The week of 23-27 February 2026 had a defensive feel across U.S. markets. Investors were balancing stronger-than-expected January producer price data, which reinforced the view that the Federal Reserve may stay on hold for longer, against continued trade-policy uncertainty and renewed concern about how quickly artificial intelligence could disrupt parts of the corporate landscape. That mix kept Treasury markets unsettled and pushed investors toward steadier parts of the market. In sector terms, the message was clear: utilities, consumer staples, and health care attracted demand, while technology and financials came under pressure.

Introduction

This was not a broad, everything-goes-up kind of week. It was selective, cautious, and very position-driven. Investors leaned toward stable cash flows and away from parts of the market that are more exposed to growth scares, rate sensitivity, or changes in risk appetite. That is why utilities, consumer staples, and health care led the way, while financials and technology trailed.

As you move through the report, watch three things. First, look at how clearly the weekly leadership turned defensive. Second, compare that with the year-to-date picture, which still shows strong gains in energy and materials. Third, use the momentum and correlation sections to see where money is rotating next, not just where it has already moved.

Weekly Returns

Utilities-XLU led the week with a gain of 3.02%, followed by Consumer Staples-XLP at 2.41% and Health Care-XLV at 2.16%. Those are classic defensive sectors, so their leadership immediately tells you the market was looking for stability rather than excitement. The S&P 500 ETF-SPY fell -0.50%, which fits that cautious backdrop.

At the other end, Financials-XLF was the weakest major sector at -2.02%, while Technology-XLK fell -1.50%. Industrials-XLI slipped -0.05% and Consumer Discretionary-XLY lost -0.50%, which adds to the picture of a market that was not leaning into an aggressive growth story. In simple terms, investors spent the week hiding in steadier corners of the market.

Year-to-Date 2026

The broader 2026 picture still looks quite different from the latest weekly tape. Energy-XLE leads the year with a return of 25.07%, followed by Materials-XLB at 17.77% and Consumer Staples-XLP at 15.87%. That combination tells you this year has not been only about defense. Commodity exposure and real-economy cyclicals have also been working.

The laggards for the year are Financials-XLF at -6.10%, Technology-XLK at -3.62%, and Consumer Discretionary-XLY at -2.14%. Utilities-XLU is still up 11.81% year to date, while Health Care-XLV is up 3.49%. So the big picture is not one-way. Instead, it shows a market with sharp dispersion, where leadership has rotated depending on the latest mix of inflation, growth expectations, and risk appetite.

Sector Cycles

The momentum map shows where relative strength is actually sitting now. As of 27 February 2026, Materials-XLB, Energy-XLE, Industrials-XLI, and Health Care-XLV each have an RSS_latest of 1.00, placing them at the top of the momentum ranking. That tells us these groups are outperforming the SPY on a relative basis.

On the weak side, Communication Services-XLC sits at -0.99, Financials-XLF at -0.83, and Consumer Discretionary-XLY at -0.28. Technology-XLK at 0.05, Consumer Staples-XLP at 0.09, Real Estate-XLRE at -0.39, and Utilities-XLU at 0.04 are more middle-of-the-pack. In other words, the market is not rewarding every defensive or every cyclical sector equally. It is being selective, and the RSS signals help show that rotation more clearly.

Relative Strength Scores (RSS)

Health Care-XLV has the strongest current RSS reading at 1.00, while Communication-XLC is the weakest at -0.99. The most notable weekly improvement came from Utilities-XLU, whose RSS percentage change jumped 154.51%. That is a meaningful momentum shift and lines up with the strong weekly price performance we saw in the sector.

Technology-XLK moved the other way, with a weekly RSS change of -68.07%, showing that relative momentum deteriorated sharply. Put simply, capital appears to be rotating toward Health Care-XLV, Utilities-XLU, and Energy-XLE, while Technology-XLK and Communication-XLC are losing leadership.

Correlations

The correlation picture adds another layer to the story. XLF and XLC show a strong positive correlation of 0.76, suggesting those two sectors often move in the same direction. XLY and XLC also show a moderate positive correlation of 0.52, which hints at a link between communication trends and consumer-discretionary behavior.

The clearest defensive-growth split appears in the strong negative correlation between XLK and XLP at -0.82. When technology weakens, consumer staples often hold up better, and that is exactly the kind of rotation we saw this week. These relationships are useful because they show how pressure in one part of the market can quickly spill into or benefit another.

Top Holdings Weekly Returns

The stock-level picture helps explain why some sector ETFs moved the way they did. In several cases, a few standout names drove the story. In others, weakness was broad enough to drag the whole sector lower even when a handful of stocks held up well. The following sections walk through the biggest moves inside each ETF.

Communication Services (XLC)

Netflix-NFLX surged 22.33%, easily the standout move inside the ETF and one of the biggest single-stock gains in the whole report. Charter Com.-CHTR rose 1.94%, Verizon Com.-VZ added 1.81%, and T-Mobile US-TMUS gained 1.24%, giving the more traditional telecom side of the sector a decent week.

But the platform and digital-ad names were softer. Alphabet_A-GOOGL fell -1.02%, Alphabet_C-GOOG dropped -1.10%, Meta Plat.-META lost -1.14%, and Comcast Corp.-CMCSA declined -1.21%. So even though one name exploded higher, the rest of the sector still looked mixed rather than broadly strong.

Technology (XLK)

Salesforce, Inc.-CRM rose 5.20% and was the clearest bright spot inside XLK. Outside of that, the sector had a tough week. Nvidia Corp.-NVDA fell -6.65%, Oracle Corp.-ORCL dropped -1.81%, and Accenture plc.-ACN lost -3.08%.

That mix helps explain why Technology-XLK finished the week down -1.50%. This was a reminder that technology can be especially sensitive when investors pull back from growth and become more cautious about valuation, positioning, or the macro backdrop.

Consumer Discretionary (XLY)

Booking Holdings Inc.-BKNG gained 3.99%, McDonald’s Corp.-MCD rose 3.59%, and TJX Companies Inc.-TJX added 2.17%. Those moves point to resilience in travel, value retail, and lower-ticket consumer spending.

The weaker side of the sector came from Nike, Inc.-NKE at -4.92%, Lowe’s Companies Inc.-LOW at -5.63%, and Tesla, Inc.-TSLA at -2.26%. That split suggests consumers are still spending, but they are doing it selectively. Some categories are holding up, while others are clearly feeling more pressure.

Consumer Staples (XLP)

Consumer Staples-XLP delivered exactly the kind of steady performance investors usually want in a more defensive week. Mondelez Int., Inc.-MDLZ led at 4.73%, Colgate-Palmolive Comp.-CL rose 4.26%, Walmart Inc.-WMT gained 4.03%, Procter & Gamble Comp.-PG added 3.99%, and Pepsico, Inc.-PEP climbed 2.91%.

The only notable weak spot among the names highlighted here was Target Corporation-TGT, which fell -2.49%. Even so, the broader takeaway is straightforward: staples held up well because investors favored companies tied to everyday demand and steadier revenue streams.

Health Care (XLV)

Health Care-XLV had a broad and convincing week. Eli Lilly and Company-LLY rose 4.21%, Pfizer, Inc.-PFE gained 3.75%, Abbott Laboratories-ABT added 3.69%, and Amgen Inc.-AMGN rose 3.58%.

With the ETF itself up 2.16%, this was not just a one-stock story. It was a broader move into a sector that investors often trust when the market mood turns more cautious. Strong relative momentum and solid weekly gains tell the same story here.

Utilities (XLU)

Utilities-XLU was the top-performing sector ETF of the week, rising 3.02%, and Constellation Energy Corp.-CEG did a lot of the heavy lifting with an 11.88% gain. Exelon Corp.-EXC rose 3.52% and Pacific Gas & Electric Co.-PCG gained 3.49%, adding to the strength across the group.

Dominion Energy, Inc.-D fell -3.26%, which shows the sector was not uniformly strong at the stock level. Still, the overall message was clear: investors were willing to pay up for defensiveness, income, and more stable business models.

Energy (XLE)

Energy-XLE remains one of the strongest sectors in the bigger 2026 picture, and it still produced some solid weekly winners. Exxon Mobil Corp.-XOM gained 3.54%, ConocoPhillips-COP rose 2.65%, and Williams Companies-WMB added 2.38%.

The main weak spot in the names highlighted here was Oneok Inc.-OKE, which fell -5.22%. So the sector was not uniformly strong, but the balance still leaned constructive. Energy continues to look like a sector with underlying support, even when individual names move in different directions week to week.

Real Estate (XLRE)

Real Estate-XLRE had a mixed and slightly volatile week. Equinix, Inc.-EQIX rose 5.54%, American Tower Corp.-AMT gained 2.43%, CrownCastle Inc.-CCI rose 1.74%, Realty Income Corp.-O added 1.71%, and Simon Property Group, Inc.-SPG gained 1.07%.

On the weaker side, Welltower Inc.-WELL slipped -0.16% and CoStar Group, Inc.-CSGP dropped -10.51%. That makes this a more uneven sector story than the ETF headline alone might suggest. Some real-estate names held up well, but others were clearly under pressure.

Financials (XLF)

Financials-XLF was the weakest sector ETF of the week at -2.02%, and the stock-level damage was concentrated in several major banks. Wells Fargo & Comp.-WFC fell -8.17%, Goldman Sachs Group, Inc.-GS lost -6.80%, and Bank of America Corp.-BAC dropped -6.09%.

There were a few offsets. S&P Global Inc.-SPGI gained 6.09% and Marsh & McLennan Comp.-MMC rose 4.14%. But those pockets of strength were not enough to lift the broader sector. The overall tone in financials stayed heavy, which fits the wider risk-off mood of the week.

Industrials (XLI)

Industrials-XLI looked fragile rather than outright broken. Honeywell Inter., Inc.-HON rose 0.34% and Union Pacific Corp.-UNP gained 0.10%, so there were a couple of modest positives.

Most of the highlighted moves, though, were negative. Caterpillar, Inc.-CAT fell -2.23%, Boeing Comp.-BA lost -1.94%, and Deere & Comp.-DE dropped -4.95%. That left the sector with a slightly defensive, slightly growth-wary tone, rather than a message of strong economic confidence.

Materials (XLB)

Materials-XLB rose 0.85% for the week, with strength concentrated in a few names. Newmont Corp.-NEM gained 6.44%, Freeport-McMoRan, Inc.-FCX rose 5.81%, and Corteva, Inc.-CTVA added 4.99%.

DuPont de Nemours, Inc.-DD fell -0.73% and Air Products and Chem., Inc.-APD dropped -1.96%, which kept the ETF from looking stronger overall. Even so, the balance of the moves still supports the idea that materials remains one of the better-positioned sectors in the current cycle.

Conclusion

This was a classic defensive rotation week. Utilities-XLU at 3.02%, Consumer Staples-XLP at 2.41%, and Health Care-XLV at 2.16% led the market, while Financials-XLF at -2.02% and Technology-XLK at -1.50% lagged. The stock-level breakdown reinforces that story: Constellation Energy Corp.-CEG and Netflix-NFLX stood out on the upside, while Wells Fargo & Comp.-WFC and Nvidia Corp.-NVDA were among the most visible drags.

The momentum data backs up the same message. Health Care-XLV, Energy-XLE, and Materials-XLB still look strong on a relative basis, while Communication-XLC and Financials-XLF remain weak. For next week, the big watchpoints are simple: follow Treasury yields, Fed-rate expectations, and whether the defensive bid stays in place or starts to give way to a rebound in growth and cyclical sectors.

Closing Message

Thanks for reading. If you found this useful, please share it with anyone who follows markets and sector rotation.

I would also love your feedback. If there is anything you want added or changed next time - more charts, more macro context, or deeper stock-level commentary - let me know.

Best regards,

-Cenk

Disclaimer: This report is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results. Always do your own research or speak with a qualified financial professional before making investment decisions.

Meta runs a family of social apps — Facebook, Instagram, Messenger, and WhatsApp — that connect billions of people. Most of the money comes from advertising: businesses pay to show ads to users, and Meta’s job is to make those ads effective by matching them with the right audiences.

It also has a separate segment called Reality Labs, which builds augmented- and virtual-reality products (hardware, software, and content for immersive experiences). That side is more of a long-term bet, while the core apps and ads business is still the main cash engine.

