February 27, 2026

In the Loop – February 27, 2026

“In The Loop” is designed to give you a short update reflecting major developments, earnings, and investment trends across some core Equity Income and Growth holdings. All clients should be aware that individual buy/sell recommendations will be conveyed directly to you on an individual basis. Have a great weekend.

S&P 500 “The Market”

The calm at the index level hides strong currents beneath the surface. The S&P 500 has traded in one of its tightest ranges to start a year since the 1960s. Yet more than one-fifth of its stocks have moved up or down by over 20% so far this year. According to Citadel Securities’ Head of Equity and Equity Derivatives Strategy, the gap between single-stock moves and the broad index is now at an extreme level. “Single stock dispersion is at extreme levels”

What does this mean and What is it telling investors?

“Single stock dispersion is at extreme levels” means capital is being actively repriced beneath a calm index surface. This is rotation, not panic. Money is shifting from weaker, liquidity-driven business models toward companies with durable earnings, strong free cash flow, and visible demand. Passive exposure becomes less effective because returns concentrate in select names, and correlations break down as stocks trade more on their own merits. This often signals a regime shift — not necessarily driven by higher rates, but by changing sector leadership and a market-wide sorting process.

What should Investors do and historically how does this market environment end?

In this environment, returns come from company selection, not macro guessing. Familiar “comfort stocks” are no longer automatically safe; fundamentals determine outcomes. A disciplined barbell approach works best: combine structural winners tied to infrastructure, energy, defense, and AI backbone with cash-flow defensives that have strong balance sheets and limited disruption risk. Emphasize earnings momentum, free cash flow, and balance sheet strength, rebalance proactively, and selectively harvest volatility where appropriate. This phase typically ends when index volatility spikes and correlations rise sharply — signaling that macro has taken control again.

This environment fits our US Resiliency framework almost perfectly. Our portfolios are not populated with speculative, capital-burning, liquidity-dependent narratives. Rather, they are populated by companies with strong balance sheets, clear backlog visibility, durable pricing power, and government-aligned policy tailwinds.

Artificial Intelligence and Iran Update

On Wednesday, I was on a conference call that included Retired Lt. General David Bellon, Retired Vice Admiral David Buss and Retired Lt. General Mike Groen. General Groen culminated his service as The Director of The Joint Artificial Intelligence Center (JAIC). The inside of how the military is using AI is fascinating. The broad conclusion on AI is that the US is committed to creating the massive infrastructure required as a nation to create a World Class Environment. Production for Security, we want the best tools before any other nation and that desire will keep pushing this sector as fast as possible. There will be multiple Small and Mid-cap winners within AI defense.

Iran– General Bellon was surprised by the moving of the USS Ford from the Caribbean to the Eastern Mediterranean. Mainly, because it was at the end of a long cycle and the living conditions could be rough for service members aboard. I am going to sum up the conversation by repeating that the USS Ford moving into the Suez Canal is considered a “High Risk” maneuver. Therefore, if the USS Ford enters the Suez Canal, odds increase that kinetic conflict could be days away. The same would hold true for the USS Lincoln entering the Strait of Hormuz. Pray for Peace.

Since it’s getting long, I decided to add charts this week:

For a port in the Tech storm, look no further than Apple (APPL) for balance sheet strength.

Aging Consumers Spending more Favors a Defensive Healthcare like JNJ.

This chart shows momentum in High Quality Energy (XOM) as well as an opportunity to add MSFT. MSFT is at a 5 Yr relative low dating back to the re-opening, while sitting on 15 years of support and the most oversold since ’09.

Uncertain times could favor a defensive retail operator like (Wal-Mart)WMT.

For those who need to bring their own power to a data center, here is a chart showing that rising demand…
  • 2nd Largest Year of Gas Turbine Orders in History: 2025 global gas turbine orders were ~100GW, a sizeable jump from ~58GW in 2024 and ~44GW in 2023. Most major regions and countries saw order growth in 2025, but North America was the most notable, with ~44GW of orders (up ~160% y/y).
  • 3rd Largest Quarter of Gas Turbine Orders in History: Global gas turbine orders were 34.1GW in 4Q25 (+134% y/y, +48% q/q), the third largest quarter in history behind 3Q/4Q of 2000 (35.9/35.0GW).

Think GE Vernova(GEV) within Energy Infrastructure.

We remain focused on navigating market trends and positioning portfolios for long-term growth and resilience.
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Formidable Asset Management (“Massey Romans Capital”) is an investment adviser registered under the Investment Advisers Act of 1940. The information presented in the material is general in nature and is not designed to address your investment objectives, financial situation or particular needs. Prior to making any investment decision, you should assess, or seek advice from a professional regarding whether any particular transaction is relevant or appropriate to your individual circumstances. Although taken from reliable sources, the Firm cannot guarantee the accuracy of the information received from third parties.

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