The BIG Report: October 2026

First, a B.I.G. thank you! Delaware, you voted B.I.G. your favorite Investment and Financial Planning firm again this year, in both the Delaware State News and the News Journal readers’ polls. We were honored to be at both awards ceremonies, and we don’t take it lightly. Every one of those votes is a family that trusts us with something that took them a lifetime to build. Thank you!

Now, since it’s October, let’s talk baseball.

I grew up an Orioles fan, and I remember September 6, 1995, when Cal Ripken Jr. played his 2,131st consecutive game and passed Lou Gehrig. The game stopped, and he took that slow lap around Camden Yards shaking hands with the fans. What people forget is that Cal was never the hottest hitter in the league. He never led the league in home runs. What he did was show up, every single day, for sixteen years, and put the ball in play. The streak eventually reached 2,632 games. Nobody has come within a thousand of it since. That is the kind of ballplayer we want to be right now.

The S&P 500 set another record on October 6 and sits around 7,800, up roughly 14% for the year. If that holds through December 31, it will be the fourth very strong year in a row. The bull market that started in October 2022 is now almost four years old.

Coming into the fall, we were expecting the pullback that history almost always delivers before a midterm election. That 7% to 10% dip has been remarkably consistent over the decades, and we were hoping for a buying opportunity somewhere between August and November. So far the market has declined to cooperate. It simply does not want to go down.

There is also a stronger historical pattern on the other side of the election. Since World War II, the market has risen between the midterm election and June of the following year every single time, with an average gain of about 17%. Will it happen again? Maybe.

The economic backdrop is okay. Earnings are better than okay on paper, with third-quarter profits for the S&P 500 expected to come in somewhere around 30% higher than a year ago. Two things about that number, though. First, a big share of it is coming from energy companies benefiting from oil near $100 a barrel and from a small group of technology names. Strip those out and the rest of corporate America is growing much slower. Second, analysts already expect that growth to slow by about half next year. Earnings that are growing fast and about to grow slower is a very different setup from earnings that are accelerating.

We don’t want to be “too” cautious. The market has not yet hit the level of outright stupidity we’ve seen at the end of other great technology booms. Oil, electricity, railroads, automobiles, the personal computer, the internet. Every one of them ended with a final run that made no sense at all. The NASDAQ doubled in six months before the tech crash in 2000. A move like that could still be in front of us but we shouldn’t count on that to happen. 

Coming into 2026 we shifted to a more disciplined, more diversified approach. We’ve now increased that. We have trimmed a lot of our winners, cut back on high yield (higher risk) bonds and we are adding investments that lock in safe rates of return of over 5% taxable, and over 6% tax-equivalent for high income earners. The 10-year Treasury is yielding above 5.2% for the first time since 2002. That is an opportunity we haven’t had in nearly 25 years. 

Here is the arithmetic that drives the decision. Market returns don’t average, they compound, and that cuts both ways. If $100,000 goes up 50%, you have $150,000. If it then loses 50%, you have $75,000. You are now below where you started, and you need a 100% gain to get back to your high water mark. Half of long-term success is hanging on to what you’ve made when the risk and the reward are no longer in balance.

The market is not healthy under the surface. More than half of the stocks in the S&P 500 are trading below their own 200-day moving average (a long-term trend line) while the index itself sits at an all-time high. At a normal new high, roughly three-quarters of the stocks are above that line. The averages are being carried by a narrow group of very large companies, and that is a combination we have rarely seen end well.

Borrowed money is at a record. Margin debt, the money investors borrow from their brokers to buy stocks, reached a record $1.5 trillion this summer and is running about 37% higher than a year ago. Growth that fast has only shown up a handful of times in the last 30 years: 1998 to 2000, 2007, and 2021. Each time, a rougher market followed. Leverage doesn’t cause a decline, but it makes every decline worse.

Rates and inflation are going the wrong way. The Federal Reserve raised rates in September, and inflation is running in the mid 3% range with September’s number expected to be worse thanks to diesel prices. A 5%-plus Treasury yield is a gift to savers and a headwind for stock prices, because stocks now have real competition for the first time in a generation.

Energy prices may not retreat as fast as people hope. With the Middle East still unsettled, the Strait of Hormuz still a question mark and Russian diesel refineries blown up, oil is up more than 60% this year and diesel which moves everything around the world is over $7 a gallon. That feeds inflation, squeezes consumers, and keeps the Fed uncomfortable.

As mentioned earlier, earnings could slow. Expectations are high, and high expectations are easier to miss.

And some of what we’re seeing has no history at all. There are metrics in this market that have literally never printed before. When there is no historical analogue, there is no playbook, and the honest answer is that nobody knows how it resolves. We feel it is better to be safe than sorry.

If opportunities arise, we’ll look to take advantage. We have the dry powder to do it, and that is the whole point of trimming now. We’ve also recently back-tested every indicator we track, and one of them has proven to be incredibly accurate. If that indicator breaks, we are getting more defensive, no questions asked. We would rather take the risk of missing some upside for a while and watching the hottest hitters in the league get the headlines than risk giving back four years of gains. 

This is not the point in the business cycle to swing for maximum gain. This is the part of the cycle where you take your base hits, lay down the bunt, move the runner to the next base and go for the grinding win. We don’t want to be the hottest hitter in the league right now. We want to be Cal.

David F. Boothe

President, Chief Investment Officer