A Change for 2026
For the past several years we’ve crafted our quarterly newsletter to provide you with periodic market, tax and other planning updates throughout the year. It’s been a pleasure to write for all of you, and we look forward to continuing to do so.
This next year we are going to change the structure to provide you with shorter form and timely updates with a target of a monthly piece that highlights recent updates in the market, planning or tax opportunities.
As always, we appreciate your relationship with our team and look forward to a successful 2026.
Is the Market Setting Up for another strong 2026?
2025 delivered a third consecutive strong year in the market, which has resulted in vast wealth being created across the US and Globe. Per CNBC, in 2024 more than 1,000 millionaires were created each day¹, and with a strong 2025, this number is likely similar. When you see this growth it’s only natural to hear our clients say we are due for a pullback and 2026 won’t be as good as 2025.
It's true, on average the S&P 500 is positive 74% of the time (with an average positive return of 21%) meaning once every three years the market declines². It’s also true that the second year of an election cycle is the most challenging year for the market. See the chart below³:
In addition, consumer sentiment is at three-year low and prior to June of 2022, consumer sentiment hasn’t registered a number in the low 50’s since 1980⁴. So, the consumer, in general, isn’t holding high expectations for 2026. Now, should they?
2026, one could argue is carrying several tailwinds into a strong year that you can’t ignore. One of which is spending. While the consumer might not be “FEELING” good about the economy and market, they are spending and spending is one of the key indicators of a driving economy and that hasn’t seen a slowdown yet. Below is the chart for consumer spending:
In addition, inflation (the rate at which prices rise) was surprisingly lower than expected at the end of the year, 2.7% as of Nov 2025⁵, and when you have inflation running below annual 3% rate it tends to be manageable by the consumer and their budgets. As long as the consumer stays strong for 2026, we see a high chance for the market and economy to have another strong year, which wouldn’t be uncommon.
We spent some time looking to see how many times the S&P 500 have been up four years in a row or more. Here is what we found.
- There have been 10 stretches where the market has been up four years in a row
- Two separate 5 year streaks – 1995-1999 & 2012-2016
- One 6 years streak – 2009-2014
- One 8-year streak – 1982-1989
- One 10-year streak – 1947 – 1956
Cumulatively this accounts for a significant amount of growth in the market and investors’ portfolios, so just because the market has been up three years in a now, it doesn’t mean it won’t be up in the fourth year.
At the end of the day, none of us truly know if the market is going to be up or down next year, or even how the “ride will be”. A recent “Five for Friday” email highlight Ross Mayfield prediction of a sell off, see below:
However, remember the great year of COVID, 2020, where sell offs don’t mean a down year.
2026 will be a perfect year for doing the following:
- Revisit your risk after three strong market years
- Plan for future cash flow needs and create the cash needed now.
- Review your tax return for 2025 in the Spring – significant changes from the OBBA likely created and will create tax planning opportunities for you for the next few years
For those interested in our 2026 Market and Policy Outlook by Strategas, check out this link below:
References
¹ https://www.cnbc.com/2025/06/24/us-gained-1000-millionaires-a-day-on-average-in-2024.html
²Baird Investing Concepts 2025
³Strategas – 2026 Market & Policy Outlook
⁴ https://fred.stlouisfed.org/series/UMCSENT
⁵ https://www.bls.gov/news.release/cpi.nr0.htm
*Past performance is not indicative of future results and diversification does not ensure a profit or protect against loss. All investments carry some level of risk, including loss of principal. An investment cannot be made directly in an index. Robert W. Baird & Co. Incorporated.