THE DEAN’S LIST: When Everything Reverses, Stay Zoomed Out

Dean’s note:
What a week. Tech got hammered. Microsoft lost $357 billion in market cap in a single day - its worst since 2020. Meanwhile, Meta jumped 10% because investors actually liked what they heard about AI driving the core business. Gold and silver had their worst crash in decades. A new Fed Chair was named.

And through it all, the themes we've been talking about on TDL kept showing up. Today is a great day for all the themes we've discussed. Tech is getting hit with MSFT leading the decline. Meta is up almost as much as MSFT is down because investors appreciate the way its AI investments are acutely driving its core business.

While tech is down, causing the S&P 500 to trade at a loss, the majority of our counterbalance themes in the single digit millionaire portfolio are showcasing their strength. Foreign stocks, US small caps, and the equal weight S&P 500 are all doing well. The commodity component of our portfolio strategy is doing poorly as crypto falls in concert with risk assets and tech, but gold has been on a historic run so a bad day is easily forgiven. As these themes continue to play out in 2026, we will likely increase our weightings to these counterbalance themes. But big shifts in views take months and quarters to develop, not days. So stay zoomed out to avoid overtrading.

Last week was one of the most eventful weeks of the year. Four of the Magnificent Seven reported earnings. The Fed held rates steady. And Trump finally named his Fed Chair pick. Here's what happened and what it means:

Wednesday: Fed held rates at 3.50%–3.75% (as expected). Powell said the economy is on "firm footing." Microsoft, Meta, and Tesla reported after the bell.

Thursday: Microsoft crashed 10%. Meta surged 10%. Tesla fell 3.5%. Apple reported a blowout quarter after hours.

Friday: Trump nominated Kevin Warsh as Fed Chair. Gold crashed 10%+. Silver crashed 30%+. Markets closed volatile.

Trump tapped Kevin Warsh as Fed Chair, and not a moment too soon. Warsh came up in investment banking at Morgan Stanley, served as one of the youngest Fed governors in history, and was seriously in the room during the great financial crisis. That pedigree is rare. It tends to produce clear signals, few surprises, and a pragmatic approach to the delicate balance between inflation and growth. Businesses and investors should breathe easier.

This Kevin is one of the louder voices warning the Fed drifted too far with endless QE, inflating asset prices and encouraging leverage rather than promoting healthy growth. A Warsh-led Fed would likely focus on protecting the dollar, predictable policy, and less whiplash for the economy. That's generally bullish for long-term investment and economic stability, even if it means less butt-kissing at the White House.

Now, let's be honest, the whole thing is a little incestuous. Warsh is married into the Estée Lauder family and moves in the same New York finance circles as Trump. Regardless, you want a chair who knows how credit flows and how quickly policy mistakes cascade through housing, lending, and asset prices. Yes, Warsh is a Wall Street insider with serious pedigree. But it's tough to argue that Wall Street wants the economy to burn. Stability, growth, and strong capital markets benefit everyone.

After years of blunt tightening, confusing communication, and policy experimentation, putting someone in charge who has both the theoretical grounding and market scar tissue could be exactly what the economy needs. It's time to pick a credible leader, and give businesses and investors a clear monetary direction again.

Dean’s note:
Should be lots of action with Kevin being nominated. A lot of the themes that dominated January are reversing sharply. But investors should not read too much into the one day rout of weak dollar and rate sensitive assets.

Small cap stocks, emerging markets, commodities are all down sharply. Meanwhile the dollar and interest rates hardly budged. Surely the rally in some of the hottest assets like silver had become stretched with speculation. And investors want to learn more about the Fed nominee's plans before uncertainty lifts. February is going to be an interesting month. Can’t wait to hear from Warsh so the guessing game ends.

Let me tell you what I saw on Friday. Gold dropped 10%+ from near $5,600 to below $4,800. Silver crashed over 30% - from $120 to $78. That's silver's worst day since the Hunt Brothers tried to corner the market in 1980.

What triggered it? Two things. First, the Warsh nomination reassured markets that the Fed wouldn't become a political puppet. The "debasement trade" that had pushed metals to record highs suddenly looked less compelling. Second, the CME raised margin requirements, which forced leveraged speculators to sell.

I've been warning you for weeks: silver up 150% in a year, gold up 64% - those are not normal moves. When everyone leans the same way, even good assets can sell off as positions get unwound. The headlines were trying desperately to justify the tremendous moves. Now the same headlines are screaming about collapse.

Dean’s note:
I still own gold. I didn't sell into the panic. But I also didn't add more when everyone was screaming about $6,000 gold. Insurance is supposed to pay out sometimes. And sometimes insurance has bad days. The long-term case for owning some gold - geopolitical chaos, fiscal concerns, central bank buying - hasn't changed. What changed was the speculation. Stay zoomed out.

