The Challenge For 2026 Markets

The Challenge For 2026 Markets Authored by Lance Roberts via RealInvestmentAdvice.com, It’s that time of year when Wall Street polishes up its crystal balls and begins predicting returns for 2026. Since Wall Street never predicts a down year, which would be unwise for fee-based product revenues, these forecasts are often inaccurate and sometimes significantly wrong. Let’s review some previous years. For example, on December 7th, 2021, we wrote an article about the predictions for 2022. “There is one thing about Goldman Sachs that is always consistent; they are ‘bullish.’ Of course, given that the market is positive more often than negative, it ‘pays’ to be bullish when your company sells products to hungry investors. It is important to remember that Goldman Sachs was wrong when it was most important, particularly in 2000 and 2008. However, in keeping with its traditional bullishness, Goldman’s chief equity strategist David Kostin forecasted the S&P 500 will climb by 9% to 5100 at year-end 2022. As he notes, such will “reflect a prospective total return of 10% including dividends.” The problem, of course, is that the S&P 500 did NOT end the year at 5100. Then, in 2022, Wall Street predicted a modest return of just 3.9% for 2023. Of course, reality turned out to be markedly different. The same trend was observed in 2023, 2024, and 2025 as Wall Street grossly underestimated the forward market return. Heading into 2025, Wall Street predicted a median return of just 8.2% with the highest estimate of nearly 15%. As we wrap up the year, the market is again closing in on a 20% return, marking the third consecutive year of such performance. However, while analysts repeatedly fail at the guessing game, Wall Street’s annual tradition is always of higher returns. To borrow a quote: “(Market) Predictions Are Difficult...Especially When They Are About The Future” - Niels Bohr Okay, I took a little poetic license, but the point is that while we try, predicting the future is difficult at best and impossible at worst. If we could accurately predict the future, fortune tellers would win all the lotteries, psychics would be more prosperous than Elon Musk, and portfolio managers would always beat the index. However, this is never the case, and as investors, we must rely on our data, analyze past events, filter out the current noise, and discern possible future outcomes. The biggest problem with Wall Street today and in the past is its consistent disregard for the unexpected and random events that inevitably occur, like the “Liberation Day” tariff event that sent the market plunging by nearly 20%. However, even when such events occur frequently, from trade wars to Brexit to Fed policy and a global pandemic, Wall Street analysts were often convinced that such things would not happen. So what about 2026? We have some early indications of Wall Street targets for the S&P 500 index, and, as is always the case, they are primarily optimistic for the coming year. The median estimate for 2026...

Preview: ~500 words