What the 1980s Oilers Can Teach Us About Today’s Markets

For the last few years, equity markets have looked a lot like the Edmonton Oilers of the 1980s. With Wayne Gretzky leading the way, the Oilers dominated the NHL, capturing four Stanley Cups in five seasons. In markets, a small group of superstar stocks, the “Magnificent 7,” led most notably by Nvidia, played a similar role, driving index returns and pushing markets to repeated record highs.

Lately, however, the game plan has started to change.

Since last week’s Federal Reserve meeting, market leadership has begun to rotate. Instead of relying on a handful of high-profile names, returns have come from a broader mix of sectors. Defensive and cyclical areas such as materials, healthcare, and financials have moved higher, while the largest technology stocks have lagged. It’s a classic rotation, and an important one, suggesting investors are positioning for continued economic growth rather than simply chasing the most crowded trades.

The divergence beneath the surface has been notable. While the S&P 500 slipped as the Magnificent 7 declined roughly 2%, the S&P/TSX gained 0.7%. A more constructive tone from the Federal Reserve, including improved long-term growth expectations, has encouraged investors to look beyond rate-sensitive mega-cap technology and toward areas that can participate in expansion without relying on elevated valuations.

This shift is also evident within the AI trade. Recent earnings from Oracle and Broadcom confirmed that demand for AI infrastructure remains strong. What has changed is investor discipline. Markets are now paying closer attention to how that growth is being funded. Rising capital intensity, balance-sheet strain, and longer payback periods have made investors more selective. The AI cycle is not ending, capital spending plans remain substantial, but it is maturing. The first phase, driven by rapid multiple expansion, is giving way to a more measured phase where capital efficiency and returns matter more.

The takeaway is straightforward. Markets don’t need to abandon their superstars to keep winning, but the most durable bull markets rely on depth, balance, and teamwork. Just as the Oilers needed contributions up and down the lineup to win another Stanley Cup, diversified portfolios remain best positioned to navigate the next phase of the cycle.