Microsoft and Meta both reported on Wednesday. Both beat estimates. One crashed 10%. One surged 10%. The difference? Investors want to see AI spending actually driving the business.

Microsoft reported $81.3 billion in revenue (+17% YoY) and $4.14 EPS—both beats. But Azure cloud growth slowed to 39% from 40%. Capital expenditures jumped 66% to $37.5 billion. And 45% of their commercial backlog is tied to OpenAI. Investors got nervous about whether all that spending is producing enough return. The stock lost $357 billion in market cap - the second-largest single-day loss in U.S. history.

Meta told a different story. Revenue hit $59.9 billion (+24% YoY). EPS came in at $8.88. More importantly, they showed how AI is directly improving ad targeting and engagement. Daily active users across their apps hit 3.58 billion, up 7%. Yes, they're spending $115–135 billion on AI infrastructure in 2026. But investors believe the money is working.

Apple reported Thursday after hours. $143.8 billion in revenue (+16% YoY). EPS of $2.84—an all-time record. The iPhone 17 supercycle is real. And here's the shocker: Greater China revenue hit $25.5 billion, up 38%. Remember when everyone said Apple was losing China to Huawei? The market is forward-looking until it forgets the past.

Dean’s note:
This is exactly what the rotation looks like in action. Not all big tech is created equal. The winners are the ones where AI spending is visibly improving the core business. The market is getting pickier about who gets to spend billions and call it "investment."

The Federal Reserve held rates steady at 3.50%–3.75% on Wednesday, ending a streak of three consecutive cuts. No surprise there. What mattered was what Powell said: the economy is on "firm footing," policy is "well positioned," and decisions will be made "meeting by meeting."

Two governors dissented, wanting another cut. But the majority sees no urgency. Growth is solid. Inflation is stuck around 2.7%—still above the 2% target. The labor market has stabilized. In other words: why cut when nothing is broken?

Markets now expect at most two cuts in 2026, probably starting in summer. This was Powell's second-to-last meeting as Chair. By March, Warsh will likely be running the show - if the Senate confirms him.

Dean’s note:
Don't overthink the Fed. Rates are near neutral. The economy isn't screaming for help while President Trump demands easing to prime the economic pump. The transition to Warsh will matter more than any single rate decision.

Stay focused on what you can control: your savings rate, your diversification, your time horizon. Let Warsh tell the story of exactly how he plans to impact monetary policy and if easing is the name of the game, how he will sway 10 committee members to change their minds. Tough racket.

January's big story was market breadth expanding beyond the Magnificent Seven. The Russell 2000 had its best start to a year since 2009. Small caps, equal-weight S&P 500, international stocks, value stocks - all outperforming.

Friday's Warsh-induced volatility hit small caps and emerging markets hard. The Russell 2000 fell to around 2,550. But here's the thing: it's still up about 7% for the year. The S&P 500 is basically flat. The fundamentals haven't changed.

Small caps still trade at a 31% valuation discount to large caps. Earnings growth projections still favor small caps (60% vs. 18% for big tech). Rate sensitivity still benefits smaller companies now that the Fed funds rate is at 3.5% instead of 5.5%.

Dean’s note:
A one-day pullback doesn't change a multi-month trend. My IWM and RSP positions are still outperforming my VOO. That's what diversification looks like when it's working. Don't let a noisy day shake you out of a sound strategy.

I've been doing this long enough to see crashes come and go. Long enough to see gold spike and crash and spike again. Long enough to watch Fed Chairs and Presidents come and go while the economy keeps chugging along. Long enough to know that the people who do best are the ones who stay zoomed out.

Friday felt scary. Silver down 30% in a day. Gold down 10%. Headlines screaming. CNBC breathless. But step back and what do you see? Silver is still up 19% for January. Gold is still up 13% for the month. The S&P 500 ended January higher. The rotation to small caps and international stocks is intact.

Big shifts in views take months and quarters to develop, not days. The themes we've discussed all year—diversification, market breadth, avoiding concentration in seven stocks, owning some gold as insurance—they're all still working. Some days they work better than others. That's investing.

Here's my framework for February:

• Watch the Warsh confirmation process. It will tell us about monetary policy direction.

• Don't chase precious metals in either direction. If you own some, hold it. If you don't, there's no rush.

• Keep adding to your 401(k). The new $24,500 limit is in effect. The market doesn't care about your feelings.

• Stay diversified. The portfolios doing best in 2026 are the ones that didn't bet everything on seven stocks.

• Avoid overtrading. When everything reverses in one day, the temptation is to act. Usually the best action is no action.

The rotation is real. The broadening is healthy. The disciplined investors are being rewarded. And February is going to be an interesting month.

— Dean

P.S. Remember the super catch-up contribution if you're between 60 and 63. You can put $35,750 into your 401(k) this year. That's your boring superpower. Use it.

Read The Dean's List 2026 Financial Forecast to see the trends as it relates to your money.