1) The market’s verdict: the share price story

Most of the fundamentals in this write-up run through 2024, but the price series here extends one more year (through 2025). Over the full price window, the stock starts at $26.62 (2012) and finishes at $660.09 (2025). The big gut-punch shows up in 2022, when the price drops to $120.34 before snapping back hard after that.

One way to read that: markets can punish the stock short-term even when the business is strong — and then re-rate it quickly when confidence returns.

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What makes Munger especially useful for regular investors is that he didn’t leave behind a secret formula. He left behind something better: a decision-making framework—a way to think clearly when money, ego, and uncertainty collide.

1) Munger in one line: investing as “decision quality” 🎯

Munger’s style is less a stock screen and more an operating system:

• Build a latticework of mental models across disciplines.

• Invert: ask “how could this fail?” before dreaming about upside.

• Demand a margin of safety—valuation is a downside discipline, not a precision contest.

• Be inactive most of the time, then decisive when odds are unusually good.

• Use checklists to fight bias, incentives, and self-deception.

If Buffett is the world’s most famous “owner-operator” investor, Munger is the brutally honest voice in the cockpit saying: “Don’t crash.”

2) Achievements that prove it wasn’t just talk 🏆

A) A documented long-run record (with real drawdowns)

Buffett’s “Superinvestors” study includes Munger’s partnership results (1962–1975): 19.8% compounded gross annually (13.7% for limited partners) versus 5.0% for the Dow—but with deep declines in 1973–74, showing the emotional cost of concentration.

That’s Munger in a nutshell: high standards + high volatility tolerance.

B) Strategic influence on Berkshire Hathaway

Buffett openly states Munger pushed Berkshire from “cigar-butt” bargains toward quality + durability + fair price, and that he followed the advice (with occasional backsliding).

Berkshire’s long-run performance tables (published in its shareholder materials) reflect the overall machine they built together—though you can’t mathematically “separate” who contributed what.

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C) Case studies that became investing folklore 📚

See’s Candies is the signature example of “quality at a fair price”: Berkshire describes pricing power and “economic goodwill” mattering more than tangible assets, and notes See’s required relatively little capital to run while generating substantial earnings over time—freeing cash to redeploy.

Costco is Munger’s living proof of scale, trust, and value: in Daily Journal remarks he highlights how Costco can win even as retail gets tougher, including how private label + scale can pressure legacy consumer brands.

BYD is a “rare exception” style bet: Munger credits Li Lu with bringing the idea; Reuters reports Berkshire’s initial stake in 2008 and later reductions/exits—often cited as a Munger-influenced move.

3) Munger’s core investing style (what he actually does) 🧩

1) Latticework: cross-disciplinary thinking

Munger argued that you need a “latticework” of theory to avoid forcing reality into a single favorite model—because markets are multi-causal.

Retail takeaway: Don’t be a “one-model investor.” A company isn’t just a DCF, or a story, or a chart. It’s incentives, competition, accounting, psychology, and capital allocation—all interacting.

2) Inversion: “how do I avoid ruin?”

He repeatedly pushes inversion—solve problems backward and avoid the paths that guarantee failure.

Retail takeaway: Before buying, write a “failure list”: leverage risk, refinancing risk, customer concentration, disruption, fraud, regulation, bad incentives. If the failure list is ugly, walk away.

3) Margin of safety: valuation as protection

Munger is firmly in the margin-of-safety tradition: don’t require perfect forecasting; buy with room for error.
He also warns that even great companies can be terrible investments if the price assumes perfection (his “Nifty Fifty” caution).

Retail takeaway: The goal isn’t “be right.” The goal is “don’t be blown up.”

4) Patience + decisiveness: “do nothing, then pounce”

Munger’s bias is toward inactivity—letting compounding work and avoiding friction costs and tax drag.
But when the setup is unusually attractive, he believes in concentration.

Retail takeaway: Most people lose by overtrading. Munger’s edge is that he can sit still—and then act big when it matters.

5) Checklists, incentives, and bias control

Munger endorsed checklists as a way to counter predictable mental errors and stressed incentives as a powerful driver of behavior and misjudgment.

Retail takeaway: Your brain will rationalize anything. A checklist is how you stop yourself from paying tuition to the market.

4) The best Munger lessons for retail investors 🧰

A) Don’t copy his portfolio—copy his process

Munger had advantages (access, network, scale, time, temperament). Your edge is different: you can be patient, low-cost, and selective.

B) Avoid leverage (seriously) 🚫

He repeatedly warned that leverage is how smart people get wiped out—volatility becomes forced selling.

C) Match concentration to competence + temperament

Munger’s partnership record shows you can be “right” and still suffer brutal drawdowns.
If you can’t emotionally survive a 30–50% drop without panic-selling, don’t pretend you’re a concentrated-value investor.

D) Use a Munger-style pre-mortem checklist ✅

Here’s a clean, practical version inspired by his themes:

• Circle of competence: Can I explain the business simply, without forecasts?

• Moat / durability: Is there real pricing power or structural advantage?

• Capital intensity: Does it need heavy reinvestment just to stand still?

• Incentives: Are management incentives aligned with owners?

• Balance sheet: Any leverage/refinancing fragility?

• Price: Is there a margin of safety—or am I paying for perfection?

• Temperament test: Can I hold through deep drawdowns?

5) What’s interesting and admirable about Munger 🌟

Munger’s appeal isn’t charisma. It’s clarity.

• He treated clear thinking as a moral duty (lifelong learning, intellectual honesty).

• He made “avoid stupidity” sound simple—but built a whole discipline around it.

• He didn’t sell comfort. He sold reality: incentives distort, biases dominate, and mistakes compound—so you need systems.

6) If you want the “best sources” to learn Munger fast 📚

If you only read a few primary/near-primary things, start here:

• Buffett’s 2023 letter tribute (explicitly describing Munger’s influence).

• “Superinvestors of Graham-and-Doddsville” (includes Munger partnership tables).

• The 1994 “Elementary, Worldly Wisdom” lecture transcript (mental models + investing).

• The “Psychology of Human Misjudgment” (bias + incentives framework).

• Poor Charlie’s Almanack (compiled talks and frameworks).

Closing thought

Charlie Munger’s legacy is a reminder that investing is not just finance—it’s applied judgment. If you can build a system that avoids big mistakes, resists emotion, respects opportunity cost, and waits patiently for rare “fat pitches,” you’ll be practicing Munger-style investing—even if you never buy the same stocks he did.

Goodbye 👋
Thanks for reading — I hope this gave you a clear, practical feel for Charlie Munger’s “operating system” 🧠⚙️. If it sparked an idea (or challenged one), share it with a friend or colleague who loves investing frameworks 📩. And I’d genuinely love your feedback: which Munger principle helps you most right now — inversion, checklists, or patience?
— Cenk

You can reach the report version of this post here:

Disclaimer: This post is for educational and informational purposes only and does not constitute financial advice, investment advice, or a recommendation to buy or sell any security. Investing involves risk, including the possible loss of principal. Do your own research and consider consulting a licensed financial professional before making investment decisions.

Charlie Munger (1924–2023) was one of the most influential investors and business thinkers of the modern era, best known for reshaping Warren Buffett’s approach from “cheap-but-ordinary” bargains toward “wonderful businesses” purchased at sensible prices—an evolution Buffett explicitly credits to Munger.

Munger’s distinctive contribution…

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In Post #3, we mapped Current Assets — the short-term toolbox (cash, receivables, inventory).
In Post #4, we moved into Non-current Assets — the long-game bucket (PPE, investments, and the “vibes vs stuff” lines like goodwill and intangibles).

Now we flip to the side that creates real pressure:

Current Liabilities.

Street translation: these are the bills with deadlines. And deadlines are where “fine on paper” companies can suddenly get trapped. 😬

Because balance-sheet risk isn’t just “what do you own?”
It’s “what do you owe… and how soon do you owe it?” ⏳

Liabilities — Current (your map legend) 🗺️

accountPayables 🧾

Money owed to suppliers.

This can be totally healthy (great payment terms) — or it can be stress (delaying payments because cash is tight).

Street translation: the “we owe our suppliers” tab.

shortTermDebt ⏰🏦

Debt due soon.

This is one of the most important stress lines because it can create a refinance-or-die moment if cash is weak.

Street translation: bills with a deadline.

taxPayables 🏛️

Taxes owed to governments.

Usually not the main killer, but it adds pressure because the taxman doesn’t negotiate like vendors do.

Street translation: the “pay up” line.

deferredRevenue 📦🛠️

Cash already collected for products/services not delivered yet.

In some businesses, it’s actually a sign of demand — but it’s still an obligation.

Street translation: they already took the money, now they owe the work.

otherCurrentLiabilities 🎒

The short-term misc bucket (accrued expenses and other obligations).

If it jumps a lot, you investigate. No shortcuts.

Street translation: surprise bills hiding in a bundle.

totalCurrentLiabilities 🧱

All short-term bills combined.

This is the number you compare against totalCurrentAssets to judge short-term breathing room.

Street translation: the “next 12 months of obligations” stack.

Quick checklist (current liabilities) ✅

• accountPayables

• shortTermDebt

• taxPayables

• deferredRevenue

• otherCurrentLiabilities

• totalCurrentLiabilities

If you remember one thing: current liabilities are the clock. 🕒
They’re what the company must satisfy soon, no matter how pretty the long-term story is.

Apple example: Current liabilities moved (FY2024 → FY2025, $B) 🍎

Here are the changes:

• accountPayables: 69.0 → 69.9 (+0.9)

• shortTermDebt: 22.5 → 20.3 (-2.2)

• taxPayables: 26.6 → 0.0

• deferredRevenue: 8.2 → 9.1 (+0.8)

• otherCurrentLiabilities: 50.1 → 66.4 (+16.3)

• totalCurrentLiabilities: 176.4 → 165.6 (-10.8)

Street note: when a line item drops to 0.0 in datasets, it can be reclassification — not magic. 🪄❌
(So don’t celebrate until you check where it went.)

How to read this like a pro (without overcomplicating it) 🧠

When you see current liabilities, your brain should run this simple flow:

1. Is totalCurrentLiabilities rising or falling?
   That’s the overall pressure gauge.

2. What’s driving the move?

   • If shortTermDebt spikes: refinancing pressure may be rising.

   • If otherCurrentLiabilities spikes: you open the box and investigate.

   • If deferredRevenue rises: could be demand strength — but still work owed.

3. Then compare to current assets.
   You’re trying to answer one street-simple question:

“Can they cover the next 12 months without ugly moves?” 🚨

Ugly moves = dilution, emergency debt, asset sales, cutting investment at the worst time.

Bridge to Post #6 🔗

Next, we move from “bills due soon” to the obligations that sit in the background… until they suddenly matter:

Non-Current Liabilities — long-term debt, long-dated commitments, and the stuff that can quietly box a company in over time.

Because once you can read current liabilities and non-current liabilities together, you’ll stop judging risk by today’s breathing room alone — and start seeing the full pressure profile before it becomes a headline. 🧱⏳🚨

Thanks for reading — I hope this made the balance sheet feel a lot less “accounting-ish” and a lot more usable in real life. If you found it helpful, share it with a friend who’s trying to get better at picking stocks (or avoiding landmines).

Best regards,

-Cenk

Disclaimer:
Educational only — not financial advice. Investing and trading involve risk, and you can lose money. Do your own research and consider speaking with a licensed professional.

From 15–20 February, the tone in U.S. markets was set by a familiar mix: rate expectations, trade-policy headlines, and geopolitics. Investors digested fresh Federal Reserve messaging that kept the near-term path of rates a live debate, while a major legal and political back-and-forth on tariffs added to the “headline risk” around global supply chains and pricing power. At the same time, U.S.-Iran tensions kept energy markets on edge and helped put a bid under oil-related narratives, while housing-related updates reinforced that interest-rate sensitivity is still very real in rate-heavy parts of the market. Net-net, it was a week where macro headlines mattered, but stock selection and sector rotation still did most of the work.

Introduction

This was a mildly risk-on week, but not a “buy everything” kind of rally. Leadership came from the more cyclical parts of the market—especially Communication Services, Industrials, and Financials—while defensive pockets like Consumer Staples, Health Care, and Utilities lagged. Under the surface, the story was also very name-driven: a few big moves inside each sector did a lot of the heavy lifting. As you read the rest of this note, focus on two things: first, whether the week’s sector winners also have improving momentum versus SPY (the RSS section), and second, which individual holdings actually drove the ETF move (the holdings charts).

