February 15, 2026

My Thoughts on
the Market

Weekly Edition

How did the markets do?

• Stocks had a choppy week, with the S&P 500 finishing down close to -1.5%. The Dow Jones (value stocks) fared a little better losing slightly less than -1% whereas the Nasdaq (mostly growth stocks) sold off over -2%.
• Bonds performed much better as Treasury yields fell across the board, which means bond prices went up.

What headlines moved the markets?

• January inflation cooled to 2.4%, better than the 2.5% economists expected.
  • This is exactly the progress we need to see - prices rising at a more normal pace without the economy falling apart.
  • It’s still not at the Fed’s target of 2%, however this cooling trend gives the Fed more maneuverability to lower interest rates if needed.
• The January 2026 U.S. unemployment report released this week showed an unexpected strengthening of the labor market, with the unemployment rate decreasing to 4.3% from 4.4% in December 2025.
  • 130,000 new jobs were added, exceeding expectations and representing the strongest performance since late 2024. Most of these jobs were in the Healthcare and Social Services sectors.
  • Although the January figures were good, 2025’s overall job growth was heavily revised downward, revealing that the labor market was much weaker in 2025 than initially reported.
• Technology stocks sold off sharply as investors worried about whether AI investments are getting ahead of themselves.
  • Tech services companies (SaaS) are worried that they will lose market share to new AI products. Legal, accounting, and other business software could be replaced by multifunctional AI agents.

Quote of the week
“The market got everything it could have wanted from January's CPI and Jobs reports, but the Devil is in the details” - Bram Berkowitz, analyst with The Motley Fool

• Even though both inflation and jobs data came in better than expected this week, the market still sold off on the news, leaving many scratching their heads wondering why.
• Jobs Report Surface vs. Reality
  • Although the economy added 130,000 jobs (more than double expectations) and unemployment fell to 4.3%, most new jobs were in healthcare and government-funded social assistance sectors. Without these government-dependent sectors, the U.S. would have lost jobs. Furthermore, only 584,000 jobs were added in 2025 vs. 2 million in 2024, making 2025 the weakest job market since the early 2000s.
• Inflation Report Complications
  • The Fed’s favorite measure of inflation, the Consumer Price Index (CPI), rose only 2.4% year-over-year, moving toward the Fed's 2% target. However, those numbers were distorted by the 43-day government shutdown (Oct. 1 - Nov. 12, 2025) and economists estimate inflation should be 2.7%. Because no data was recorded during the shutdown, no price increases were reflected in October, leading many to believe that the results are flawed.

Personal Finance: The Bucketing of Money Approach
Disclaimer: This is general educational information and not intended as financial advice.

• The Bucketing of Money approach divides investment savings into separate "buckets" based on when you will need the money. Typically there are 3 buckets representing different time horizons (short, medium, and long-term) based on when you will need to use the money. The concept is based on the principle that Risk = Return = Time; meaning that higher risk investments need more time to have the greatest probability of accomplishing their maximal rate of return, whereas lower risk investments have less volatility and require less time invested. The goal of this approach is to both maximize your rate of return while also having money readily available when you need it and reduce the emotional impact of market volatility.
• Bucket 1: Short-Term (Years 1-2)
  • This bucket holds 1-2 years of living expenses in readily accessible cash-like instruments and acts as a buffer during market downturns.
  • Choose highly liquid and stable investments such as savings accounts, CDs, and money market funds.
• Bucket 2: Medium-Term (Years 2-5)
  • Designed to refill Bucket 1 as it gets depleted.
  • Balance growth with stability and utilize investments that provide steady income through interest and dividends.
  • Invest in moderate to conservative growth investments with lower risk than the overall stock market, such as bonds, value style dividend stocks, or balanced funds.
• Bucket 3: Long-Term (Years 5+)
  • This bucket focuses on long-term growth and is where you can afford to take on the most risk/return since this money won’t be touched for many years.
  • Take profits from the good years and reallocate to Bucket 2, and avoid touching the investments during the down years. Or, if you can stomach the volatility, take advantage of the downturn and reinvest excess cash from Bucket 2 into your higher risk investments.
  • Look for growth-oriented investments like stocks, equity funds, and real estate that will provide the highest potential returns over the long term.

Conclusion

• Tech stocks are pulling back, but the overall economy doesn’t appear to be in bad shape. There is still some healthy skepticism amongst investors.
• Economic indicators are not as conclusive as the headline numbers suggest. The tariffs and last year’s government shutdown are still muddying the water, however clearer data will emerge as time passes.
• If you are investing for the long haul but also need to use some of your savings in the near term, then the Bucketing of Money approach is a sound methodology for managing capital.
  

Have a nice weekend!

Kevin