Try Fund Library Premium
For Free with a 30 day trial!
January is always an interesting time of year. Calendars are flipped, resolutions are made, and investors look for signals about what the year ahead may hold. But does a new year truly represent a fresh start for markets, or simply a continuation of existing trends?
Many investors pay close attention to January as a potential leading indicator for the year. The so-called January Barometer suggests that as goes January, so goes the year. Over the last 40 years, when January is positive for the S&P 500, the average full year return is about 15% and is positive 84% of the time. When January is negative, the average full year return is about 2%-3% and is positive just 60% of the time. The S&P 500 was up 0.6% in January 2026.
The appeal of these seasonal indicators is understandable, they offer a simple narrative in an otherwise uncertain world. Momentum often plays a role in market outcomes, and early-year sentiment can influence positioning. That said, we remain cautious about placing too much weight on calendar-based patterns.
After a volatile 2025, investors entered 2026 searching for clarity. Many expected some form of reset following last year’s strong rally. A year-end surge had left parts of the market appearing stretched, and there was concern that profit-taking would dominate early trading. That was not the case. January ultimately finished modestly positive, but the headline result masks the underlying volatility. It was one of those months where sentiment swung quickly, leadership rotated, and macro headlines continued to dominate market narratives.
If history is any guide, a positive January may provide comfort to momentum-driven investors. For us at Pender, however, the focus remains unchanged: identifying durable businesses trading at meaningful discounts to intrinsic value, independent of seasonal signals. As we move into 2026, here are several themes we are closely monitoring.
January saw a sharp reset in software equities as investors revisited concerns that artificial intelligence could disrupt traditional business models. The narrative that enterprises will increasingly rely on internally built AI solutions weighed on valuations across the sector. We view this assumption as overly simplistic, given the complexity, regulatory requirements, and mission-critical nature of most enterprise platforms.
For disciplined investors, this broad-based pullback has created opportunities to selectively add exposure to durable franchises at more attractive valuations.
Commodities have been a notable beneficiary of capital rotation, supported by U.S. dollar weakness, central bank buying, and ongoing geopolitical uncertainty. Gold and silver reached record levels during the month, lifting related equities. While momentum has been powerful, we remain focused on companies capable of generating attractive returns across the cycle rather than relying solely on rising commodity prices.
As is often the case when price moves become parabolic, some consolidation followed into month-end. We view this pullback as a natural reset rather than a structural shift, and potentially an opportunity, at least until the underlying macro drivers begin to reverse.
While we now have greater clarity on the next FOMC Chair, uncertainty remains elevated. At the same time, comments from President Trump in Davos predicting further stock market gains are notable.
Volatility is likely to persist, but in such an environment, the strategy of selectively buying dislocations remains viable.
David Barr, CFA, is the CEO at PenderFund Capital Management and Portfolio Manager of several Pender funds, including Pender Partners Fund. Used with permission.
Notes and Disclaimer
© Copyright 2026 by PenderFund Capital Management Ltd. All rights reserved. Reproduction in whole or in part by any means without prior written permission is prohibited.
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the simplified prospectus before investing. The indicated rates of return are the historical annual compounded total returns including changes in net asset value and assume reinvestment of all distributions and are net of all management and administrative fees, but do not take into account sales, redemption or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. This communication is intended for information purposes only and does not constitute an offer to buy or sell our products or services nor is it intended as investment and/or financial advice on any subject matter and is provided for your information only. Every effort has been made to ensure the accuracy of its contents. Certain of the statements made may contain forward-looking statements, which involve known and unknown risk, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.
Image: iStock.com/insta_photos
Try Fund Library Premium
For Free with a 30 day trial!
Fund Library