Weekly Returns

In the latest weekly performance, the Communication-XLC sector led with a return of 1.94%, indicating strong momentum in this area, likely driven by ongoing advancements in digital communication and media. Following closely were the Industrials-XLI and Financials-XLF, which returned 1.76% and 1.63%, respectively. This suggests a favorable environment for economic growth, as both sectors typically benefit from increased business activity and consumer spending.

On the other hand, the Cons. Staples-XLP sector lagged significantly with a decline of -1.81%, highlighting a potential shift away from defensive stocks as investors seek higher returns in more cyclical sectors. Additionally, the Utilities-XLU and Health Care-XLV sectors also posted negative returns of -0.37% and -0.54%, respectively, reinforcing the trend of investors moving away from traditionally safer investments.

The performance of the Technology-XLK sector, which returned 0.95%, suggests a moderate interest in tech stocks, although it underperformed compared to the leading sectors. This could indicate a rotation where investors are favoring sectors that are more sensitive to economic cycles, such as Industrials and Financials, over those that are typically considered safe havens. Overall, the market appears to be favoring cyclical sectors, reflecting a growing confidence in economic recovery.

Yearly Returns

In 2026, the leading sector ETFs are Energy-XLE and Materials-XLB, with returns of 22.79% and 16.78%, respectively. These sectors are benefiting from strong demand and favorable pricing conditions, which have propelled their performance significantly ahead of the broader market. In contrast, the lagging sectors include Financials-XLF with a return of -4.16% and Technology-XLK at -2.15%, indicating a challenging environment for these areas, possibly due to rising interest rates and market corrections.

There appears to be a rotation theme favoring cyclical sectors over defensive ones. The strong performance of Energy-XLE and Materials-XLB suggests that investors are gravitating towards sectors that typically benefit from economic growth. Meanwhile, defensive sectors such as Cons. Staples-XLP and Utilities-XLU are underperforming relative to the cyclical sectors, indicating a shift in market sentiment towards riskier assets.

Notable dispersion is evident between the sectors, with a significant gap between the top performer, Energy-XLE, and the bottom performer, Financials-XLF. This divergence highlights the varying impacts of economic conditions on different sectors, as well as the selective nature of investor confidence in 2026. Overall, the market is showing a clear preference for cyclical growth, while defensive sectors are lagging behind.

Sector Cycles

As of 20 February 2026, the Materials-XLB and Health Care-XLV sectors exhibit the strongest momentum, both with an RSS_latest of 1.00. Conversely, the Communication Services-XLC sector shows the weakest momentum with an RSS_latest of -1.00. The Energy-XLE sector also demonstrates a strong momentum at 1.00, while the Financials-XLF sector is positioned at -0.78. Other sectors such as Industrials-XLI and Technology-XLK have RSS_latest values of 0.74 and 0.16, respectively, indicating moderate momentum. The Consumer Discretionary-XLY and Consumer Staples-XLP sectors are at -0.25 and -0.10, while Utilities-XLU holds an RSS_latest of -0.07. The Real Estate-XLRE sector has an RSS_latest of -0.54.

NOTE: Relative Strength Score (RSS) measures the momentum of a sector compared to the SPY, normalized between -1 and +1.

Relative Strength Scores (RSS)

As of 20 February 2026, the strongest momentum is observed in Health Care-XLV and Energy-XLE, both scoring 1.00 in RSS, indicating robust performance relative to SPY. Conversely, Communication-XLC shows the weakest momentum with an RSS of -1.00. In terms of weekly percentage changes, Cons. Staples-XLP demonstrates significant improvement with a change of 64.41%, while Technology-XLK shows deterioration at -39.04%, indicating a notable shift in momentum. Additionally, Industrials-XLI has shown a remarkable increase in momentum with an RSS change of 86.09%, suggesting a potential rotation towards this sector. NOTE: Relative Strength Scores (RSS) measure the strength of a sector ETF relative to SPY.

Correlations

The correlation data reveals significant relationships among various sectors, particularly highlighting a strong positive correlation of 0.76 between XLF and XLC, suggesting that as financials perform well, communication services may also benefit. Conversely, XLK shows a notable negative correlation of -0.82 with XLP, indicating that as technology performs well, consumer staples may struggle. Additionally, the positive correlation of 0.58 between XLP and XLRE implies that real estate may thrive alongside consumer staples. These correlations can guide investors in understanding sector interdependencies and potential market movements.

Top Holdings Weekly Returns

Communication Services (XLC)

The weekly returns of the top holdings in the XLC ETF reveal a strong performance from major players in the communication sector. Alphabet_A-GOOGL led the pack with a return of 3.03%, closely followed by Alphabet_C-GOOG at 2.90%. This indicates robust investor confidence in Google’s advertising and cloud services, which are critical growth areas for the company.

Meta Plat.-META also showed solid performance with a return of 2.48%, reflecting a potential rebound in user engagement and advertising revenue. Meanwhile, Netflix-NFLX contributed positively with a return of 2.34%, suggesting that its content strategy may be resonating well with subscribers, despite ongoing competition in the streaming space.

On the downside, several holdings experienced negative returns, with Charter Com.-CHTR suffering the most at -3.73%. This decline, along with other negative performances from T-Mobile US-TMUS at -1.84% and AT&T-T at -2.47%, indicates challenges within the telecommunications segment, possibly due to competitive pressures and market saturation.

Overall, the strong performance of leading companies like Alphabet and Meta contrasts sharply with the struggles of traditional telecom firms, highlighting a shift in investor sentiment within the XLC ETF.

Technology (XLK)

The top holdings of the XLK ETF demonstrated varied performance over the past week, with Nvidia Corp. (NVDA) leading the pack with a weekly return of 3.83%. This strong performance is indicative of continued investor confidence in Nvidia’s growth potential, particularly in sectors such as artificial intelligence and gaming, which are crucial drivers for the Technology-XLK sector.

Following Nvidia, Apple Inc. (AAPL) also performed well, with a weekly return of 3.44%. This suggests that Apple continues to maintain its strong market position and investor interest, likely buoyed by ongoing product launches and robust sales figures. In contrast, Cisco Systems Inc. (CSCO) recorded a return of 3.06%, reflecting a positive sentiment towards its networking solutions amid increasing demand for digital infrastructure.

On the downside, several major players within the XLK ETF experienced negative returns. Notably, Oracle Corp. (ORCL) had the weakest performance with a decline of 7.53%, which may indicate challenges in its cloud services segment or competitive pressures. Additionally, Accenture plc. (ACN) and Salesforce, Inc. (CRM) also faced significant declines of 3.96% and 2.40%, respectively, suggesting that these companies may be experiencing headwinds in their consulting and customer relationship management services.

Overall, while the top holdings of the XLK ETF showcased a mix of strong gains and notable losses, the performance of Nvidia and Apple highlights the resilience and potential growth within the Technology-XLK sector.

Consumer Discretionary (XLY)

The top holdings of the XLY ETF displayed a range of weekly returns, with Amazon.com, Inc.-AMZN leading the pack at 5.69%. This strong performance indicates that e-commerce and online retail continue to thrive, likely benefiting from ongoing consumer trends favoring digital shopping experiences.

Following AMZN, Starbucks Corp.-SBUX and Nike, Inc.-NKE also showed positive returns of 3.94% and 3.60%, respectively. These figures suggest that consumer discretionary spending remains robust, particularly in sectors related to lifestyle and personal branding, which are often more resilient during economic fluctuations.

On the downside, several holdings experienced negative returns, with O’Reilly Automotive, Inc.-ORLY showing the largest decline at -3.27%. This drop may reflect broader concerns regarding consumer spending in the automotive sector, which can be sensitive to economic conditions and consumer confidence.

Overall, the mixed performance among the top holdings of the XLY ETF highlights the varying dynamics within the consumer discretionary sector, where some companies are thriving while others face challenges. This suggests a nuanced market environment that investors should closely monitor.

Consumer Staples (XLP)

The weekly returns for the top holdings in the XLP ETF reveal a mixed performance among the consumer staples sector. Leading the gains, Coca-Cola Comp. (KO) posted a return of 1.47%, indicating strong brand resilience and consumer demand. Following closely, Target Corporation (TGT) and Altria Group Inc. (MO) also reported positive returns of 0.80% and 0.48%, respectively, suggesting that these companies are maintaining stability in a challenging market environment.

On the downside, several holdings experienced significant declines, with Walmart Inc. (WMT) leading the losses at -8.14%. This sharp drop may reflect broader economic pressures affecting retail giants or shifts in consumer spending habits. Additionally, Mondelez Int., Inc. (MDLZ) and Costco Wholesale Corp. (COST) saw declines of -6.06% and -3.26%, respectively, which could indicate challenges in maintaining sales momentum amid competitive pressures.

Overall, the XLP ETF’s performance this week highlights a divergence within the consumer staples sector, where a few companies are thriving while others are struggling. This trend may prompt investors to reassess their positions based on individual company fundamentals and market conditions.

Health Care (XLV)

The top holdings of the XLV ETF displayed a mixed performance over the past week. Leading the pack was Amgen Inc. (AMGN) with a weekly return of 1.51%, indicating a strong performance relative to its peers. Following closely was Thermo Fisher Scientific Inc. (TMO) with a return of 1.21%, suggesting that these companies are currently benefiting from favorable market conditions or positive news.

On the downside, several major players in the Health Care Sector faced significant declines. Eli Lilly and Company (LLY) reported a weekly return of -2.93%, while AbbVie Inc. (ABBV) and Pfizer, Inc. (PFE) experienced even steeper losses of -2.89% and -3.37%, respectively. This trend indicates potential challenges within the pharmaceutical segment, possibly due to market reactions to earnings reports or regulatory news.

Overall, the Health Care Sector ETF (XLV) itself saw a decline of -0.54%, reflecting the overall bearish sentiment affecting many of its top holdings. The contrasting performances of the top gainers and losers highlight the volatility within the sector, suggesting that investors should remain cautious while assessing opportunities in the Health Care Sector.

Utilities (XLU)

The weekly returns for the top holdings in the Utilities-XLU ETF reveal a mixed performance among the constituents. Notably, Constellation Energy Corp. (CEG) led the pack with a return of 2.22%, indicating strong market sentiment or positive developments specific to the company. In contrast, Pacific Gas & Electric Co. (PCG) also showed a positive return of 1.10%, suggesting resilience in its operational performance despite broader market pressures.

On the downside, several key players experienced significant declines. NextEra Energy, Inc. (NEE) faced the steepest drop with a return of -1.73%, followed closely by Exelon Corp. (EXC) at -1.42%. This trend indicates potential challenges within the sector, possibly stemming from regulatory issues or market volatility affecting investor confidence. Overall, the Utilities-XLU ETF itself recorded a slight decline of -0.37%, reflecting the overall struggles within the sector amidst varying performances of its top holdings.

In summary, while some companies like CEG and PCG thrived, the broader sector faced headwinds, highlighting the volatility and challenges within the Utilities-XLU ETF.

Energy (XLE)

The top holding in the XLE ETF for the week was EOG Resources, Inc.-EOG, which posted a weekly return of 1.95%. This strong performance highlights the company’s resilience in the current energy market, potentially driven by favorable operational efficiencies or pricing strategies. Following closely was Oneok Inc.-OKE, with a weekly return of 1.42%, indicating robust demand for natural gas and related services, which may be contributing positively to its stock performance.

Other significant contributors included Chevron Corp.-CVX and the Energy Sector ETF-XLE itself, with returns of 1.08% and 1.01%, respectively. These figures suggest that major players in the energy sector are benefiting from a stable market environment, which could be a result of geopolitical factors or supply-demand dynamics. Conversely, the lower performers in this week’s analysis were Phillips 66-PSX and Marathon Petroleum Corp.-MPC, with returns of -2.52% and -2.71%, respectively. This decline may reflect challenges such as refining margins or operational disruptions.

Overall, the mixed performance of the top holdings in the XLE ETF indicates a sector that is experiencing both growth and challenges, with certain companies capitalizing on favorable conditions while others struggle.

