2026 Predictions
In investing late is better than never if it’s the right call, and so the following belated predictions are what guide my 2026 investing positions.
Overall Market View:
I and many other investors see this year as one that is less risky than 2025, which usually portends some kind of danger we are all not seeing. Regardless, there are two primary concerns we should keep in mind. One being that stocks are valued historically high (even more so than 2025, which was again a concern). Two being the volatility of Trump, which over this past month the Greenland affair has laid bare.
I believe valuation concerns will be tempered by soaring U.S. productivity and GDP growth beyond expectations, while the promise of AI shows fruit to those who invested early and have large sets of data to train from (ads and medicine are my largest bets). On Trump, the danger to markets is when he gets too overconfident and takes outsized risks that backfire. I am worried the success in Venezuela may propel him to take further risks both home and abroad, which could cause trouble for markets. Yet 2025 shows us that Trump sees the stock market as his #1 barometer of success, and that the TACO (Trump Always Chickens Out) trade has time and again been the right one. With the midterms coming, I just don’t think Trump will take too many risks abroad, and will focus more of his time at home, especially on ways to stimulate the domestic economy coming into the November election.
There are of course other risks, one being that the U.S. economy will be running so hot in ways that it hasn’t in recent memory. Many believe the Fed will start cutting interest rates as inflation comes down. At the same time the big beautiful bill and additional stimulus will enter before midterms, further goosing the economy. This could bring about a massive GDP and stock market boom in America, but it also means there will be larger risks taken by many players. In this seemingly positive scenario, black swan financial and other risks become more probable. It could also simply be that valuations are predicated on this overly rosy scenario, and when it doesn’t turn out (e.g. if Fed doesn’t cut in 2026), then the stock market basically treads water for the year.
The above beliefs indicate I will stay fully invested for the year once again. At the same time I am building some cash from W-2 income, and will likely use that to buy in further when a reasonably large dip occurs or a certain stock I’m watching looks particularly attractive. My prediction for markets in 2026 would be towards the high end of analysts, best guess S&P 500 up 15-25% by year end.
Market and Tech Predictions:
Microsoft, Tesla, and Apple have a hard time in 2026, and finally the Mag 7 will slightly lag overall market performance. Microsoft will begin to look precarious in the way Google did the last two years before the late ‘25 Gemini induced surge (I exited my Microsoft position last month). Meta will outperform as its stock price coming into 2026 was oversold, and AI features and ads will boost profitability.
US GDP exceeds expectations driven by productivity gains; inflation remains sticky but ticks down slightly; low unemployment holds steady. The Fed cuts in ‘26, but less than market expectations. Trump claims this is the “golden age” of America, but the K shaped economy continues to divide well off Americans and increasingly poorer Americans. Americans who hold assets once again are the winners as interest rates remain elevated.
Trump stimulus prior to the midterms rolls out to win votes. He’s promised all sorts of wild things from no more income tax to $2,000 stimulus checks from the tariff income, but prior to the election there will be something else coming in order to curry favor. Nonetheless republicans lose the House but retain the Senate in close elections. Divided government is generally good for markets, so I don’t see this as a risk.
Sky-high valuations correct. 2024-2025 has seen stretched valuations for the hottest stocks and conversely “value” stocks with low P/E have struggled. 2026 will see a minor correction with many of the value stocks that can grow earnings finally being rewarded for it and a coming back to Earth for the highest fliers that aren’t growing faster than previous years.
Tariffs are rolled back somewhat by the supreme court, but not completely. A mess ensues and the Trump administration eventually finds another way around the court to wield tariffs as a weapon. They’ve had enough time to prepare, so I wouldn’t expect the tariffs to go away without a long fight.
Geopolitics Predictions:
China will be more willing to make deals with Trump and other western countries. The Chinese have a host of problems at home, and without a boost to the domestic economy through finding a home for its overcapacity, the Chinese economy is at risk of further deflation. I also think the Taiwan Strait will be relatively quiet this year as Xi is struggling with internal power dynamics, most particularly in the military. It could be that he changes course and thinks a conflict would unite the country as some American presidents have done in the past, but the Chinese don’t think this way.
Most of the dictators and troublemakers for the U.S. will be extremely cautious in 2026 as they are terrified of what happened to Maduro in Venezuela. U.S. power is projected around the globe as Trump gains confidence from Venezuela and next eyes Cuba and Iranian interventions. This era will mark a new type of U.S. hegemony where Americans do not put boots on the ground to rebuild the country they invade, but rather find pliant leaders they can coerce into doing what is in the American interest. Cuba is far more likely to see regime change than Iran, especially before the midterm elections as Trump does not want to see the oil price spike before November.
The Ukraine/Russia war ramps up and Russia begins to gain more territory. With the Americans mostly out of the picture, Putin will press his advantage, and when he’s winning he’s less likely to negotiate. Many think the Russian economy needs a war to function properly as so much has been rejiggered for the war effort, so there are many incentives that make it more probable the war will continue.
Right leaning anti-immigrant parties gain more power across Europe, shocking many of the elites that believed Europe was markedly different from America. Sleepy Europe is in for a reckoning soon on both their economy and immigration, and the Trump administration has continually encouraged candidates who align more to their views. 2026 will see a new stage in this trend, and European encumbants will be more aggressive than democrats in the U.S. were by trying to keep nationalist and right-wing politicans off ballots — this will backfire.
Climate change is deprioritized across the world, and the race to carbon neutrality by many nations is scrapped in favor of attracting AI related capital and building out data centers. It’s really quite stunning how rapidly climate became an issue so few leaders care about. The big climate goal of stopping 1.5C temperature rise by 2035 will be resigned to history, and those few leaders left who have any shred of credibility will only be able to point to AI utopia as the way out of an ecologically damaged warmer globe. Despite La Nina conditions, 2026 will be the hottest year on record.
Final Thoughts:
While it is impossible to predict everything with complete accuracy, as an investor you must take positions and act accordingly. My views haven’t changed much from 2025 to 2026 in that it’s an extremely volatile time but the upside of stocks still outweighs the downside in terms of potentiality. The main thing you should be prepared for in today’s world is what you’ll do when there is a shock to the system that sees the market drop 10%+ in a very short period of time. 2025 showed you should hold through the chaos and in short order you’ll be back in the green. So for most investors in 2025 the worst you could do is sell when everyone you see is panicking. Stick to that, and you’ll be fine in 2026 too.
this is going to be an adventurous year financially!