What’s awaiting us during 2026? I guess we will start to figure out soon… (This post is USA focus as dollar rules the world still…)
My forecast (which you should ignore) is that we will see a year of government stimulus and overpromising as we make our way into the midterm elections, and that this is likely to drive short-term interest rates down… and long-term interest rates up, even if we do get more meaningfully into “quantitative easing” with a very dovish Fed that is compelled to buy government bonds to try to push rates lower.
Paradoxically, we might also get a bit of a housing recovery, since President Trump has talked a lot about trying to jump start the housing market, so we might get some new government incentives that push real mortgage costs lower, despite higher long-term rates in the rest of the bond market.
That strikes me as an environment where we’re going to need good earnings growth to fight what would likely be the rising impact of inflation from more stimulus and government spending, so we probably have to hold on to the strong performers who have the actual earnings to back up their story, like, say, NVIDIA (NVDA) and Alphabet (GOOGL, GOOG), even though we might be nervous about the fact that the AI CapEx boom is getting a little bit sketchy around the edges, as more companies rely more and more on debt to get data centers built. One lesson of past booms is that they can go on a lot longer than we think they can, and if the government is pushing stimulus next year, it’s hard to see the wheels falling off of the AI bandwagon in the near future. Still, this AI mania will subside someday, and the longer it goes on, the more likely it is to end in an ugly crash.
And we’re also probably going to want some hard assets, which might include real estate if the government really gets mortgage rates down, but the problem is that the hard assets everyone tends to want to flock to, like gold, silver and copper, are already at extremes on the charts, so those prices will probably be really volatile during 2026.
This is an environment where we would generally expect to see oil do well, since economic activity will likely be stimulated by the government (not just in the US, but everywhere), probably keeping inflation elevated, and oil has been a go-to investment during inflationary times… but we’ve also got an oil glut that could get worse if we have peace in Ukraine (or, perhaps, that might reverse if US really end up at war with Venezuela (started today as I write)/Iran).
I do think this is the perfect environment for gold and silver… but lots of people see that, which is why gold and silver have already soared so high. Those are also classic rug-pull assets whenever something more exciting comes along and people stop worrying as much, and they’ve already doubled in short order, so it’s hard to be at all confident that gold will have another record year, or that silver will hold on to these gains, just because they’ve tended to give back those crazy spike gains in the past. I’m still holding, maybe the continued buying by the global central banks will mean there’s no fall for gold this time, but it would not be surprising to see some meaningful pullback in gold and silver once we get into the year.
I continue my long-term strategy of buying a little gold and silver now and then, without regard to price, just as a way to diversify my savings. Given the huge gains to date, gold and silver might suffer almost as much as tech stocks if we have a “sell everything” market crash — they might bounce back easier, since market crashes tend to drive people to gold and silver after the crash, but when people sell everything they usually sell their winners first and fastest so they can feel better about themselves, and for a lot of people right now that means selling gold and gold stocks.
So as usual, nobody knows nothing… but we have to be prepared for everything. As we roll into 2026, I expect we’ll probably see both the stock market and inflation rising, and lots of high-wire screaming about whether or not the country is doing well. It’s going to be nerve-wracking, and the path forward is probably the same as it has always been: Diversify, don’t put money you need in the next five years into the stock market, and remember that a diversified stock portfolio has been the best way for ordinary folks to build wealth for 100 years… but it also doesn’t work for every single ten-year period, so sometimes we have to be very patient.
Market history tells us that buying the S&P 500 today will probably provide a really tepid return over the next decade, just because valuation matters and the market is expensive right now… but it also tells us that in an inflationary world, there aren’t many reasonable alternatives to the stock market. So manage your expectations… and maybe try to be a little bit above average by owning companies who can compound in value, by not buying the worst stuff, or by fighting the urge to react to the rollercoaster of market emotions by buying high and selling low.
But like I said, you should ignore both my predictions for 2026, and everyone else’s and find your own path…
All the best to all of us with our 2026 investments.
Busy And Useful 