Real Estate (XLRE)

The top holding in the XLRE ETF, CoStar Group, Inc.-CSGP, demonstrated a remarkable weekly return of 10.85%, significantly outperforming its peers. This strong performance may indicate a growing confidence in the company’s market position and operational effectiveness, potentially attracting more investor interest.

In contrast, the second-largest holding, Simon Property Group, Inc.-SPG, posted a positive weekly return of 2.47%. This suggests that while it is performing well, it is not experiencing the same level of momentum as CSGP. The stability of SPG indicates resilience in the retail real estate sector, which may be benefiting from a rebound in consumer spending.

On the downside, several holdings within the XLRE ETF experienced negative weekly returns, with CrownCastle Inc.-CCI at -2.62% and Equinix, Inc.-EQIX at -2.94%. This decline may reflect broader market pressures or sector-specific challenges, such as rising interest rates impacting REIT valuations.

Overall, the mixed performance among the top holdings in the XLRE ETF highlights a divergence in the real estate sector, where some companies are thriving while others are facing headwinds. This could signal varying investor sentiment and market dynamics within the sector.

Financials (XLF)

The top holdings of the XLF ETF showcased strong weekly returns, with Marsh & McLennan Comp. leading at 2.76%. This indicates a robust performance in the financial services sector, particularly for companies that provide risk management and insurance solutions. Following closely, JP Morgan Chase & Co. achieved a return of 2.72%, reflecting its strong position in the banking industry, which is often influenced by interest rate changes and economic conditions.

Another notable performer was Morgan Stanley, with a weekly return of 2.49%, which highlights the resilience of investment banks in a fluctuating market. Additionally, Visa Inc. and Wells Fargo & Comp. contributed returns of 2.19% and 1.98%, respectively, underscoring the importance of payment processing and traditional banking in the current economic landscape.

Overall, the XLF ETF’s performance, with an average return of 1.63%, indicates a positive trend in the financial sector, driven by strong performances from its top holdings. This suggests investor confidence in the financial services industry amidst ongoing economic developments.

Industrials (XLI)

The top holdings of the XLI ETF displayed notable performance variations over the past week. Leading the pack was Deere & Comp. (DE) with an impressive weekly return of 9.88%, indicating strong demand and possibly favorable market conditions for agricultural machinery. Following closely was General Elect. Comp. (GE) with a return of 8.82%, suggesting positive investor sentiment towards its diversified industrial operations.

In contrast, some holdings experienced declines, most notably Boeing Comp. (BA) which fell by 4.50%. This drop may reflect ongoing challenges within the aerospace sector, potentially impacting investor confidence. Additionally, Caterpillar, Inc. (CAT) and United Parcel Service (UPS) also reported negative returns of 1.87% and 0.74%, respectively, indicating that not all companies in the industrial sector are performing equally well.

Overall, the XLI ETF’s performance was buoyed by strong gains from its top holdings, particularly Deere & Comp. and General Elect. Comp., while some traditional heavyweights faced downward pressure. This divergence highlights the varying dynamics within the industrial sector.

Materials (XLB)

The top holding in the XLB ETF, Linde plc-LIN, demonstrated a strong weekly return of 3.22%, indicating robust performance relative to its peers. This suggests that Linde may be benefiting from favorable market conditions or operational efficiencies that are driving investor confidence.

Following Linde, Freeport-McMoRan, Inc.-FCX and Corteva, Inc.-CTVA also posted positive returns of 2.39% and 1.71%, respectively. This performance reflects a potential resilience in the materials sector, particularly in the areas of mining and agriculture, which are critical components of the XLB ETF.

In contrast, the overall XLB ETF experienced a decline of -0.66%, indicating that despite the strong performances of its top holdings, the broader sector faced challenges. Notably, several holdings such as Dow Inc.-DOW and Newmont Corp.-NEM suffered significant losses of -6.06% and -2.92%, respectively, which likely contributed to the ETF’s negative return.

The mixed performance among the top holdings suggests a divergence in sector dynamics, where strong performers like Linde and Freeport-McMoRan are offset by underperformers such as Dow and Newmont. This highlights the importance of stock selection within the XLB ETF for investors looking to navigate the materials sector effectively.

Conclusion

Putting it all together, the week looked like a classic cyclical tilt: Communication-XLC (1.94%), Industrials-XLI (1.76%), and Financials-XLF (1.63%) led, while Consumer Staples-XLP (-1.81%) lagged and the other defensives (XLV, XLU) stayed soft. A big part of the story was concentration in single names—CoStar Group, Inc.-CSGP (10.85%), Deere & Comp.-DE (9.88%), and General Elect. Comp.-GE (8.82%) were standout winners, while Walmart Inc.-WMT (-8.14%), Oracle Corp.-ORCL (-7.53%), and Dow Inc.-DOW (-6.06%) were the biggest drags. The momentum read is also a useful reminder that “this week’s winner” isn’t always “the strongest trend”: despite leading the week, XLC is still at -1.00 on RSS_latest, while XLE/XLB/XLV sit at 1.00. Next week, watch how rate expectations evolve, whether trade and geopolitical headlines keep feeding into sector leadership, and whether the market keeps rewarding cyclicals over defensives.

Closing message

If you found this useful, feel free to share it with anyone who follows sector rotation. And if you’d like changes for the next update—more on correlations, more single-stock color, or a tighter focus on just the leaders and laggards—tell me what would make it more valuable for you.

Best regards,

-Cenk

This note is for informational purposes only and is not financial advice. Past performance is not indicative of future results. Please do your own research and consider consulting a qualified professional before making investment decisions.

Tesla competes on a system stack, not a single feature: vehicle hardware, software, charging access, service experience, and increasingly, autonomy and energy products. Competition is typically won or lost at the customer’s “total experience” level—upfront price, charging convenience, software usefulness, and resale confidence—rather than a spec-sheet battle alone.

Structurally, Tesla’s advantages show up where scale and integration matter (fleet learning loops for driver assistance, charging access, and factory cost-down), while disadvantages show up where regulation, incentives, or brand trust shift demand quickly. This report maps Tesla’s closest rivals in each segment and pairs the competitor set with a small, labeled market snapshot.

In this report, a “direct competitor” means a company that overlaps with Tesla on (1) price tier—either premium EVs or volume EVs; (2) ecosystem lock-in—apps, data, charging access, and subscriptions that raise switching costs; (3) substitutes—hybrids/PHEVs, premium ICE, and mobility services that compete for the same budget/use case; and (4) distribution overlap—online/direct sales, dealer networks, fleets, and partnerships that target the same buyers.

Read more

Tesla (TSLA) and Ford (F) both sell vehicles, but they live in very different worlds: Tesla is a newer company built around EVs and software, while Ford is a legacy manufacturer with huge scale and a century of operating history.

Comparing them side-by-side helps answer a simple question: is a company growing because it’s getting bigger, because it’s getting more profitable, because it’s getting better at turning profit into cash—or some combination of all three?

Over 2010–2024, the stock market’s story was extreme: Tesla’s price index in the dataset rose from 100 to about 22,747.3, while Ford’s fell to about 59.0 (indexed, 100 = the start). That’s a reminder that the market often rewards change and optionality—but the financial statements tell you what’s happening under the hood.

Below, we walk through 10 financial-statement metrics. Important note: the dataset provides start and end values for each metric (2010 and 2024).

TL;DR

• Scale: Ford is still larger on sales—revenue goes from $128.95B (2010) to $184.99B (2024)—but Tesla’s revenue explodes from $116.74M to $97.69B.

• Profitability turn: Tesla moves from deep losses to positive margins (operating margin -126.0% → 7.2%; net margin -132.0% → 7.3%).

• Margins squeezed: Both companies’ gross margins fall (Tesla 26.3% → 17.9%; Ford 15.6% → 8.4%).

• Cash generation: Tesla’s operating cash flow swings from -$127.80M to $14.90B; Ford stays strongly positive at $11.50B → $15.40B.

• Investment pace: Tesla’s CapEx ramps sharply (-$40.20M → -$11.34B); Ford also invests more (-$4.09B → -$8.68B).

• Leverage gap: Tesla ends the period with net cash (net debt -$2.52B), while Ford’s net debt rises to $137.93B.

• Valuation: EV/EBITDA ends at 87.61x for Tesla vs 12.45x for Ford, and Tesla shows big volatility (including a 262.28x point in 2013).

Read more

When people say “Tesla,” they usually mean cars — but the company is really two big businesses under one roof:

• Automotive: making and selling electric vehicles, plus extras like leasing, software features, and the ecosystem around the car (think charging, services, and other add-ons).
• Energy: selling energy storage (big batteries for homes and utilities) and solar-related products and services.

So the story isn’t just ‘how many cars did they ship?’ It’s also ‘how much profit did they keep?’ and ‘did the business spit out cash… or eat it?’

1) Price: What the Market Was Willing to Pay

From 2010 to 2024, TSLA’s annual closing price went from $1.78 to $403.84 — roughly a 227× move.
The big “whoa” moment shows up in 2020, when the price jumped to $235.22.

Read more

Now we zoom out.

Non-current assets are the long-lived resources: the machinery, the long-term bets, and (sometimes) the accounting “ghost assets” that look impressive but won’t pay tomorrow’s bills.

Street translation: this is the part of the balance sheet that builds the future… not the part that saves you in a cash squeeze. ⚠️

Let’s build your variable map.

Assets — Non-current (what belongs where) 🗺️

propertyPlantEquipmentNet 🏭🖥️

This is the real operating gear: factories, equipment, buildings, servers — net of depreciation.

Street translation: this is the machinery of the business.
For capital-heavy companies, this matters a lot because it hints at ongoing spending needs. (Gear needs upkeep. Upkeep needs cash.)

goodwill ✨🧾

Goodwill happens when you buy a company and pay more than the accounting value of its net assets.

It can represent real strategic value — but it’s also not something you can use to pay bills.

Street translation: goodwill is acquisition premium.
It can be fine, but too much can be a warning sign. 🚩

intangibleAssets 🧠📜

Intangibles are non-physical assets like patents, licenses, customer relationships, and brands.

They can have real economic value, but they’re not liquid like cash.

Street translation: valuable? yes. life-saving in a squeeze? usually no. 🚒

goodwillAndIntangibleAssets 👻📦

This combines the two “non-physical” categories.

Investors watch it as an illusion risk check: if this is a massive chunk of total assets, the asset base may be less tangible and less flexible.

Street translation: how much of the balance sheet is vibes vs stuff? 😄

longTermInvestments 🏦📈

Money invested outside the core business with a longer time horizon (bonds, equities, strategic holdings).

It can be smart treasury management… or a side bet.

Street translation: the “we have extra money parked somewhere” bucket. 🚗

taxAssets 🎟️

Potential future tax benefits.

Useful — but only if the company stays profitable enough to use them.

Street translation: a tax asset is a coupon… only valuable if you survive long enough to redeem it. ✅

otherNonCurrentAssets 📦👀

The long-term junk drawer.

Not automatically bad — but if it grows fast or becomes large, that’s your signal to open the footnotes.

Street translation: “show me what’s in the box.” 🕵️

totalNonCurrentAssets 🧱

The full long-term asset pile: how much of the company’s resources are tied up in long-lived items.

Street translation: the long-term “body” of the business. 🧍‍♂️

otherAssets 🧩

A catch-all that depends on the data provider.

Not automatically bad — but it’s rarely the line you want dominating the balance sheet.

Street translation: if this is big, ask questions. ❓

totalAssets 🧠

The headline number: everything the company owns or controls.

But remember:

big assets don’t mean safe assets.

Street translation: size doesn’t equal strength — quality does. 💪

Your variable list (non-current assets) ✅

• propertyPlantEquipmentNet

• goodwill

• intangibleAssets

• goodwillAndIntangibleAssets

• longTermInvestments

• taxAssets

• otherNonCurrentAssets

• totalNonCurrentAssets

• otherAssets

• totalAssets

Apple: non-current highlights (FY2024 → FY2025, $B) 🍎

• propertyPlantEquipmentNet: 45.7 → 49.8 (+4.2)

• longTermInvestments: 91.5 → 77.7 (-13.8)

• taxAssets: 19.5 → 20.8 (+1.3)

• otherNonCurrentAssets: 55.3 → 63.0 (+7.7)

• totalNonCurrentAssets: 212.0 → 211.3 (-0.7)

• totalAssets: 365.0 → 359.2 (-5.7)

Street translation: Apple’s long-term asset pile stayed basically flat, but the mix shifted — more operating gear (PPE), less long-term investments, and a jump in “other” long-term assets. That mix-change is the real signal. 👀

Bridge to Post #5 🔗

Next, we flip the balance sheet to the side that creates pressure:

Liabilities — starting with Current Liabilities.

