary and fiscal stimulus.  On the monetary side, the Fed lowered interest rates on three separate occasions in 2025 and may lower them more in 2026. 

On the fiscal front, new tax breaks from taxes on tips, overtime, and social security will take effect this year.  In addition, new provisions around depreciation tax laws, allowing businesses to fully write off costs in the first year, is further incentivizing business investments.  All of this should be supportive for the markets and likely to keep our outlook positive.

Although we expect our outlook to remain positive for the near future, we have been reminding clients that it will not stay positive forever.  Volatility will inevitably resurface.  Investors who achieve the best long-term returns are those who understand it will and are mentally prepared for it when it arrives. 

Ten percent stock market corrections typically occur every year.  They are usually noise which we often discount or view as opportunistic so long as economic fundamentals are supportive as they are currently.  The important thing is to expect them and not panic when they occur.  We believe investors should not be willing to invest in stocks if they are not willing to experience at least 10-20% drops in their account values at any given time. 

We continue to see diversification as more important this year than in years past.  Earnings growth has begun to broaden out, benefiting more sectors than just technology.  Reflation, a theme for us in 2026, is benefiting cyclical sectors such as banks, energy, commodities, and international equities.  Disruptive impacts from AI are also highlighting the importance of diversification.  Extremely popular sectors, such as technology software, have come under severe pressure recently due to their business models being questioned by the disruptive power of AI.

As always, we continue to believe our Risk Odometer provides guidance in making better investment decisions because it keeps us objective and disciplined.  We use this methodology and advise our clients to do the same.  Emotions are our enemies in investing. 

The Equity Market Risk Odometer is our guide for judging risk in the equity market. It is used as a guide for investment decisions in our proprietary investment strategies. It is composed of various indicators based on leading economic indicators, earnings, technical price action, breadth, and volatility. Its score can range from +5 to -5. Readings greater than one are positive and readings less than or equal to zero are negative.

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_{This information does not have regard to the specific investment objectives, financial situation and the needs of any specific person who may view this information.  Statements, opinions, and forecasts made represent a particular observation and assessment of the market environment at a specific point in time and are not intended to be a forecast of future events or a guarantee of future results.  Statements regarding future prospects may not be realized and may differ materially from actual events or results.  Past performance is not indicative of future performance.}

_{FC Wealth Solutions and its representatives do not provide legal or tax advice.  You may want to consult a legal or tax advisor regarding any legal or tax information as it relates to your personal circumstances.}

_{Michael Fickell is an investment advisor representative of FC Wealth Solutions}

_{Securities and investment advisory services offered through FC Wealth Solutions, a registered investment advisor.}

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