The market is in a unique position today.
On one hand, stocks are more expensive than they've ever been.
As Doc pointed out last week, the S&P 500 Index currently trades for 3.4 times sales. That's at an all-time high – even more than the dot-com peak back in 2000.
The index also trades for 27 times earnings, which is getting close to an all-time high.
Clearly, stocks can't stay this expensive forever. A bust will happen eventually.
But I don't think that has to happen right away.
Even with extremely high valuations, stocks can still rise this year. They have plenty of momentum, and we're not yet seeing the most glaring sign that things will come crashing down – a broad level of euphoria.
On top of all that, stocks recently flashed a rare bullish signal...
Last month, 69.7% of all stocks on the New York Stock Exchange ("NYSE") were trading above their 200-day moving averages (200-DMAs). That means most NYSE stocks are in long-term uptrends. This is an incredibly bullish signal... because stocks that are rising tend to keep rising.
And history shows we can expect more gains...
Since 2000, we've only seen six other instances where 69.7% of NYSE stocks traded above their 200-DMAs. The most recent occurred in February 2023.
Each time, stocks were up both nine months and one year later. The average gain after one year was an impressive 19%. Take a look...
Another piece of evidence to support higher stock prices in 2026 is that the S&P 500 posted a positive return last month, rising 1.4%.
Historically, when the S&P 500 has a positive January, it posts further gains for the rest of the year...
Specifically, when stocks rise in January, the index is positive 87% of the time for the rest of the year – going all the way back to 1950. And the average annual return after a positive January is 12.2%.
Take a look...
With that said, you shouldn't expect a straight move higher. There will undoubtedly be some volatility throughout the year.
As I showed you in the first chart, even when stocks have momentum, there are still drawdowns. And we should expect some bumps in the road starting this month.
You see, February is one of two months that have averaged negative returns since 1950. And when you look at the past 10 years, the average loss is even larger...
So I'm warning you now that your portfolio may take a dip this month. That doesn't mean you should run for the hills, though.
There will always be a reason to sell. Whether it's high valuations or fears of an economic slowdown, you can always make the case to sell your equities and move your portfolio to cash.
But as I explained, the outlook for stocks is still bullish overall. One month of negative returns doesn't cancel out the larger, long-term opportunity here.
In fact, if stocks do pull back this month, my recommendation would be to buy the dips on the highest-quality names.
One of the best ways to find high-quality stocks is with Retirement Millionaire. In this newsletter, Doc recommends fantastic companies with durable business models, strong cash flows, and real staying power.
Instead of chasing hot trends or short-term speculation, he looks for safe stocks that can compound your wealth over time. And this strategy works... Since its inception in 2008, the Retirement Millionaire model portfolio has posted an average return of 64.7% with a win rate of 72%.
Yes, we're now in a historically expensive market. But you can still make money this year – responsibly – with Doc's help.
Click here to learn more about Retirement Millionaire and how it can help grow and protect your wealth... no matter what the market is doing.
What We're Reading...
- Something different: Hemp and marijuana are the same species, so why do they have different laws?
Here's to our health, wealth, and a great retirement,
Jeff Havenstein
February 4, 2026