Because asset quality tells you what a company has…
but timing of liabilities tells you whether it can survive the next 12 months without panic moves. ⏰🚨

Thanks for reading — I hope this made the balance sheet feel a lot less “accounting-ish” and a lot more usable in real life. If you found it helpful, share it with a friend who’s trying to get better at picking stocks (or avoiding landmines), and drop a comment with the next topic you want me to break down — cash flow next, or income statement? I’ll use your feedback to choose what to write next.

Best regards,

-Cenk

Disclaimer:
Educational only — not financial advice. Investing and trading involve risk, and you can lose money. Do your own research and consider speaking with a licensed professional.

Ray Dalio is an American investor best known for founding Bridgewater Associates in 1975 — famously starting the firm out of a two-bedroom apartment in New York City. He earned an MBA from Harvard Business School and built a career around a big idea that still defines his work today: markets aren’t random chaos — they’re systems driven by cause and effect.

Over the years, Dalio gradually stepped away from formal leadership at Bridgewater (CEO in 2017, CIO in 2020, and chairman at the end of 2021), shifting toward mentoring and transition planning

The headline: Dalio invests like an engineer, not a storyteller

If you had to sum up Dalio’s investing style in one line, it’s this: understand the economic machine, write down the rules, diversify by what can go wrong, then manage risk like it’s your main product.

That sounds simple, but it’s rare in practice — because it forces you to admit something most investors avoid: you can be smart and still be wrong, and the only real protection is building portfolios (and decisions) that don’t break when reality surprises you.

1) Macro-first thinking: “What environment are we in?”

Dalio is associated with global macro investing — focusing on big forces like growth, inflation, interest rates, currencies, policy, and credit cycles, and then expressing those views across liquid markets.

What makes this different from typical “stock picking” is the starting point. Instead of asking, “Which company is best?” the macro lens asks:
“What’s the world likely to look like next — and which assets benefit or get hurt?”

This is why Dalio’s commentary often feels like economics meets risk management. He’s not trying to predict one chart. He’s trying to map the whole weather system.

2) Principles + process: turning decisions into repeatable rules

Dalio’s public framework is heavily shaped by the idea of an “idea meritocracy” and radical transparency — a culture designed to stress-test thinking and reduce blind spots.

Even if you don’t love the cultural package, the investing lesson is powerful:
good outcomes come from good process — especially under pressure.

In real terms, that means writing down:

• what you believe,

• why you believe it,

• what would prove you wrong,

• and what you’ll do if you are wrong.

Most investors only do the first two.

3) “All Weather” diversification: don’t diversify by names — diversify by outcomes

Dalio’s most famous portfolio concept is All Weather, which Bridgewater frames as the foundation of the risk parity movement.

The core insight is blunt: most portfolios are quietly a single bet. For example, a classic equity-heavy portfolio often assumes that growth will be okay, inflation won’t spike too badly, and liquidity won’t vanish at the worst moment.

All Weather tries to build something sturdier by diversifying across different economic environments (think: rising inflation, falling inflation, strong growth, weak growth), not just across tickers.

In plain English:
it’s not about owning “more stuff.” It’s about owning stuff that reacts differently when the world changes.

4) Risk isn’t a section — it’s the entire design

Dalio-style portfolio construction is essentially risk engineering:

• You assume you’ll be surprised.

• You assume correlations will change when you need diversification most.

• You size positions so one theme can’t wreck the whole portfolio.

This is also why his frameworks appeal to institutions: the goal isn’t just “win big.” It’s “don’t die” — and still compound over time.

Investing achievements: what Dalio (and Bridgewater) actually did

Dalio’s biggest achievement isn’t a single trade — it’s building an enduring macro institution and making certain frameworks mainstream.

1) Building Bridgewater into a global institution
Bridgewater describes Dalio’s arc from founding the firm in 1975 to building it into a major global player, with Dalio later stepping back from leadership roles over several years.

2) Making “All Weather” a reference point
All Weather became one of the most widely discussed models for regime-aware diversification and risk-balanced portfolio construction.

3) A recent headline performance milestone (2025)
Reuters reported Bridgewater’s flagship Pure Alpha fund gained 33% in 2025, and noted the firm managed around $92 billion as of Sept. 30, 2025 (figures that can shift with markets and flows).

One year doesn’t define an investing lifetime — but it does show that the “macro machine” can still deliver when the environment fits its strengths.

What you can steal from Dalio without being a hedge fund

You don’t need leverage, complex derivatives, or an institutional research pipeline to apply the best parts of this philosophy. Here are a few practical takeaways:

Stop confusing “many holdings” with diversification.
Ask what your portfolio does in inflation, recession, and liquidity shocks — not just how many tickers you own.

Write down your decision rules.
Even one page helps: entry, exit, risk limits, and what invalidates your thesis.

Think in environments, not headlines.
Headlines are noise; regimes are signal. Inflation up? Policy tightening? Growth rolling over? These are the levers.

Respect risk like it’s the price of admission.
If you can’t survive drawdowns, you can’t compound.

Goodbye (from me)

If there’s one “Dalio lesson” worth keeping close, it’s this: you don’t need to predict the future perfectly — you need a process that stays standing when you’re wrong. Thanks for reading, and I hope this gave you a clearer mental model for how one of the most influential macro investors thinks about markets.

— Cenk

Disclaimer

This post is for educational and informational purposes only and reflects general commentary, not personalized investment advice. It is not a recommendation to buy or sell any security or to adopt any strategy. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results. You should do your own research and consider speaking with a licensed financial professional before making investment decisions.

Markets spent the week balancing a friendlier inflation pulse against a noisier political backdrop. On Friday, January CPI came in softer than expected (0.2% month-on-month, 2.4% year-on-year), which pushed Treasury yields lower and nudged rate markets toward a June Federal Reserve cut. At the same time, Washington kept investors on the defensive as Congress wrestled with Department of Homeland Security funding and immigration conditions, keeping shutdown risk in the headlines. The net result was a cautious, “hide in stability” feel—good for utilities and select rate-sensitive areas, tougher for banks and growth-tilted exposures.

Introduction

This was a rotation week more than a “market up or down” week. The S&P 500 was under pressure, and leadership shifted toward the classic defensive corners—steady cashflows, regulated pricing power, and “sleep-at-night” balance sheets. In the pages below, start with the sector return snapshots (weekly and year-to-date), then use the Relative Strength Score (RSS) section to see which sectors are actually gaining momentum versus SPY. Finally, the holdings pages show what drove each sector move—who did the lifting, and who did the damage.

Weekly Returns

Utilities-XLU was the clear winner this week, up 7.12%, while Financials-XLF fell -4.80%. That spread is the story: investors leaned into defense and stepped away from economically sensitive balance-sheet risk. Real Estate-XLRE (3.45%) and Materials-XLB (3.40%) also finished strongly, while Technology-XLK (-1.17%) and Cons. Discre.-XLY (-1.61%) stayed on the back foot. For context, the S&P 500 ETF-SPY declined -1.37%.

Yearly Returns

Year-to-date, the market’s leadership still sits with the commodity and cycle-linked groups. Energy-XLE is up 21.51% and Materials-XLB is up 17.44%. Consumer Staples-XLP (15.09%) and Industrials-XLI (12.16%) are also firmly positive, while Utilities-XLU is up 8.75% and Real Estate-XLRE is up 7.67%. On the other side, Financials-XLF is down -5.68% and Technology-XLK is down -3.14%. The S&P 500 ETF-SPY sits at -0.12% year-to-date.

Sector Cycles

The Relative Strength Score (RSS) measures momentum versus the S&P 500 ETF (SPY) on a scale from -1 (weakest) to +1 (strongest). As of 13 February 2026, leadership is tightly concentrated, with Health Care (XLV), Energy (XLE), and Materials (XLB) all at +1.0. On the weak end, Communication Services (XLC) sits at -1.0, followed by Financials (XLF) at -0.75 and Real Estate (XLRE) at -0.68. The middle is more mixed, with Industrials (XLI) at +0.40 and Technology (XLK) at +0.26.

Relative Strength Scores (RSS)

Over the week (06 February → 13 February), Industrials (XLI) posted the largest RSS jump (+351.33%), followed by Materials (XLB) (+45.51%) and Energy (XLE) (+32.95%), while Technology (XLK) saw the sharpest drop (-27.63%) and Consumer Discretionary (XLY) also slipped (-11.61%).

Correlations

Correlations help explain what tends to trade together in this sample (aligned weekly RSS). A few pairs stand out. Financials-XLF shows a strong positive relationship with Communication-XLC (0.75) and a solid positive relationship with Cons. Staples-XLP (0.59), and it’s also positively correlated with Real Estate-XLRE (0.66). Technology-XLK, meanwhile, has a strong negative correlation with Cons. Staples-XLP (-0.82)—a classic “growth vs defense” tug-of-war. Utilities-XLU and Cons. Staples-XLP are tightly linked (0.76), while Materials-XLB and Cons. Discre.-XLY run meaningfully opposite (-0.67).

Top Holdings Weekly Returns

Communication Services (XLC)

Communication Services (XLC) had a clear split between winners and losers. In the table, Communication Sector ETF-XLC finished the week at -1.11%. On the upside, the biggest movers were T-Mobile US-TMUS (11.0%), Verizon Com.-VZ (5.93%), AT&T-T (5.75%). On the downside, the heaviest decliners were Alphabet_A-GOOGL (-5.48%), Alphabet_C-GOOG (-5.43%), Meta Plat.-META (-3.35%).

Technology (XLK)

Technology (XLK) had a clear split between winners and losers. In the table, Technology Sector ETF-XLK finished the week at -1.22%. On the upside, the biggest movers were Oracle Corp.-ORCL (11.9%), Microsoft Corp.-MSFT (-0.08%), Advanced Mic. Dev. Inc.-AMD (-0.81%). On the downside, the heaviest decliners were Cisco Syst. Inc.-CSCO (-9.36%), Apple Inc.-AAPL (-7.86%), Accenture plc.-ACN (-7.13%).

Consumer Discretionary (XLY)

Consumer Discretionary (XLY) had a clear split between winners and losers. In the table, Consumer Discretionary ETF-XLY finished the week at -1.65%. On the upside, the biggest movers were Lowes Compan. Inc.-LOW (3.12%), OReilly Automative, Inc.-ORLY (2.52%), Home Depot Inc.-HD (1.38%). On the downside, the heaviest decliners were Booking Holdings Inc.-BKNG (-7.12%), Starbucks Corp.-SBUX (-5.85%), Amazon.com, Inc.-AMZN (-5.59%).

Consumer Staples (XLP)

Consumer Staples (XLP) had a clear split between winners and losers. In the table, Consumer Staples ETF-XLP finished the week at 1.65%. On the upside, the biggest movers were Mondelez Int., Inc.-MDLZ (4.14%), Altria Group Inc.-MO (2.62%), Philip Morris Int. Inc.-PM (2.27%). On the downside, the heaviest decliners were Pepsico, Inc.-PEP (-2.68%), Coca-Cola Comp.-KO (-0.63%), Procter & Gamble Comp.-PG (0.52%).

Health Care (XLV)

Health Care (XLV) had a clear split between winners and losers. In the table, Health Care Sector ETF-XLV finished the week at -0.09%. On the upside, the biggest movers were UnitedHealth Group Inc.-UNH (5.92%), AbbVie Inc.-ABBV (3.58%), Abbott Labs.-ABT (1.48%). On the downside, the heaviest decliners were Thermo Fisher Sci. Inc.-TMO (-7.01%), Amgen Inc.-AMGN (-3.85%), Danaher Corp.-DHR (-2.15%).

