What Will 2026 Bring for the Markets?
With Christmas over and New Year’s fast approaching, I find myself thinking about what the new year will bring for the markets and my personal investments. I am not overly concerned with the markets themselves, but rather with the economy as a whole. We are being fed good economic numbers, but how reliable are those numbers? How do we know that the people putting those numbers together are not playing into the political games that we see today?
There was a point in time when no one questioned the validity of the economic numbers coming out. It was not until President Trump’s second term that we began to consider this option. What do incorrect numbers do to the markets and the actual economy?
I am not a professional investor, but I don’t feel like it takes a professional to see what is happening in the economy or the markets. If the population paid attention to what was around them, they would see that government-provided economic data could be incorrect. The country cannot claim that over a million jobs have been added, given that companies have announced over 1.2 million layoffs this year. The government cannot say that prices are coming down and inflation is easing if people are still struggling massively to afford groceries and other staples. But what effect do these numbers have on the markets?
When positive economic numbers are released, such as a rise in growth, a lower-than-expected unemployment rate, or a national average price that appears to be lowering, the markets generally rise. If the news is reversed, the markets fall, and bonds typically go up. This causes the markets to become overpriced and over hyped. However, there is also a push from the White House to become the world leader in artificial intelligence (AI). The people pushing this new technology will either not be affected by it, have not considered how it will impact others, or they simply don’t care, as they are primarily concerned with surpassing China.
It is said that AI has not only created a bubble but is also taking jobs away from people. When positive news emerges about AI and its progress, tech stocks rise, becoming more expensive. The AI push also demands large data centers that require a significant amount of electricity, straining the already insufficient power grid. This push is causing electricity prices to rise, in turn, increasing the cost of electric company stocks. The irony is that the republicans said the electric vehicle (EV) push would do the same thing. So, not only are stocks becoming more expensive and overvalued, but essential living costs are also rising.
The increased demand for electricity is also driving oil and oil company stocks higher. Gas prices have decreased slightly since Trump’s election in 2024, but not to the level the population had expected. You may be wondering what this has to do with 2026; hang on, and I’ll share my opinion.
In 2026, I see the economy struggling once the proper health measures become apparent. The new tax policies and tariffs will start to reveal the impact. We will see more job losses due to AI, utility prices will keep going up because of the demand for AI data centers, and oil prices will continue to fall because of the increase in production to use as fuel to power these data centers.
The job losses will impact the economy in a negative way. There will be less money flowing throught the economy and less money means falling stock prices. Because there will be less money flowing into the economy, there is only one way for companies to continue to report record prices, raise prices. This will make affordability less achievable.
I see the markets going through a correction to make up for the overvaluation in securities. I also see markets struggling with the rising impact of AI. Currently, AI provides a tool that many companies are utilizing to enhance efficiency and automation; it is also proving to be more cost-effective than hiring entry-level employees. The move to incorporate AI into business for the purpose of automating entry-level positions will also further degrade the job market. Freshly minted college graduates will struggle to find jobs, and those in the workforce who are older and don’t understand technology will struggle to keep their jobs, as employees will have to learn AI prompts and how to operate the AI agents that are designed to help them with their jobs.
2026 will also bring the impact of the AI bubble into focus. This should be the time when AI companies start to make a profit. If the profits are not what is expected, the markets will decline, and some of the smaller companies will go under. The .com bubble of 1999 and 2000 is what we are looking at. Mergers and acquisitions, along with failures and strain on the banking system because of bankruptcies and bad loans. I feel like this next year will be a combination of 2000 and the banking crisis of 2008. In 2025, several regional banks failed, which put pressure on the banking system as a whole. 2026 is expected to bring increased pressure on the banking system due to economic conditions and challenges related to AI.
While money is being made right now, we must remember that no one really knows when a decline or correction will happen, and that is when everyday people get hurt. Advisors and brokers will struggle because people have put confidence in them to manage their money. No one will be immune to the fallout.
