by Jason Bodner
January 6, 2026
Ancient civilizations never fully agreed on when a year should begin. The Romans started the year in March, aligning time with planting seasons and military campaigns. The Mayans tracked overlapping cycles rather than linear-years. Even the Gregorian calendar, which governs modern life, was not universally adopted for centuries after its creation. New Year’s Day, as we know it, is an arbitrary marker.
Even the concept of BC and AD came over 500-years. “AD” (AD is now called CE, or “Common Era”).
However, you count a new year, it is just one more sunset followed by one more sunrise in a chain that has repeated itself for roughly 4.5-billion years on this particular planet, yet perception matters. We attach meaning to the January turn of the calendar. We make resolutions, join gyms, change habits (for a few days or weeks) and declare a fresh start. The date itself may be artificial, but our mental reset seems real.
Since we live by the modern calendar, it makes sense to pause and review how last year actually unfolded. Looking back at flows across stocks and ETFs, 2025 was a remarkably typical year when viewed through a long-term lens. Since January 1st, 1990, there have been 455,352 unusually large inflow signals compared to 336,515 unusually large outflow signals. That means 57.5-percent of all signals over the past 36-years have been inflows. This imbalance explains why equity markets tend to rise over time.
Using SPY (the S&P 500 ETF) as a proxy, it began trading on January 29th, 1993. Since then, SPY has risen roughly 27 out of 36-years (75%). The market’s natural state is not balance: It is accumulation.
Removing extreme selling periods makes this even clearer. I calculated the ratio of inflows to outflows on a rolling 10-day basis and excluded all periods where fewer than 40% of signals were inflows. Out of 9,041 observed trading-days, removing those heavy selling windows left 7,478-days. That means roughly 83% of the past 36-years were not periods of intense outflows. The remaining 17% of the time accounts for a disproportionate share of selling pressure. Notice how the red aligns with local market troughs:
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Those brief windows explain the fear investors remember. Periods where 10-day inflows dropped below 40% accounted for 57% of all outflows since 1990. Narrow the threshold further to 30% inflows or less, and those periods alone account for 30% of all outflows. In other words, about 10% of all trading days are responsible for nearly one-third of all selling activity. Heavy outflows are not constant. They are concentrated, emotional, and short-lived. This rhythm has persisted for decades.
The past year followed the same script. In 2025, 10-day periods with inflows below 30% accounted for roughly 20% of the year’s total outflows. The timing was familiar. February, April, and November were primary stress points. Fear arrived in clusters, while confident buying unfolded slowly and persistently. That asymmetry explains why markets tend to grind higher, then fall sharply. It is behavioral, not random.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Zooming in on the fourth-quarter reinforces the pattern. Outflows dominated November, pressuring both stocks and ETFs, before abruptly giving way to inflows. This shift pushed the Big Money Index lower and then lifted it just as quickly. Elevated Trading Volumes confirm what we expect around holidays.
Activity fell sharply during Thanksgiving and Christmas weeks as sessions shortened and participation thinned. Price action during those windows matters less than what happens before and after them.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Looking at flows by company size adds another layer of insight. At first glance, 2025 seemed balanced across market capitalization. In reality, nearly 20% of the year’s total outflows occurred in just a handful of days in April. Calm trends dominated most of the year, while fear compressed into narrow windows.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Sector flows tell a similar story. When fear hits, outflows strike the growth sectors hardest. Technology, Discretionary, Industrials, and Financials absorbed the bulk of selling pressure. Yet those same sectors also led on the inflow side once panic subsided. For the full year, top outflow sectors were Technology, Discretionary, Industrials, and Financials. Paradoxically, the top inflow sectors were Technology, Health Care, Industrials, and Financials. Markets rise gradually and fall violently. The data reflects that reality.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Despite episodes of elevated volatility, 2025 showed healthy underlying progress. Sustained bull-markets are defined by capital flowing into risk-oriented sectors rather than hiding in defensive corners. Technology, Industrials, Financials, Health Care and Discretionary all showed steady up-trends paired with net inflows. Defensive sectors like Utilities, Staples, and Real Estate, lagged. Utilities benefited from enthusiasm around the AI rage, but once that narrative cooled, outflows returned and performance normalized.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Looking ahead to 2026, the balance of evidence still favors market tail-winds over head-winds. Interest rates are moving lower as the cutting cycle begins. Lower rates reduce the cost of financing growth and support higher valuations. Taxes are also lower, improving corporate margins even without revenue expansion. These forces alone provide a meaningful boost to bottom lines.
Importantly, margins are not improving in isolation. Revenues and earnings are expanding as well. The past year delivered one of the strongest earnings growth environments in recent memory:
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
That combination of improving fundamentals and supportive macro-conditions is difficult to ignore. The primary risks lie outside normal market mechanics. Geopolitical events remain unpredictable and uncontrollable. Conflicts in eastern Europe and the Middle East continue to evolve unevenly, yet markets have absorbed these shocks and moved forward. Another potential head-wind is the mid-term election cycle. Markets dislike uncertainty, and political rhetoric inevitably intensifies as campaigns heat up. If outcomes remain unclear heading into November, volatility is likely to rise. History shows, however, that the fourth-quarter of mid-term years is typically one of the strongest periods in the market cycle.
Calendars may be human inventions, but cycles of fear and confidence are part of human nature. Flow data reminds us that markets spend most of their time accumulating, interrupted occasionally by sharp but brief emotional resets. Understanding that difference is the key to navigating uncertainty with discipline.
As Epictetus observed, “It is not events that disturb people, but their judgments about them.”
All content above represents the opinion of Jason Bodner of Navellier & Associates, Inc.
Also In This Issue
A Look Ahead by Louis Navellier
Lower Threats of Prolonged Wars Will Be Bullish for the Stock Market
Income Mail by Bryan Perry
Identifying the “Pain Trade” for Early 2026
Growth Mail by Gary Alexander
The First Quarter of the 21st Century – in Review
Global Mail by Ivan Martchev
Talking Markets with ChatGPT
Sector Spotlight by Jason Bodner
When Should a New Year Start – and Does it Matter?
View Full Archive
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Jason Bodner
MARKETMAIL EDITOR FOR SECTOR SPOTLIGHT
Jason Bodner writes Sector Spotlight in the weekly Marketmail publication and has authored several white papers for the company. He is also Co-Founder of Macro Analytics for Professionals which produces proprietary equity accumulation and distribution research for its clients. Previously, Mr. Bodner served as Director of European Equity Derivatives for Cantor Fitzgerald Europe in London, then moved to the role of Head of Equity Derivatives North America for the same company in New York. He also served as S.V.P. Equity Derivatives for Jefferies, LLC. He received a B.S. in business administration in 1996, with honors, from Skidmore College as a member of the Periclean Honors Society. All content of “Sector Spotlight” represents the opinion of Jason Bodner
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