Utilities (XLU)

Utilities (XLU) had a clear split between winners and losers. In the table, Utilities Sector ETF-XLU finished the week at 7.07%. On the upside, the biggest movers were Pacific Gas & Elec. Co.-PCG (10.46%), Constellation Ener. Corp.-CEG (10.26%), Exelon Corp.-EXC (9.03%). On the downside, the heaviest decliners were NextEra Ener., Inc.-NEE (4.58%), Duke Ener. Corp.-DUK (4.86%), Southern Comp.-SO (5.08%).

Energy (XLE)

Energy (XLE) had a clear split between winners and losers. In the table, Energy Sector ETF-XLE finished the week at 2.01%. On the upside, the biggest movers were Williams Comp.-WMB (7.9%), EOG Resources, Inc.-EOG (6.21%), Oneok Inc.-OKE (5.21%). On the downside, the heaviest decliners were Valero Ener. Corp.-VLO (-1.42%), Schlumberger N.V.-SLB (0.04%), Marathon Petroleum Corp.-MPC (0.06%).

Real Estate (XLRE)

Real Estate (XLRE) had a clear split between winners and losers. In the table, Real Estate Sector ETF-XLRE finished the week at 3.49%. On the upside, the biggest movers were Equinix, Inc.-EQIX (12.58%), CrownCastle Inc.-CCI (11.94%), American Tower Corp.-AMT (11.93%). On the downside, the heaviest decliners were CoStar Group, Inc.-CSGP (-10.7%), Simon Property Group, Inc.-SPG (-1.38%), Prologis,

Financials (XLF)

Financials (XLF) had a clear split between winners and losers. In the table, Financial Sector ETF-XLF finished the week at -4.8%. On the upside, the biggest movers were Berkshire Hathaway Inc-BRK-B (-1.84%), Goldman Sachs Group, Inc.-GS (-2.56%), Morgan Stanley-MS (-4.97%). On the downside, the heaviest decliners were Wells Fargo & Comp.-WFC (-7.57%), Bank of America Corp.-BAC (-7.17%), S&P Global Inc.-SPGI (-6.71%).

Industrials (XLI)

Industrials (XLI) had a clear split between winners and losers. In the table, Industrial Sector ETF-XLI finished the week at 0.48%. On the upside, the biggest movers were Caterpillar, Inc.-CAT (6.62%), Lockheed Martin Corp.-LMT (4.46%), Deere & Comp.-DE (3.34%). On the downside, the heaviest decliners were Aut. Data Process., Inc.-ADP (-8.32%), General Elect. Comp.-GE (-1.95%), Boeing Comp.-BA (-0.22%).

Materials (XLB)

Materials (XLB) had a clear split between winners and losers. In the table, Materials Sector ETF-XLB finished the week at 3.41%. On the upside, the biggest movers were Newmont Corp.-NEM (8.84%), Linde plc-LIN (7.23%), DuPont de Nemours, Inc.-DD (7.2%). On the downside, the heaviest decliners were Nucor Corp.-NUE (-5.36%), Air Products and Chem., Inc.-APD (-1.14%), Sherwin-Williams Comp.-SHW (1.82%).

Conclusion

The message from the tape was straightforward: defensives led, cyclicals lagged. Utilities-XLU topped the weekly table at 7.12%, while Financials-XLF was the clear laggard at -4.80%, with SPY down -1.37%. Under the hood, the biggest single-stock upside moves came from the cell-tower and data-center REITs—EQIX (12.58%), CCI (11.94%), and AMT (11.93%)—helping Real Estate-XLRE finish strong. The sharpest hits came from CSGP (-10.7%), CSCO (-9.36%), and ADP (-8.32%). On momentum, RSS still favors Health Care-XLV, Energy-XLE, and Materials-XLB at 1.00, while Communication-XLC remains at -1.00.

What to watch next week: whether financials stabilize after a steep drawdown, whether tech can stop bleeding, and whether the rate-cut narrative (and Washington funding headlines) keeps pushing investors toward the more defensive parts of the market.

Closing message

That’s it for the week. If this was useful, please share it with anyone who watches sector rotation. And if you’ve got feedback—what you’d like added, removed, or explained differently—send it through so the next edition is better.

Best regards,

-Cenk

This report is for informational purposes only and is not financial advice. Past performance is not indicative of future results. Please do your own research and consider consulting a qualified professional before making investment decisions.

Benjamin Graham’s big message is simple: real investing isn’t guessing prices—it’s buying value with a safety cushion. He draws a hard line between investing and speculation. In Graham’s world, an investment is something you buy after real analysis, where you have safety of principal and a reasonable return. If those conditions aren’t there, you’re not “investing”—you’re speculating (and that’s fine… as long as you admit it and keep it small).

The market is “Mr. Market” — and he’s moody

One of the most famous ideas in the book is Mr. Market: imagine you own a small piece of a business, and every day your partner (Mr. Market) shows up with a new price to buy your share or sell you more. Some days he’s confident and overexcited, other days he’s terrified and offers a ridiculous low price.

Graham’s point: you don’t have to listen to him.
You only use Mr. Market when he’s giving you a deal—either:

• he overpays (you can sell), or

• he underprices (you can buy).

Otherwise? Ignore the noise and focus on what the business is worth.

The core weapon: Margin of Safety

If you only remember one phrase from this book, it’s margin of safety.

Think of it like this: you don’t build a bridge that can hold exactly 10 tons—you build it to hold way more, because reality is messy. Investing is the same. You don’t buy a stock at “fair value” and hope you calculated perfectly. You buy it meaningfully below what it’s worth, so if you’re wrong on some details, you’re still protected.

That gap between price and value is your buffer. Your shock absorber. Your sleep-at-night factor.

Two investor “personalities”: Defensive vs Enterprising

Graham doesn’t tell everyone to invest the same way. He splits people into two types:

1) The Defensive Investor (most people)

This person wants decent results with low stress. The strategy is boring on purpose:

• diversify

• keep a balanced mix of stocks and high-quality bonds

• rebalance occasionally (not daily)

• avoid hot tips, hype, and complexity

• consider low-cost funds if picking stocks feels like a job

In short: build a solid plan you can stick to when headlines get scary.

2) The Enterprising Investor (the “I’ll do the work” type)

This person is willing to put in real effort to try for better-than-average results. But Graham is strict here: you don’t get to call yourself “enterprising” just because you like trading.

You earn the label by doing the work: reading financials, understanding businesses, comparing value vs price, and hunting for situations where the market is clearly wrong (deep value, special situations, neglected stocks, etc.). Even then, Graham keeps repeating: no margin of safety, no deal.

A modern reality check

Some of the book’s exact numbers and old-school examples are dated (because markets and interest rates change). But the framework is still rock-solid:

• separate investing from speculation

• don’t let emotions set your price

• demand a margin of safety

• match your strategy to your time/energy

• don’t confuse activity with skill

That’s why Warren Buffett has praised it so heavily over the years: not because it gives you a magic stock formula—but because it trains your mindset.

A quick “Graham-style” checklist you can actually use

Before you buy anything, ask:

• Do I understand the business in one minute? If not, why am I buying it?

• Am I investing… or just hoping?

• What could go wrong—and do I still survive? (Margin of safety thinking)

• If the price dropped 30% tomorrow, would I panic or buy more?

• Am I defensive or enterprising in real life (time + effort), not in ego?

If those questions make you uncomfortable, that’s the book doing its job.

Goodbye

That’s the heart of The Intelligent Investor: treat stocks like ownership, treat the market like a moody partner, and never pay a price that leaves you with zero room for error. If you enjoyed this breakdown, share it with a friend who’s tired of market drama—and if you want, tell me what kind of investor you are (defensive or enterprising).
Cenk

Disclaimer: This post is for educational purposes only and does not constitute financial, investment, or trading advice. Always do your own research and consider speaking with a licensed financial professional before making investment decisions.

Key takeaways:

· Cloud infrastructure services: AWS, Google Cloud; Q3 2025 revenue share was AWS 29%, Azure 20%, Google 13% [1].

· UC&C / collaboration: Zoom, Cisco; 2024 UC&C revenue share was Microsoft 45.6%, Zoom 6.2%, Cisco 5.3% [2].

· CRM applications: Salesforce, Oracle, SAP; 2023 CRM app share was Salesforce 21.7% vs Microsoft 5.9% [3].

· Desktop OS: Apple macOS, Google Chrome OS, Linux; worldwide Jan 2026 desktop OS share was Windows 67.7% [4].

· Gaming platforms: Sony PlayStation, Nintendo; Microsoft reported 500M gaming MAU, vs PlayStation Network 132M MAU (Dec 2025) and Nintendo 130M annual playing users (Jan-Dec 2025) [5][6][7].

· AI assistants: Google Gemini, OpenAI ChatGPT, Anthropic; Microsoft reported 100M Copilot MAU, while Gemini was reported at 750M MAU and ChatGPT at 400M weekly active users (Feb 2025) [8][9][10].

1) Cloud infrastructure & platform services (Azure)

Most direct competitors: Amazon Web Services (AWS), Google Cloud, Oracle Cloud Infrastructure (OCI).

AWS and Google Cloud are the most direct peers because they compete head-to-head with Azure for global IaaS/PaaS consumption, enterprise migrations, and AI infrastructure workloads. OCI is a market-dependent competitor in regulated and database-heavy enterprise accounts, where Microsoft and Oracle often sell into the same CIO budget and long-term contracts.

Market snapshot (labeled):

Metric: Worldwide cloud infrastructure services revenue share, Q3 2025 (IaaS, PaaS, hosted private cloud).

Values: Azure = 20%; AWS = 29%; Google Cloud = 13% [1].

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Peter Lynch isn’t famous because he predicted the next recession, nailed the perfect market top, or had a “secret” indicator.

He’s famous because he made investing feel… normal.

While running the Fidelity Magellan Fund from 1977 to 1990, he delivered roughly 29% per year on average, and the fund grew from about $18 million to $14 billion.

But his bigger legacy is the message: regular people can do well by combining everyday observation with real homework.

The core vibe of Lynch’s style 🧠

If you had to boil it down to one sentence, it’s this:

Start with what you notice in real life, then confirm it with the numbers.

He loved the idea that the average person has an “edge” because you see products, stores, apps, and habits before Wall Street gets excited about them.

And he was blunt about what doesn’t help: trying to predict the economy, interest rates, or the market’s next move.

The main principles of Peter Lynch’s investment style ✅

Here’s the “all killer, no filler” list. (Think of it as a checklist you can actually use.)

1. Know what you own 🧾
   If you can’t explain what the business does and why it should earn more in the future, you’re guessing.

2. Only buy what you understand 🧩
   Your best research tools are your eyes, ears, and common sense—then you verify.

3. Do your homework (the “numbers” still matter) 🔍
   Lynch’s style sounds folksy, but he emphasized real research and fundamentals behind a good story.

4. Don’t waste your life predicting the macro 🌦️
   He argued it’s futile to forecast the economy/markets, and that the effort can distract you from companies.

5. You have plenty of time ⏳
   He encouraged patience—because great businesses often play out over years, not weeks.

6. Look at the balance sheet (especially debt) 🧱
   A business with manageable debt has more room to survive bad years and keep compounding.

7. Avoid “long shots” and hypey, easy-entry industries 🚫
   He warned against situations where competition can copy success quickly.

8. Classify the stock first 🗂️
   Lynch grouped companies into six behavior-types (more below). It helps you set sane expectations.

9. Price matters—pay a fair price for growth 💵
   He popularized using growth-adjusted valuation, often discussed via the PEG idea.

10. Hunt for “tenbaggers,” then don’t panic-sell them 🚀
    He coined “tenbagger” (a 10x stock) and warned against selling winners too early.

11. Don’t “cut the flowers and water the weeds” 🌸🌿
    A famous line attributed to Lynch: “Selling your winners and holding your losers is like cutting the flowers and watering the weeds.”

The six stock “personalities” Lynch used (and why this is secretly genius) 🗂️

One of Lynch’s most practical moves was saying: not all stocks are trying to do the same thing.

He categorized companies as: slow growers, stalwarts, fast growers, cyclicals, turnarounds, and asset plays.

Here’s what that means in plain English:

• Slow growers 🐢: Big, mature companies that grow slowly—often bought for dividends, not fireworks.

• Stalwarts 🛡️: Solid companies that can grow steadily; usually not 10x, but can be dependable.

• Fast growers ⚡: Smaller, aggressive growers—the “could be huge” bucket (but you must check valuation).

