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I have been publishing my Fearless Forecast for more than 30 years. I don’t know many or really any other advisor that sticks their neck out like this year in and year out. That’s one of the many reasons why we are different. I love producing original content, especially when it flies in the face of consensus or conventional wisdom. Our industry has a lot of lazy people who do not do their homework. They do not gather data, analyze data, model data and act on data. Instead, they blindly follow the mediocre research of others. I don’t know how individual investors tolerate and accept the regurgitation of nonsense by advisors who simply do not do their homework.

Back to the forecast.

Over the decades, I have been surprised at how accurate our forecasts have been compared to the garbage Wall Street publishes, even though we absolutely do not manage client portfolios according to my forecast. It’s an annual exercise that I enjoy, but it doesn’t amount to much more than that. And unlike the high priced Wall Street strategists who are usually wrong early and often, I do not change my forecast once it’s published. I live with the successes and failures.

Some often ask why I am so critical of Wall Street strategists. First, they seem to have little accountability. They so quickly run away from a bad forecast or simply revise history. Not managing money, they just turn on a dime and never look back. Take 2025 for instance.

As I have often mentioned, I have all Wall Street strategist annual forecasts dating back to 1990. And data don’t lie. Last year, the median forecast was 6600 on the S&P 500. It closed at 6845. Evercore ISI was the only firm even remotely close. In 2024 the median was 4950 and the index closed at 5882. No one was remotely close.

During the tariff tantrum in late March and early April, a full 13 strategists from Wall Street reduced their year-end forecasts right as the S&P 500 was bottoming at 4900. So, they began the year high and then “sold” right at the low.

Wanna guess what they did next? You got it! They waited until stocks rallied back to new highs and then raised their year-end targets to new highs. It’s insane that these folks are paraded and celebrated in the media when they mostly do damage to individual investors and their portfolios.

In 2026 the median forecast is 7520 with not a single strategist calling for a down market. That got my contrarian bones thinking that 2026 could be a down year.

Don’t get me wrong. Every forecast I have done wasn’t as successful as the past few years. I laid a giant egg in 2002, my worst call ever when I was looking for the S&P 500 to bottom in the first half of the year around 900 and rally sharply to year-end around 1100. I owned it. I lived with it. I moved on.

On the flip side, my best forecast was for 2023. Coming into that year, I said that I never had higher conviction for a forecast since I started doing them in 1990. In real time, I forecast a new bull market beginning in Q4 2022 that could take the major stock market indices to fresh all-time highs by the first half of 2024. I thought there was an outside chance at a +30% year for the S&P 500. I said it was going to be a strong “risk on” year. Few were as bullish as I was.

Coming into 2025, I labeled it “the year momentum died”, forecasting that the back of the mega cap technology trade would be broken and other sectors would lead. 2025 would be a non-linear year. I thought 2025 would look nothing like 2017, the first year of President Trump’s first term. I did not think animal spirits would return to the economy without a deeper tax cut package.

I also did not see 2025 resembling 2017, 2023 and 2024 were historically strong years for the stock market. Rather, I thought buying the dips and selling the rips would be rewarded. I also said that tariffs would have “more bark than bite”, a very anti-consensus comment.

In the end, I summarized 2025 as follows:

“Breaking the year down, the stock market should struggle in Q1. The confirmation should be a close below the lowest point in December by the major stock market indices. If and when that happens I would start to sell strength. Fresh, all-time highs in Q1 are likely to be non-confirmed by most conventional and proprietary indicators. If I am wrong about Q1 then look for a deeper decline in Q2.”

“When all is said and done, I see a frustrating year that feels worse than it is with a Q1 stock market peak and at least one 10%+ correction by July 4th lasting at least two months. The S&P 500 ends the year up mid to upper single digits. Everything would have to break perfectly for a double digit return.”

Looking ahead to 2026, many pundits are calling for a fourth straight year of double digit returns. 11 times the stock market has been up three straight years. 8 times the following year was up. While not impossible, it would be more challenging to tack on another strong year although detractors could point out that 1995, 1996, 1997, 1998 and 1999 all delivered returns in excess of 20% as new technology, the internet, was evolving. Is AI the new internet?

1995 +37.58%
1996 +22.96%
1997 +33.36%
1998 +28.58%
1999 +21.04%

2026 will have some similarities to 2025. While I forecast a Q1 stock market peak and 10%+ correction by July 4th last year, I see a Q2 stock market peak and Q3 10%+ correction, call it 10% to 18%, that bottoms later in the quarter or even early Q4.

2025 kept the streak alive of positive years ending in “5”.

1955 +31.56%
1965 +12.45%
1975 +37.20%
1985 +31.73%
1995 +37.58%
2005 +4.91%
2015 +1.38%
2025 +17.90%

2026 is a year ending in “6” which have historically been positive years, albeit with volatility embedded.

1976 +23.84%
1986 +18.67%
1996 +22.96%
2006 +15.79%
2016 +11.96%

The media and pundits like to easily dismiss this type of analysis because it should not have any bearing on future returns. After all, does the market really know what digit a year ends in? However, when something seems to work, it’s worthwhile noting it until it stops.

Along similar lines, 2026 is a midterm election year. Historically, those years have been bear killers, meaning that major bottoms took place. However, they have also been year with large declines.

2022 -25.40%
2018 -19.80%
2010 -16.00%
2006 -7.70%
2002 -34.00%
1998 -19.30%
1994 -8.90%
1990 -19.90%

If we dial down a little more, it also President Trump’s second term although not back to back as has been seen previously. Second term midterm election years have produced significant gains for stocks. 14%

1986 +18.67%
1998 +28.58%
2006 +15.79%
2014 +13.69%

Looking at the economic data as 2026 begins, we know that Q3 2025 saw an outsized GDP gain of 4.3%. Q4 will likely be noisy because of the government shutdown. Inflation has collapsed into a tight range within 0.50% of 3%. However, the consumer confidence and consumer sentiment data exhibit behavior typically seen during the trough of a recession. With the University of Michigan Consumer Sentiment below 60, that usually leads to strong equity returns over the coming year greater than 10%.

My friend, Ryan Detrick, shared that the Federal Reserve Open Market Committee has cut interest rates 22 times with stocks at all-time highs. Intuitively, one would conclude that stocks should go higher with rate cuts at new highs amid good times in the markets. And that conclusion would be correct. On average, the S&P 500 is higher by 14%.

Given that the stock market has soared and that sentiment edges on greedy, giddy and euphoric, some may wonder why I don’t think a correction will come sooner. The answer lies in 2025. From February to early April the stock market dropped by just under 20% and then flew to new highs at warp speed. That type of behavior usually insulates stocks from another 10%+ decline for at least 7 months, but typically 11 months or longer. Since the post-tariff tantrum 20% decline saw fresh highs in June 2025, the next peak shouldn’t be seen until at least January 2026, but more realistically after April 2026.

Before I began my research for 2026, my thinking was a single digit year overall where 10% would be amazing and down 5% would be the worst. However, that changed as I data-mined. If all goes perfectly in 2026, the S&P 500 will hit 8200, an 18% gain. If all goes poorly in 2026 the S&P 500 will decline to 6435. In short, I see strength early in the year with a peak less than 8000 on the S&P 500 followed by a correction greater than 10%. In the end, the S&P delivers a low double digit return.

Stay tuned for part II where I dive into which sectors should lead in 2026 along with energy, interest rates, the Fed and economy.

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