Some things can give us an indication of what is to come. We need to monitor the actions of company leadership and board members. If they start to dump stock, there could be a very good reason; they know something we don’t know. At the same time, if they begin to buy stock, we have already missed the opportunity. We also need to keep a close eye on the government. If Congress and the White House intensify their push for AI dominance, we should wonder whether they are invested in the tech companies developing AI chips and computers. We will also need to pay attention to the ratio of layoffs to new job additions.
These tips and events to watch can keep you and your money safe in the new year. Remember that many people are out for themselves. As much as I don’t want to continue beating the drum, but the government is not actually working in our best interest; they are doing whatever they need to do to get reelected and enriched.
The Holidays and Depression
This time of year can be, and sometimes is, the most challenging part of the year for many people. The holidays are typically filled with joy and happiness. Families and friends gather to reflect, share meals, and exchange gifts. While many people go about their lives in a routine during the holidays, others struggle. This could be feeling lonely, missing recently lost family members, or feeling like they are not important to anyone—whatever the reason, we need to keep these people in mind.
On top of the situations above, we must also keep in mind the family members who are in the hospital, terminally ill, or fighting personal battles that can weigh heavily on the soul. There are families at hospitals all over the world, not knowing if this will be the last holiday season they will have with the person they love. Families are shouldering the burden of financial troubles and wondering how to make ends meet. No parent wants to think that they cannot give their kids a Christmas, or whatever they celebrate. Do you know if the lights will stay on? Will they still have heat or food? These are questions that so many people across the country are asking.
While a good portion of the country is not experiencing the typical winter temperatures, some areas are getting freezing temperatures, snow, and ice, as well as historic flooding. Our thoughts also need to go to those who are homeless. Those who are homeless usually have a difficult time finding warmth, shelter, and food. At the very least, we could donate to a food bank or soup kitchen, give blankets and coats to a service that distributes them to people in need, or volunteer at a food kitchen or homeless shelter.
While we enjoy our festivities, food, togetherness, and daily comforts, we must also keep others in mind. Saving a life, or bringing a sparkle to someone’s eye, could be as simple as a phone call, a personal visit, a hot meal, or a blanket. People with mental health troubles all too often feel that no one cares or thinks of them. Making that call or visit could change a person’s frame of mind and let them know that people do care for them. Visit older people, as many family members may have moved away. Take a friend or family member out to lunch or dinner, or simply invite a family member or friend who usually doesn’t receive many visitors to the holiday festivities.
I have come up with all this from experience, not only with friends and family, but also personally. There have been many years of loneliness and hopeless feelings, both from the feelings that no one cares and the financial struggles that I have had. It took people just reaching out to make me feel better when I was younger, and my wife to be my rock as I got older. I have seen military members lose their lives because no one checked on them during the holidays. The demons they are dealing with are much more than the average person can bear. The feelings that military members and veterans can experience can stem from the time of year because they lost a fellow soldier in combat, or they may have been notified of divorce proceedings. At the same time, they were deployed, or they simply came home from deployment to an empty house and no possessions left to their name. It is for these reasons that we need to check on everyone this time of year.
So, check in on all your family and friends, enjoy your Holidays, and have a Merry Christmas.
The Nasdaq and 24 Hour Trading
The news broke today that the Nasdaq has filed papers with the SEC to open trading 23 hours a day. The plan includes closing for one hour to settle. This may sound like a good idea, but the ramifications could be catastrophic. The problem lies with liquidity and the ability of people to make investments.
The people who would benefit from a move like this are institutional investors who can afford to staff and equip computers to execute trades on their behalf during extended hours. CNBC reported that some experts believe this move could lead to significant price fluctuations. These price swings will hurt individual investors in their brokerage accounts and retirement accounts.
With the potential for an AI bubble and the sell-offs that have been seen in tech stocks, increasing trading hours could exacerbate those sell-offs. While we sleep, our investments may be losing value at a rate that exceeds our risk tolerance. The markets already have a reputation for not being fair, but this move will increase that notion, driving investors to the DOW and the S&P.
