Listen to "The Healthiest Bull Market Nobody is Talking About" on Spreaker.
The Bull Market Hiding Inside Your Statement
If you own an S&P 500 index fund, this year has probably felt underwhelming. The index is up about 7% year to date — decent, but nothing like the headlines of the last few years.
Here's what we've been telling clients, and what this week's show is all about:underneath that 7%, the majority of the S&P 500's stocks are outperforming — over 300 companies are beating the index, and the majority are trading above their 50-day moving average.The market isn't stalling. It's broadening. And almost nobody in the mainstream financial media is talking about it.
For the last three years, you heard about seven companies — the Magnificent Seven — and almost nothing about the other 493. This year, the story has flipped. We think it's the healthiest thing that's happened to this bull market in a long time.
Why Your Index Fund Is "Only" Up 7%
The S&P 500 is weighted by company size, and after a three-year tech run, the Magnificent Seven grew to roughlya third of the entire index. Put a dollar into an S&P 500 index fund, and about 33 cents lands in just seven stocks.
That was fantastic on the way up — those seven names drove most of the index's returns, and shareholders felt every bit of it. But this year, several of them have pulled back. And when a third of your fund is parked in stocks having an off year, the index barely moves — even while most of the market does well.
That's the quiet trap of the cap-weighted index: you think you own 500 companies, but you mostly own seven.
Look at what the rest of the market is doing:
- Equal-weight S&P 500— the same 500 companies, purchased in equal dollar amounts — is upover 14% year to date, more than double the cap-weighted index.
- Russell 1000 Value— blue-chip, dividend-paying companies — is upnear 20%.
- Healthcareis up roughly24%year to date.
- Industrialsare up roughly24%, including nearly 4% in the last month alone.
- Consumer staplesare up about11.3%.
- Financials— J.P. Morgan, Goldman Sachs, Bank of America, Progressive — are up about9.7%.
- Evenutilities, at about 7.6%, are edging out the S&P 500 itself.
Roughly seven in ten S&P 500 stocks are up on the year. As we said on the show: hang the stock listings on the wall and throw a dart — you've got a seven-in-ten chance of hitting a winner.
Money Is Rotating — Not Leaving
Here's the part that matters most for anyone worried about a crash.
For two years, the fear was:when the rug comes out from under the Mag Seven, the whole market tumbles.Some of those stocks have pulled back meaningfully. The market didn't tumble.
Why? Because the money never left.This isn't a flight to cash, bonds, or the mattress — the profits from the AI trade are being reinvested into the rest of the market: financials, healthcare, industrials, staples. In past downturns, investors exited the market entirely, and that's how 30% drawdowns happen. This time, they're rotating into sectors that had been sleepy and undervalued for years.
Think of it as the market spreading out its foundation. The Mag Seven built a tall tower; now the base underneath it is being trued up by profitable, dividend-paying, value-based companies.
A rising market where the leadership hands off and the base widens isn't a warning sign. Historically, it's a launch pad.
The 100-Year-Old Theory That Agrees
One of the more interesting confirmations comes from a framework that predates every ticker on your screen:Dow theory, from Charles Dow himself.
The idea is simple: a healthy bull market needs confirmation from two corners of the economy at once —industry must make goods, and transportation must move them.When the Dow Industrials and the Dow Transports are both approaching highs, the economy underneath the market is real.
Both are doing exactly that. And here's the modern twist: a lot of what's being made and moved is the raw material of the AI buildout — steel, cement, HVAC, generators, transformers. Rail is having a genuinely strong year moving it all. (Meanwhile, the SpaceX IPO everyone knocked each other over to buy is down about 50% since its open. The 150-year-old railroads just kept chugging.) There's a very real industrial revolution underway, and it's happening in sectors nobody calls exciting.
A century-old theory and a brand-new technology arriving at the same conclusion: this bull market has legs under it.
The Defensive-Stock Paradox
Here's the counterargument we take seriously — and why we don't buy it.
Consumer staples beating the S&P 500 is usually a defensive signal. Toothpaste-and-cereal stocks lead when investors fear a recession. So is this rotation actually a warning?
We don't think so, for one simple reason:nobody is calling for a recession.Earnings are good, economies are growing, unemployment is low. If this were fear-driven, you'd see money leaving the market for cash and treasuries — instead it's staying invested, just in different places. What we're seeing looks much more like profit-taking after a historic tech run, redeployed into companies that make money and pay dividends.