• Cyclicals 🎢: Companies whose profits rise/fall with the economy (autos, materials, travel, etc.). Timing matters more.

• Turnarounds 🛠️: Businesses that were struggling but may recover (high risk, high potential).

• Asset plays 🏗️: Companies that own valuable “stuff” the market is ignoring (real estate, subsidiaries, hidden assets).

This framework does one powerful thing: it stops you from expecting a slow grower to behave like a rocket ship—and it keeps you from overpaying for a fast grower just because it’s exciting.

The Lynch “math” (without turning this into a textbook) 🧮

Lynch wasn’t allergic to numbers. He just didn’t want numbers without meaning.

A classic Lynch-flavored idea is growth-aware valuation—often discussed as PEG (P/E divided by growth). The CFA Institute explains the intuition using Lynch’s rule of thumb: a “fair” P/E is roughly equal to growth, so a PEG around 1 is “fair-ish” and below 1 can look cheaper (as a starting point).

Important: that’s not a magic formula. It’s a flashlight.

Think of PEG as asking:

“Am I paying a reasonable price for how fast earnings are growing?”

Case studies & real examples (how the style looks in the wild) 🧭

Case study 1: Early conviction, real homework (the “Flying Tiger” story) ✈️

In his early years, Lynch made one of his first successful investments in an air freight company called Flying Tiger Line, which helped him pay for graduate school. It’s a small detail, but it captures the spirit: find a business you can understand, then commit with conviction.

Case study 2: The “biggest money-maker” lesson (Fannie Mae) 🏦

According to Beating the Street (as summarized in public sources), Lynch’s most profitable pick during his Magellan years was Fannie Mae.
You don’t need to copy that trade. The takeaway is bigger: a single great winner can matter a lot, which is why Lynch obsessed over finding “baggers” and having the patience not to sell too early.

More examples of stocks he cited as major profit contributors 🧺

Public summaries of his Magellan-era picks list names like Ford Motor Company, Philip Morris, MCI, Volvo, General Electric, General Public Utilities, Student Loan Marketing Association, Kemper Corporation, and Lowe’s.

Again: the point isn’t to chase old tickers. It’s to notice how wide his net was—he looked wherever the facts were attractive.

How to apply Lynch’s style today (a step-by-step you can actually do) 🔧

1) Start with your real life (seriously) 🛒

Make a quick list:

• What products/services do you pay for happily?

• What’s getting more popular among friends/coworkers?

• What do you keep seeing in parking lots, on phones, in kitchens, at gyms?

This “everyday observation” is straight out of Lynch’s approach.

2) Do the “two-minute drill” 🎤

Before you open spreadsheets, answer:

• What does the company do?

• Why might earnings be higher in 3–5 years?

• What could go wrong?

If you can’t answer those, don’t buy yet.

3) Check the fundamentals (the boring part that makes money) 📚

Lynch emphasized digging into things like whether a product is meaningful to the company, and using tools like growth-aware valuation rather than hype.

A simple “starter” checklist:

• Are earnings growing (and do you understand why)?

• Is debt reasonable for the business?

• Are you paying a sensible price for the growth?

4) Refuse to be a fortune-teller 🔮

Lynch’s camp is basically: forecasting the economy is a trap. Put that energy into understanding the company instead.

5) Hold with patience—but stay honest 🧘

He wasn’t saying “hold forever no matter what.” He was saying:

• Don’t sell just because the stock is noisy.

• Do sell if the business story breaks (the reason you bought is gone).

The most common way people misread Lynch ⚠️

“Invest in what you know” doesn’t mean “invest in whatever you like.”

It means:

• Use familiarity as a starting point,

• then prove it with research.

Otherwise you’re not doing “Lynch investing.” You’re doing “vibes investing.” 😅

A final Lynch-ish reminder (for the next scary headline) 🧊

One reason his advice endures is how stubbornly long-term it is. In a Fox Business interview, Lynch argued the market is likely to be higher over the next 10, 20, 30 years—and that trying to predict the market is largely a waste of time.

That doesn’t mean every stock is safe. It means your edge comes from:

• understanding businesses,

• paying reasonable prices,

• and giving time a chance to work.

Goodbye (and your turn) 👋

Thanks for reading! If this post helped you, please share it with someone who wants a simple, disciplined approach to the market—and drop a comment with what you’d like me to write about next so I can choose a topic that helps you most.

Best regards,

-Cenk

Financial Disclaimer (Not Financial Advice) ⚠️

This content is for educational and informational purposes only and does not constitute financial, investment, legal, or tax advice. I am not a licensed financial advisor. Investing involves risk, including the potential loss of principal. Past performance (including Peter Lynch’s results) does not guarantee future outcomes. Always do your own research and consider consulting a qualified professional before making investment decisions. You are responsible for any actions you take based on this content.

Microsoft (MSFT) and Alphabet (GOOGL) sit in the same “mega-cap tech” conversation, but they make money in different ways. Microsoft is deeply tied to software and cloud services. Alphabet’s engine has historically been advertising and digital platforms — with cloud becoming a bigger part of the story over time.

When investors compare them, they’re usually asking a simple question: who is growing faster, who keeps more profit per dollar of sales, and who turns those profits into real cash — while still investing enough to stay ahead?

To keep things grounded, everything below uses annual data over 2004 to 2024 and focuses on 10 financial-statement-based metrics/ratios. As a bit of context, over the same 2004–2024 window MSFT’s price moved from about $26.72 to $421.50, while GOOGL’s moved from about $4.82 to $189.30.

TL;DR

· Alphabet scaled revenue far faster from 2004 to 2024 (starting from a much smaller base), while Microsoft also grew strongly.

· Microsoft had higher profitability at the endpoints: gross margin, operating margin, and net margin were all higher in 2024.

· Alphabet increased R&D intensity over time, while Microsoft’s R&D as a share of revenue declined.

· By 2024, both companies were producing massive operating cash flow and free cash flow — with values converging.

· Microsoft’s capex intensity rose sharply by 2024, suggesting heavier reinvestment relative to revenue at the endpoint.

· Alphabet showed higher ROIC at both endpoints, while Microsoft made a very large ROIC improvement over the window.

· Alphabet’s EV/EBITDA multiple fell dramatically from 2004 to 2024; Microsoft’s multiple declined modestly.

Method

We’re looking at 10 metrics pulled from the income statement, cash flow statement, and common “quality/valuation” ratios: revenue; gross profit ratio; operating income ratio; net income ratio; R&D to revenue; operating cash flow; free cash flow; capex to revenue; ROIC; and enterprise value over EBITDA (EV/EBITDA). Together, they cover growth, profitability, cash generation, reinvestment intensity, capital efficiency, and valuation.

The 10-metric deep dive

Revenue

Revenue is the company’s total sales — the top line. For Microsoft and Alphabet, this reflects everything from software subscriptions and cloud services to advertising and platform sales.

Higher revenue usually means a business is selling more (or charging more). But revenue alone doesn’t tell you how much profit the company keeps — that’s why margins matter too.

Numbers (annual):

MSFT: 2004 = 36.83, 2024 = 245.12

GOOGL: 2004 = 3.19, 2024 = 350.02

Units: $ billions

Alphabet’s revenue grew at a much faster rate because it started from a smaller base in 2004 and scaled aggressively over the period. Microsoft still delivered major top-line expansion, but from a more mature starting point. If you care mostly about “who grew faster,” Alphabet stands out; if you care about “who grew a lot while staying very profitable,” Microsoft stays in the conversation.

Alphabet’s revenue scaled dramatically from a much smaller base, while Microsoft also grew strongly over the full 2004-2024 window.

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Assets = Liabilities + Equity ✅

In Post #2, we learned the layout: three buckets, then split by timing (current vs non-current) 🪣⏳

Now in Post #3, we’re doing the thing that makes you fast:

We build your map legend.
Because once you know where each variable lives, you stop mixing apples and oranges (pun intended 🍎), and balance sheets go from “ugh” to “ohhh… got it.”

Assets — Current (the “this year” toolbox) 🧰⏱️

Current assets are the short-term resources the company can use within ~12 months.
Street translation: this is what helps them breathe this year 😮‍💨

Let’s walk through the key variables you’ll see in this post— and what they actually mean.

cashAndCashEquivalents 💵

This is the cleanest money: cash in the bank and cash-like stuff usable immediately.

Street translation: the company’s emergency fund.
If this is strong, they can handle surprises without begging anyone. 🙏❌

shortTermInvestments 🪙

This is “cash in a suit” — money parked in short-term instruments that are usually liquid and lower risk than long-term bets.

It’s not always instant cash, but usually close.

Street translation: money that can be turned into cash quickly if needed. 🔁

cashAndShortTermInvestments 🧨

This is the combined “war chest” number: cash + short-term investments.

Investors love it because it’s a quick read on flexibility.

Street translation: how much near-cash ammo do they really have? 🎯

netReceivables 🧾

This is money customers owe the company.

Yes, it’s an asset. But it’s also a promise — not proof.

Street translation: receivables are “I’ll pay you later.”
If this grows too fast, cash can get trapped. 🕳️💸

inventory 📦

Inventory is products or inputs waiting to be sold.

Inventory can be totally normal… or it can become a discount disaster if demand slows or products get outdated.

Street translation: inventory is cash wearing a costume.
Sometimes it turns back into cash. Sometimes it turns into markdowns. 🏷️😬

otherCurrentAssets 🧻

This is the junk drawer: prepaids, miscellaneous current items.

Usually boring — but if this suddenly becomes huge, it’s your signal to start reading the notes.

Street translation: not automatically bad — but always “watchable.” 👀

totalCurrentAssets 🧱

This is the full short-term resource pile.

If you’re judging short-term survival, this number teams up with totalCurrentLiabilities.

Street translation: this is the “can we handle the year?” asset stack. ✅

Quick mental checklist (your map legend) 🧠🗂️

If you’re scanning fast, here’s the simple grouping:

• cashAndCashEquivalents

• shortTermInvestments

• cashAndShortTermInvestments

• netReceivables

• inventory

• otherCurrentAssets

• totalCurrentAssets

You don’t need to memorize everything — just remember:
current assets = near-cash + soon-cash + stuff-to-sell.

Apple example: Current assets moved (FY2024 → FY2025) 🍎📉📈

Here are the changes, in $B:

• cashAndCashEquivalents: 29.9 → 35.9 (+6.0)

• cashAndShortTermInvestments: 65.2 → 54.7 (-10.5)

• netReceivables: 66.2 → 73.0 (+6.7)

• inventory: 7.3 → 5.7 (-1.6)

• totalCurrentAssets: 153.0 → 148.0 (-5.0)

Street translation: cash rose, receivables rose, inventory fell, and the overall short-term asset pile dipped slightly.

And this is exactly why having a “variable map” matters:
you can look at that mix and instantly ask better questions like:

• “Why did near-cash fall even as cash rose?” 🤔

• “Receivables up — is that normal growth, or cash getting stuck?” 🧾

• “Inventory down — clean execution, or demand uncertainty?” 📦

Thanks for reading — I hope this made the balance sheet feel a lot less “accounting-ish” and a lot more usable in real life. If you found it helpful, share it with a friend who’s trying to get better at picking stocks (or avoiding landmines), and drop a comment with the next topic you want me to break down — cash flow next, or income statement? I’ll use your feedback to choose what to write next.

Best regards,

-Cenk

Disclaimer:
Educational only — not financial advice. Investing and trading involve risk, and you can lose money. Do your own research and consider speaking with a licensed professional.

What makes the book especially useful is that it doesn’t treat accounting as paperwork. It treats accounting as evidence. The authors’ framing is simple: great businesses leave fingerprints in their financials—particularly in consistency and in ratios that signal pricing power, low financial stress, and strong cash generation.

Below is a more “numbers-on-the-page” set of ratio thresholds and rules of thumb that are explicitly presented as screening-style guidelines tied to the book (as quoted in widely used summaries of the book’s framework).

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The Buffett/Clark ratio scorecard (rules of thumb)

Income statement quality signals

The income statement section of the framework is about one big question: does this company have pricing power and durable economics, or is it fighting for scraps? The scorecard below focuses on profitability structure and how much “drag” the business carries in overhead and interest.