Those investors holding index funds that track the S&P and the DOW will benefit. However, we may also see an increase in cash balances. If we see an increase in cash balances, it is possible that some high-interest-rate online savings accounts could raise their rates to compete. If an investor is earning an average of 3% in the Nasdaq and the high-rate savings account is paying 3.75%, investors will move.
There is also the potential for another tech crash. Stocks will become overbought, driving prices up. When stocks become overbought, a correction is likely to occur. Once the correction takes place, investors who are not part of the overnight trading will lose a lot of money.
This move will also hinder the release of company information. Stocks fluctuate regularly, but tend to move more significantly following the release of new information. These releases could be earnings, executive changes, mergers and acquisitions, or insider buy and sell activity. The extension of the trading day will allow these swings to persist for hours, rather than giving the markets a chance to digest the information.
This decision should not be taken lightly by the SEC. They need to consider how the process will impact the individual, while institutional investors will reap the majority of the profits. The bottom line is that it will make the trust in the markets even shakier than it already is. It will increase the distrust in Wall Street even more, showing that the Street is full of greed with no regard for the little guy.
Are the Experts Correct
Is there acutally a bubble in AI?
There has been a lot of talk recently about the AI bubble from the talking heads on TV. All the so-called experts claim that there is no way a bubble exists, while others insist that a bubble is definitely present. Who do we listen to and who do we ignore? This is a common question when it comes to investing in general. However, when you factor in the massive popularity of AI, the question becomes a greater concern.
If you have ever seen the movie or read the book “The Big Short,” you have likely heard of Michael Burry. He is currently referring to this as a bubble. I have to agree with him on this one. AI is becoming bigger than we expected, and there is massive investment going into it. Deals are being made almost daily, and many of these companies are collaborating with one another. Some might call it circular finance, while others might refer to it as capitalism. I call it dangerous.
Private equity and Wall Street have dumped billions into AI. Some of these AI companies have not even shown a profit, while others have no revenue to speak of. The product itself can be helpful in certain situations, such as refining an email or formatting a document. On the other hand, advancements in AI are making our kids increasingly dependent on it for everything. The number of kids today who don’t even know how to do basic research is staggering. Schoolchildren are using AI for research on projects and then having AI compile that research into a paper they can submit. This is not helping our kids; it is hurting them.
In addition to the shortcomings in school, kids are using AI chatbots for companionship. The idea that a program is talking to kids and keeping them from actual socialization is crazy. The mental health of our youth should be at the forefront of our minds. However, many parents are not tuned into what their kids are looking at or who they are talking to online. There have been studies that show the AI chatbots are harming our kids socially, and some even say that these chatbots can lead to self-harm in teens and younger kids. If we are not taking care of the kids now, what will happen to them as adults?
OK, back to the point here. Is there an AI bubble? If we examine the bubbles and major market downturns of the past, we will see commonalities in all of them. In recent memory is the .com bubble. Internet companies were starting up all over the place, and everyone wanted a piece of the pie. However, as time passed, we began to see cracks, and investments continued to pour in. These internet companies were overleveraged and had little revenue. To secure additional funding, they went public and began trading on the markets. What happens when public companies start to collapse all at once? A crash followed by a recession. Like in the .com bubble, the housing bubble was fueled by greed. This greed was viewed as a positive development by many people because it made it easier for them to enter home ownership than ever before.
Mortgage brokers were selling people adjustable-rate mortgages (ARMs) with the promise that they could refinance before the balloon payment was due. This is always a great idea in theory, but how often does it actually work in practice? Some buyers wanted to live, or give the appearance of living, a lifestyle bigger than what they currently had, so they took out ARM loans to buy second or third homes. At that point, it became too challenging to refinance due to the number of mortgages on their credit. So banks started to foreclose. This by itself is bad, but when you take into account that Wall Street divided all these loans up into bonds and sold them to investors, you have a perfect storm. When these mortgages fail, the bonds become worthless. When the bonds become worthless, investors start to move into cash or other investments to recoup their losses. However, all investments become overbought, and institutional investors start to sell. Once the big players begin to deal in massive amounts of shares, individual investors will follow, driving prices down even further.
