Welcome to 2026. Will 2026 be a continuation of 2025 where the unexpected consistently occurs?
The prevailing theme is a view of a public persuasive distrust in virtually every institution in American life. There is almost no authority figure, august body in our society in which most people have confidence.
In many ways, our nation’s public life seems overwhelming. Mutual contempt defines much of our politics. Some say they are confused and exhausted by ongoing events. How the coming year plays out may have enormous may have long lasting consequences. We all have to work to rebuild trust and civility.
All must remember that markets are ultimately people and human psychology, and people move markets. Fear is more powerful than greed. We can all cite statistics stating how much the markets are controlled by algorithmic or technology-based trading. However, these models cannot take in account emotions or irrational behavior that appear rational at the moment.
Many have gravitated away from the traditional decisions process of formulating assumptions and placing the odds of these assumptions unfolding that may produce an expected result. A major issue that is unfolding–what happens if the assumptions or the facts that are the basis of these assumptions are not valid. Are they tainted or outdated? Are these facts/assumptions are to be believed, the result of a breakdown of public trust that is discussed above?
Momentum, capitalization and passive/indexing appear to be the only successful investing strategy. However, a strong argument can be made that the markets are incredibly unbalanced as a gargantuan amount of monies are only in a handful of technology-based companies.
Listed below are the six largest companies in the S & P 500 and the projected 12 month increase according to Bloomberg.
- NVDA $4.6 trillion..90 analysts with an average projected a 36.7% 12-month gain…$6.3 trillion in 12 months
- AAPL $4.04 trillion….69 analysts with an average projected 9.5% 12-month gain…$4.42 trillion in 12 months
- GOOG $3.76 trillion…21 analysts with an average projected 7.9% 12-month gain…$4.05 trillion in 12 months
- MSFT $3.6 trillion…82 analysts with an average projected 30% 12-month gain…$4.68 trillion in 12 months
- AMZN $2.4 trillion…94 analysts with an average projected 28% 12-month gain…$3.07 trillion
- META $1.6 trillion…90 analysts with an average 25.4% projected 12-month gain…$2.0 trillion
Writing it differently, the six largest companies in the S & P 500 are projected to increase in value by $4.52 trillion or 22.6% in 2026. [There is $800 billion gap between fifth largest and sixth largest company in the S & P 500]
This projected increase is greater than the GDP of countries for the exception of China and the US. Moreover, this projected increase is greater than the market capitalization of all global markets for the exception of the US major market indices.
It is against this backdrop as to why virtually every bulge bracket firm is predicting a strong 2026. Are they talking their book? These six companies have incredible influence upon the indices given their size.
Only history will indicate if these projections unfold.
It is often written that it is the most obvious conclusions that are ignored.
As stated, the consistency in 2025 was that unexpected almost always occurred. Well-grounded assumptions that typically produce expected outcomes did not occur. Volumes will be written as to why.
It is extremely dangerous to declaratively write any projected outcomes for 2026. As stated, there is a breakdown of public trust. It must be repaired.
Enough of the negative diatribe, Welcome to 2026. What type of year will it be?
Last night the foreign markets were up. London was up 0.42%, Paris up 0.30% and Frankfurt up 0.24%. China was up 0.09%, Japan was closed for a holiday and Hang Seng up 2.76%.
Dow and NASDAQ futures are up 0.4% and 075%, respectively on AI optimism. The 10-year is up 4/32 to yield 4.15%.