When staples rallyalongsidefinancials, healthcare, and industrials — rather than instead of them — that's not fear. That's breadth.
What History Says Happens Next
We've seen this movie before:1983. 1995. 2003. 2013. 2020.In each case, technology blew out ahead of the market — and then leadership broadened. Industrials, financials, and consumer companies strengthened, a new floor formed underneath the market, and the bull run continued from higher ground.
The 1995 parallel is especially striking: tech stormed ahead, peeled back, the rest of the market trued up — and what followed was one of the strongest stretches in market history.
None of this is a guarantee. But the pattern is worth knowing, because it reframes what a "boring" year in your index fund actually means. This may not be a market topping out. It may be a market catching its breath and widening its stance.
And to be clear about the other side of it:this is not a reason to dump technology.AI, quantum computing, robotics — that story is not over, and long term we believe there's significant opportunity ahead. The point isn't techoreverything else. It's proportion.
What We'd Actually Do About It
This is where the show gets practical. A broadening market rewards one discipline above all others:rebalancing.
1. Take profits without apology.Never be sad about capturing a gain. If a winner has grown from 2% of your portfolio to 20%, you no longer own the portfolio you designed — it owns you. Trim it back toward your plan. You will never sell at the exact top or buy at the exact bottom; close is the professional's target.
2. Rebalance on the calendar, not on emotion.One proven discipline: rebalance on a set schedule — quarterly, semi-annually, annually — back to your intended mix, without batting an eye at which holding "deserves" the money. It removes the attachment to winners that keeps even professional fund managers overweight long after they should have trimmed.
3. Consider equal-weight exposure.An equal-weight S&P 500 fund holds the same 500 companies with none of the concentration. You still own the Mag Seven — you're just not betting a third of every dollar on them. Over 20 years, equal weight has averaged about11.9% versus 10.9%for the cap-weighted index. This year, it's double.
4. Broaden with new money instead of selling.If you don't want to sell your S&P fund or your tech positions, you don't have to. Directnewcontributions — including your 401(k) deferrals — toward the sectors that diversify you: industrials, healthcare, staples, financials.
5. Look at the pick-and-shovel and international layers.Electrical equipment, cement, materials, HVAC — the companies physically building the AI era. And international markets, which never had the AI run-up, carry less of its volatility, and are performing well in their own right.
6. Check what you actually own.If your 401(k) sits entirely in one S&P 500 fund, you can't rebalance — there's nothing to rebalanceinto. And if you own a target-date fund, look closer: they're layered funds-of-funds with fees on top of fees, often more conservative than you intended, and they've drawn more lawsuits than any other fund category. You deserve to know what your money is doing.
Final Thoughts: Health Looks Boring
The healthiest bull market nobody is talking about doesn't look like fireworks. It looks like 300-plus companies quietly outperforming while seven famous names rest. It looks like railroads beating rocket ships, toothpaste beating the index, and your "boring" value stocks having their best year in a long time.
Foundations are never the exciting part of the building. They're just the reason it stands.
If your statement says 7% and the market around you says 14, 20, 24 — that's not a market problem. That's an allocation conversation. We'd be glad to have it with you.
Next Steps
Want to know whether your portfolio is positioned for a broadening market — or concentrated in last year's leaders? We'll walk through your allocation, your 401(k) menu, and where a rebalance could put the odds back on your side.
Call: 855-226-8551
Email: info@yourmoneyontap.com
Frequently Asked Question
Why is my S&P 500 index fund underperforming the market in 2026?
Because the S&P 500 is cap-weighted: roughly a third of every dollar in the index sits in just seven stocks — the Magnificent Seven — and several of them are having an off year. Meanwhile the equal-weight S&P 500 is up more than double the cap-weighted index, and over 300 individual S&P stocks are beating it, led by healthcare and industrials near 24%. The fix isn't leaving the market — it's diversification: equal-weight exposure, sector funds, and a rebalancing discipline that trims concentration back to your plan.
The views expressed are educational in nature and should not be construed as personalized investment, tax, or legal advice. Investing is subject to risk, including loss of principal. No strategy, product, or tool mentioned can assure a profit or protect against loss. Individual situations vary — coordinate any strategy with professional advice. Index and sector figures cited are approximate year-to-date values as of the air date, drawn from sources believed reliable, and subject to change. Past performance is not a guarantee of future results.
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