Businesses also invested in these bonds with the thought that people always pay their mortgages. The idea was to make as much money as possible for the company by exploiting people who were being sold a false dream.
So, when we examine AI and wonder if there is a bubble, we need to dig a little deeper into the financial numbers of the companies and pay close attention to how they generate revenue and how they allocate their expenses. We need to ask ourselves if they are generating money from fundraising or revenue, and if their debt is already so large that it will take years to turn a profit. The outlook for the number of data centers required is just another increase in debt purchased through leveraged fundraising. While I hope the talk of a bubble is just talk, I cannot help but feel like this could be a dangerous situation in the near future.
Trump and the Marijuana Rules
It was said today that President Trump is considering reclassifying marijuana. No one really knows precisely what that means, but the cannabis stocks have been going crazy the last few days. So the question is, will it become like alcohol? Is this a good thing or a bad thing? These opinions will be widely debated, and this will spark a new debate that will dominate the mainstream.
One might argue that making marijuana legal like alcohol will be good for the economy because of the added tax revenue. In contrast, others may say that it will still be sold on the black market, allowing people to evade the tax. Then there will be the camp that aligns with many people; this will likely increase DUI incidents. Either way we look at it, the rules are about to change.
Yes, tax revenue will increase. How much we don’t know. Will there be an extra tax on top of sales tax? What is this tax revenue going to be used for? On the federal side, I would say it all depends on the majority. Instead of using the increased revenue to care for people in this country, it will end up in the hands of special interest groups and go to causes that benefit a few, leaving the many in need of help. But, even with the increased tax revenue, there is still the issue of enabling. If we take a step back and look at all the people in this country who have an alcohol addiction (I used to be, but I am sober now), changing the rules on weed is only going to feed addiction because it will be legal. The usage will go up.
In this situation, as taxpayers, we need to look at the money. Did anyone in our government, or those close to it, know this might come true? If they did, how much did they invest in the cannabis stocks? Based on the government’s track record so far this year, if the executive order is not taken to court, I would say that much of Congress is profiting from this news.
Despite being taught history in school, we, as a people, still repeat the same mistakes from the past. We tried prohibition, and that increased organized crime activity. We made drugs illegal, and that increased smuggling and the rise of cartels. But we repealed prohibition, and families have been destroyed because of alcohol, lives have been lost, and insurance rates have gone up based, in part, on the number of drunk driver accidents in a specific area. I think that making weed legal will have much of the same effect. However, on the other hand, I feel that if it remains illegal, smuggling and the black market will continue, putting people at risk with deals gone bad.
Questions will still remain during and after this process. The truth is that we won’t know what will happen, and we won’t know how it will affect lives or the economy. However, a question remains: Is this executive order a means of scoring political points? With the midterms approaching and Republicans not performing well in the polls, is the president trying to score points for his party to maintain control? Sadly, I feel that is the true motivation behind the idea in the first place.
The Venezuelan Tanker
By now, we have all heard about the United States seizing the tanker from Venezuela. There are mixed views on this, and rightly so. Should we have done it? Should we have left it alone? My question is, what is the goal here? To many, it may seem like we are advocating for regime change, but I cannot help but think there is more to the story. Is there something that the American people are unaware of? As a people, we don’t know if the oil on the tanker was sanctioned oil or not. I am unsure of the destination, but I know that this move is creating problems that many in this country did not vote for. We appear to be moving closer to some form of military action in Venezuela. The president has repeatedly stated that he does not want to start any wars, but look at where we are now. The Ukraine conflict is still going strong, Europe is preparing itself for some form of military action to come out of Russia, and China is all over the South China Sea around Taiwan.
We need to consider how this will benefit the struggling citizens here at home. We have people in this country who need help, and yet we seem to be more concerned about what other countries are doing. If we cannot take care of our own people, we shouldn’t worry about someone else’s. Let their leadership win or fail at their jobs.
Hello World!
Welcome to my website. This is your home for nonpartisan financial market, business, and political opinions. I will examine current events in all three topics, along with some relevant history. I encourage friendly debate and comments. Those comments will tell me what, and if I need to make changes to make the stories more attractive to readers.