Five for Friday — February 6, 2026

Profits, Gold, Crypto, Worst Stretch, and Microchip

1. Profits 

One of the simplest reasons why most people should invest a healthy chunk of their portfolio in stocks is to own the profit-motive inherent to a capitalist system. Capitalism fosters innovation through competition and financial incentive, profits follow, and investors tend to benefit over time. And it is specifically that adaptability and incentive structure that allowed the S&P 500 to deliver its highest profit margin in decades last quarter. Despite all the challenges pressuring U.S. businesses (inflation, geopolitical tensions, tariffs, etc.), they retained more earnings per dollar of sales than at any point in at least 15 years. This squares well with the recent uptick in economic productivity data (another measure of worker efficiency), and helps to explain why today’s market looks so expensive compared to the past (shouldn’t a stock market now composed of more efficient, higher growth companies demand a higher valuation?). In any case, companies continue to display strong fundamentals, and it’s harder for the market to get into too much trouble when that’s the case.  

2. Gold

The above is also a succinct case for why I have been skeptical of investing in Gold and its kin over the years, particularly as portfolio growth drivers: no cash flows, no earnings, etc. But financial markets keep score, and the recent performance of precious metals bears attention. Amid any speculative froth attempting to lure investor dollars, the most important question to ask is, “why do I want to buy this?” There’s a good case for owning a small position in commodities like metals as a noncorrelated portfolio diversifier, (i.e., an investment that moves independently of stocks/bonds, acting as a shock absorber and return-smoother for portfolios), particularly against the current backdrop. But diversification is fundamentally a long-term strategy, and has very little to do with the volatile, leverage-driven, meme-stock-style trading going on in metals this year. Fear (of missing out) is the mind killer. Remember: play your own game.  

3. Crypto

Another would-be store of value in the news is Bitcoin, which hit a one-year low this week, down some 45% from recent highs. Bitcoin is volatile so the swoon won’t shock anyone who follows the space, but it is now negative over the 15 months since President Trump’s reelection despite his positive views on cryptocurrency. This highlights the difficulty in tactically trading around politics. Another example of this is traditional energy companies lagging in Trump’s first term despite his endorsement and outperforming under Biden (while renewable energy did the reverse). Investing based on politics is fraught with ambiguity.  

4. Did you know 

that over the last century, the worst 30-year stretch for the U.S. stock market (from a pre-Depression peak in the 1920s through the post-WWII 1950s) was still a total return of over 850%? A century’s worth of rolling 30-year periods, and the worst one would have delivered nearly 9x your investment. Not bad.  

5. On this day in 1959

Texas Instruments engineer Jack Kilby patented the world’s first integrated circuit, aka microchip. Needless to say, this invention went on to become a cornerstone of the global economy, catalyzing massive productivity gains, contributing trillions in economic output, and creating countless jobs. And innovation has only intensified since then. Today, some advanced transistors (electrical switches on microchips) are a fraction of the size of a single virus particle.  

Disclosures

This is not a complete analysis of every material fact regarding any company, industry or security. The opinions expressed here reflect our judgment at this date and are subject to change. The information has been obtained from sources we consider to be reliable, but we cannot guarantee the accuracy. Market and economic statistics, unless otherwise cited, are from data provider FactSet.

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