• Gross profit margin (Gross Profit ÷ Revenue): ≥ 40% is presented as a hallmark of durable competitive advantage; < 40% suggests competition is eroding economics, and < 20% is framed as a sign of no sustainable advantage.

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If you strip away the ticker symbol and the headlines, Microsoft is basically three big businesses under one roof:

· Productivity & Business Processes: Microsoft 365 (Office), Teams, Dynamics (business software), and LinkedIn - the tools people use to work and communicate.

· Intelligent Cloud: Azure (cloud computing), server software, and developer platforms like GitHub - the “rent computing power and services as you grow” engine.

· More Personal Computing: Windows, Surface devices, Xbox + gaming, and search/advertising - the consumer side of the house.

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Most of Microsoft’s money comes in a very “boring-in-a-good-way” fashion: subscriptions, long-term enterprise contracts, and usage-based cloud services. That kind of revenue tends to be stickier than one-off sales, which helps explain why the financials look like a staircase over time.

1) The stock price: the long climb (with a few heart attacks)

From 1986 to 2025, MSFT’s annual price moved from $0.17 to $483.62. That’s roughly a 2,887× move over the full window (yes, really). The chart also shows the classic dot-com rocket in the late 1990s, a painful reset in the early 2000s, and then a strong, steady re-rating in the 2010s-especially after 2017.

Quick read:
• Big compounding happens when a business keeps getting bigger and the market keeps trusting it.
• The “boring years” often matter more than the flashy years.

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U.S. markets navigated a classic cross-current week: activity data held up (ISM manufacturing rebounded to 52.6 and services stayed steady at 53.8), while the labor picture looked softer around the edges as weekly jobless claims rose in part due to snowstorms and job openings were flagged as sitting at a five-year low. At the same time, consumer sentiment inched up to a six-month high of 57.3, but tariff-related inflation worries stayed in the conversation. On the political front, trade headlines mattered again — Washington announced a U.S.–India trade deal that lowered U.S. tariffs on Indian goods to 18% in exchange for India cutting barriers, and Europe extended its suspension of retaliatory tariffs on U.S. imports — keeping the tariff backdrop relevant for inflation-sensitive sectors and helping explain why leadership skewed defensive as growth cooled.

Introduction

This was a rotation-heavy week: money moved into steadier, cash-flow sectors while higher-beta growth took the hit. The headline index return barely budged, but the dispersion under the surface was wide — a useful setup for thinking in “cycles” rather than just “up or down.” In the sections below, start with the weekly and year-to-date leaderboards to see where capital is flowing, then use the Relative Strength Scores (RSS) and the correlations snapshot to sanity-check whether the moves look like a trend or a one-off. Finally, the holdings tables show which individual stocks actually drove each ETF’s week.

Weekly Returns

Defensives and old-economy cyclicals did the heavy lifting this week. Consumer Staples-XLP led at 5.30%, with Industrials-XLI (4.64%) and Materials-XLB (4.57%) close behind. The catch is that the broad market didn’t really participate — the S&P 500 ETF-SPY slipped 0.19% — because investors leaned away from growth. Technology-XLK fell -1.96%, Communication-XLC dropped -3.59%, and Consumer Discretionary-XLY slid -2.67%, making this feel like a “leadership flip” week more than a straight risk-on or risk-off tape.

Yearly Returns

Year to date in 2026, Energy-XLE remains the standout at 19.07%, followed by Materials-XLB at 13.61% and Consumer Staples-XLP at 13.20%. At the other end of the table, Technology-XLK is lower by 2.02% and Communication-XLC is down 1.66%. The original text also describes Financials-XLF and Consumer Discretionary-XLY as “negative” while listing returns of 0.93% and 1.24% (minus signs are not shown), so those figures are kept exactly as printed. Health Care-XLV (1.84%) and Utilities-XLU (1.55%) are positive but comparatively muted, which fits a market that’s being selective rather than broadly bullish.

Sector Cycles

Momentum versus SPY, as captured by the weekly Relative Strength Scores (RSS, scaled from -1 to +1), is strongest in Energy-XLE and Health-Care-XLV, both at 1.00. Communication Services-XLC sits at the weak end of the range at -1.00. In the middle, Materials-XLB is positive at 0.87 and Technology-XLK is at 0.36, while Financials-XLF (-0.73), Real Estate-XLRE (-0.80) and Consumer Staples-XLP (-0.46) are still negative on this measure. Industrials-XLI has pushed into modestly positive territory at 0.09, with Utilities-XLU at -0.18 and Consumer Discretionary-XLY at -0.20. Note: RSS is a normalized way to compare sector momentum against the broader market (SPY).

Relative Strength Scores (RSS)

As of 06 February 2026, Energy-XLE is the strongest on RSS at 1.00, while Communication-XLC is the weakest at -1.00. On the week-over-week change, Materials-XLB stands out for improvement with a 47.58% jump in its RSS, while Utilities-XLU slipped further with a -11.04% change. The other big tell is Industrials-XLI: its RSS has climbed from -0.32 to 0.09 over the window highlighted, which is consistent with a rotation toward industrial cyclicals after a weak start.

Correlations

The correlations snapshot points to a few relationships worth keeping in mind when you’re thinking about hedges and diversification. XLF shows a strong positive correlation of 0.74 with XLC, while XLK has a strong negative correlation of -0.82 with XLP — a reminder that “growth vs. defensives” can behave like a see-saw. XLY also shows a notable negative correlation of -0.68 with XLB, suggesting these two can move in opposite directions in certain regimes..

Top Holdings Weekly Returns

Communication Services (XLC)

Communication Services (XLC) was weak at the ETF level (XLC -3.59%), but the internals were anything but uniform. Charter Com.-CHTR surged 12.14%, while the big drag came from Meta Plat.-META at -7.68%. Traditional telecom names held up better — Comcast Corp.-CMCSA gained 5.45%, Verizon Com.-VZ rose 3.98% and AT&T-T added 3.47% — which speaks to a more defensive tilt inside the sector even as growth-oriented names struggled.

Technology (XLK)

Technology (XLK) was a tale of two tapes. On the upside, Cisco Syst. Inc.-CSCO gained 8.3% and Apple Inc.-AAPL rose 7.18%. But the sector’s biggest moves were on the downside: Oracle Corp.-ORCL fell -13.22% and Advanced Mic. Dev. Inc.-AMD dropped -11.95%, with several other large names also in the red. That split helps explain why the ETF finished down overall (Technology Sector ETF-XLK -1.96%) despite a couple of headline winners.

Consumer Discretionary (XLY)

Consumer Discretionary (XLY) also showed sharp dispersion. Starbucks Corp.-SBUX led the group at 8.16%, with Lowes Compan. Inc.-LOW up 4.21% and TJX Comp.-TJX up 4.0%. But the heavyweights pulled the ETF lower: Amazon.com, Inc.-AMZN fell -12.11% and Booking Holdings Inc.-BKNG dropped -10.89%, with Tesla, Inc.-TSLA down -4.48% and OReilly Automative, Inc.-ORLY off -4.26%. Net-net, the Consumer Discretionary ETF-XLY ended the week at -2.67%.

Consumer Staples (XLP)

Consumer Staples (XLP) was the cleanest “risk-off” story in the pack. Pepsico, Inc.-PEP jumped 10.97%, Walmart Inc.-WMT gained 10.11% and Target Corporation-TGT rose 9.57%, helping lift the Consumer Staples ETF-XLP to 5.3% for the week. Even the more defensive names contributed — Coca-Cola Comp.-KO added 5.65% and Procter & Gamble Comp.-PG rose 4.88% — underscoring how broad-based the bid was inside staples.

Health Care (XLV)

Health Care (XLV) put up a modest positive week at the ETF level (Health Care Sector ETF-XLV 1.88%), but stock-level performance was decisive. Amgen Inc.-AMGN rallied 12.41% and Merck & Comp. Inc.-MRK gained 10.54%, while UnitedHealth Group Inc.-UNH fell -3.6% and Thermo Fisher Sci. Inc.-TMO slid -6.2%. The mix looks like investors rewarding certain pharma/biotech exposures while being more cautious in managed care and tools.

Utilities (XLU)

Utilities (XLU) was basically flat at the ETF level (Utilities Sector ETF-XLU 0.23%), but there was meaningful stock dispersion underneath. Pacific Gas & Elec. Co.-PCG rose 6.29% and Dominion Ener.,Inc.-D added 3.59%, while Constellation Ener. Corp.-CEG dropped -6.86%. In other words, it wasn’t a one-way defensive trade — the sector still had plenty of single-name volatility.

Energy (XLE)

Energy (XLE) delivered one of the stronger sector weeks (Energy Sector ETF-XLE 4.28%), driven by refiners. Marathon Petroleum Corp.-MPC surged 15.29%, Valero Ener. Corp.-VLO gained 12.37% and Phillips 66-PSX rose 9.92%. The larger integrated names also helped — Exxon Mobile Corp-XOM. was up 5.39% and Chevron Corp.-CVX gained 2.17% — while Williams Comp.-WMB was the lone decliner in the table at -0.48%.

Real Estate (XLRE)

Real Estate (XLRE) finished positive (Real Estate Sector ETF-XLRE 1.34%), but the week was defined by a few outsized movers. Prologis, Inc.-PLD led with a 4.9% gain and Simon Property Group, Inc.-SPG rose 4.35%, yet CoStar Group, Inc.-CSGP plunged -18.24% and CrownCastle Inc.-CCI fell -6.81%. The takeaway is straightforward: the ETF’s headline return masks meaningful risk at the single-stock level.

Financials (XLF)

Financials (XLF) posted a small gain (Financial Sector ETF-XLF 1.53%), helped by the banks. Bank of America Corp.-BAC led at 6.3%, while JP Morgan Chase & Co.-JPM gained 5.38% and Wells Fargo & Comp.-WFC rose 3.8%. The big outlier was S&P Global Inc.-SPGI, which dropped -16.79% and materially offset some of the broader sector strength.

Industrials (XLI)

Industrials (XLI) was firmly bid (Industrial Sector ETF-XLI 4.64%), with several bellwethers up double digits. Caterpillar, Inc.-CAT gained 10.44%, United Parcel Service-UPS rose 10.4% and Deere & Comp.-DE added 10.39%, while Union Pacific Corp.-UNP advanced 7.45%. The main weak spot in the table was Aut. Data Process., Inc.-ADP at -6.26%, showing that even in a strong sector week there were idiosyncratic laggards.

Materials (XLB)

Materials (XLB) rounded out the leaders (Materials Sector ETF-XLB 4.57%), powered by Dow Inc.-DOW’s 15.34% jump and a strong move in Nucor Corp.-NUE (8.5%). DuPont de Nemours, Inc.-DD also gained 6.34%, while Linde plc-LIN was the notable laggard at -1.91%. Overall, it was a broad, cyclical-friendly tape for materials.

Conclusion

This week was all about rotation. Consumer Staples-XLP (5.30%), Industrials-XLI (4.64%) and Materials-XLB (4.57%) led, even as SPY slipped 0.19%, because investors leaned away from growth: Communication-XLC (-3.59%), Consumer Discretionary-XLY (-2.67%) and Technology-XLK (-1.96%) were the clear laggards. Under the hood, the stock winners were old-school cyclicals and defensives — Dow Inc.-DOW (15.34%) and Marathon Petroleum Corp.-MPC (15.29%) stood out, along with Amgen Inc.-AMGN (12.41%) — while the big drags were concentrated in a few names like CoStar Group, Inc.-CSGP (-18.24%), S&P Global Inc.-SPGI (-16.79%) and Oracle Corp.-ORCL (-13.22%). The RSS table reinforces that split: Energy-XLE and Health Care-XLV remain strong at 1.00, Communication-XLC is pinned at -1.00, and Industrials-XLI is one of the clearer momentum improvers. Into next week, watch whether the rotation keeps broadening beyond a handful of sectors, and whether rate and inflation expectations keep pressuring growth leadership.

Closing message

Thanks for reading. If you found this useful, feel free to share it — it really helps. And I’d love to hear what you want more (or less) of next time: more macro context, deeper stock-level drivers, extra charts, or different time horizons.

Best regards,

-Cenk

Disclaimer: This report is for informational purposes only and is not financial advice. Past performance is not indicative of future results. Please do your own research and consider speaking with a qualified professional before making investment decisions.