Founder’s Note: Jason Perz is a man of rich experience, with a background that includes both BMX racing and competitive basketball.
That’s a compelling combination, rich with potential analogies and lessons.
We haven’t even got to the part where Jason’s a world-beating portfolio manager… – JC
By Jason Perz
One of the most important skills in markets is the ability to forget.
Not ignorance. Not denial. Intentional forgetting.
Every year, I start the same way – as if nothing came before it.
After having my best year ever as a manager in 2025, I have to forget about it.
I don’t get paid for talking about how good last year was. I don’t get paid for narratives, war stories, or victory laps.
As a portfolio manager I get paid for making the best decisions I can this year, with the information and price action in front of me right now.
That reset matters more than most people realize.
Success creates entitlement. Failure creates hesitation. Both distort judgment. Professionals learn to detach from both.
The best business builders understand this instinctively. They build something, grow it, sell it, or walk away – and then move on without hesitation.
They don’t cling to what worked. They don’t anchor to what failed. They treat every new project as its own responsibility.
Markets demand the same discipline.
Starting Every Night at Zero
Steph Curry can go one for 10 on a given night. He can miss shots he’s made his entire career.
The commentary starts immediately. The noise builds. The doubts creep in – from the outside.
Then he shows up the next night and shoots like none of it happened.
Because to him, it didn’t.
Every game starts clean. The scoreboard resets. The role doesn’t change. The responsibility doesn’t change.
Yesterday’s performance has no negotiating power over today.
That’s how elite performers think.
Confidence isn’t built on memory. It’s built on presence. The moment you rely on past success to justify future outcomes, you’re already behind.
Phil Jackson said it best in The Last Dance: “You are only a success at the moment when you perform a successful act. You have to do it again.”
Success expires immediately.
There is no rollover credit in markets. No permanent status. No protection from what worked last year. You either execute now – or you don’t.
Forget the Number
Last year was my best year as a portfolio manager. Strong returns. Clean execution. A favorable environment.
None of that matters anymore.
The number doesn’t carry forward. It doesn’t reduce risk. It doesn’t make the next trade easier. It doesn’t protect future decisions.
One of the biggest mistakes investors make is confusing skill with environment.
Bull markets make many people look smart. They also reinforce habits that fail when conditions change.
What matters is not that everything moved higher. What matters is how risk was deployed while it did.
Knowing when to press matters. Knowing when to stay small matters more.
That discipline isn’t visible in a single year’s return. It only shows up across cycles.
This is why I reset the mental ledger every January.
Forget the wins. Forget the drawdowns. Forget the stories you told yourself to survive both.
Every position starts at zero.
What’s Leading Right Now
When you clear out the noise and look at markets objectively, leadership becomes obvious.
This year, leadership is coming from small caps, and within small caps, one sector stands out clearly: energy.
The scan of S&P 600 small-cap sectors tells the story. When you sort by proximity to 52-week highs, inflationary sectors sit at the top.
Not defensives. Not utilities. Not staples.
That matters.
Small caps don’t lead in risk-off environments.
They lead when capital is expanding, confidence is improving, and money is being redeployed aggressively.
Energy leading within small caps is even more important. That’s the part of the market that requires conviction, not caution.
This isn’t accidental.
At the beginning of each year, portfolio managers deploy new capital. Fresh money has no attachment to last year’s narratives.
It goes where relative strength already exists. Historically, the rotations that begin early in the year tend to persist throughout it.
Leadership early matters.
And energy isn’t just leading. It’s broadening.
XOP Confirms the Message
The clearest confirmation comes from the most aggressive corner of the energy market.
Take a look at the SPDR S&P Oil & Gas Exploration & Production ETF (XOP):
XOP is making new 52 week highs. The explorers. The producers. The volatile names that get hit hardest when conditions deteriorate.
These are the smallest, junkiest, highest-beta names in the energy complex.
And they’re leading.
That is the most risk-on signal energy can give.
Markets don’t reward that group unless capital is confident, trends are durable, and investors believe prices will stay higher long enough to justify risk.
This is not late-cycle behavior. This is early-cycle confirmation.
When the riskiest part of a sector is breaking out, it tells you the trend is sustainable.
This is how durable leadership starts—not with headlines, but with behavior.
The Takeaway
Forgetting is not a weakness. It’s professionalism.
Every year starts at zero. Every decision is made fresh. Every position must earn its place right now, not because it worked before.
When you do that, leadership becomes obvious.
Small caps are leading. Energy is leading within small caps and large caps.
And the most aggressive energy names are making new highs.
That’s not noise. That’s structure.
And when trends start strong at the beginning of the year, history says they usually don’t stop halfway through.
The job isn’t to remember last year.
The job is to recognize what’s working now – and to stay with it as long as it keeps proving you right.
Save the bees,
Jason Perz
Senior Analyst, TrendLabs