Tis the season for investing geniuses to offer their predictions for 2026. If history and their track record is any guide they will miss the mark by more than the mark. It will be like a major league pitcher winding up 60’6″ from the barn and missing the barn. In hockey framing it will be like getting ready to slide in an easy empty net goal and throwing the puck in the corner. Market prognosticators never had a clue. They don’t have a clue as to what will happen in 2026. At least I have to ‘courage’ to go out on a limb and offer that, as for my predictions for 2026 – I don’t have a clue.
Investing.com provided the details via Bloomberg.
According to fresh Bloomberg data, the average year-end 2026 target for the S&P 500 among major investment strategists stands at 7,555. The range spans from a low of 7,000 to a high of 8,100 and implies upside of 9% from current levels.
Here’s the general theme via that same post – “Earnings expectations underpin much of that optimism. Wall Street forecasts call for S&P 500 earnings per share of roughly $306 in 2026, up 12.5% from the current consensus estimate of $272. Valuation assumptions remain relatively stable, with expectations that the forward price-to-earnings multiple will stay near the current level of around 22 by the end of next year.
Here’s the returns projections from major financial institutions.
Goldman Sachs analysts point to solid U.S. growth, a weaker dollar and productivity gains from artificial intelligence as key drivers supporting earnings expansion.
“Beyond the macro drivers, the profitability of the largest stocks will continue to be a key driver of S&P 500 earnings growth,” they argued, adding that returns from the seven largest stocks in the index — Nvidia, Apple, Microsoft, Google, Amazon, Broadcom, and Meta — account for roughly a quarter of its total earnings.”
OK, now I’m nervous. The market geniuses are calling for returns that are essentially in line with the average annual long term returns for U.S. equities. Market history suggests that something entirely different is about to happen. What? We don’t know.
Average almost never happens when it comes to stock markets. For the record, the prediction for 2025 was between 5% and 10% 🙂 Swing and a miss on a ball that was 12 inches off the plate.
Via Visual Capitalist, here’s the breakdown by 10% bands …
And now, count the number of times we’ve had average returns near 10%. From 1990, there have been two. It begs the question as to why the market guessers would ever guess the average. They are almost guaranteeing that they will hear a deafening wrong buzzer. For boomers let’s suggest they get ‘The Gong’.
Predicting sunny days as the blizzard arrives
Here’s the shocker deets on predictions courtesy of the Globe & Mail (subscription required) …
“Paul Hickey, a founder of Bespoke Investment Group, has been compiling these predictions for years. He has found that since Dec. 31, 2000, the Wall Street consensus has only ever predicted annual gains — every single year.
The market didn’t rise every year, of course. In 2022, for example, the S&P 500 fell 19.4%. The consensus forecast called for a gain of 3.9% — a discrepancy amounting to 23.3 percentage points. All told, through 2024, the S&P 500 fell in seven of 25 calendar years, or 28% of the time. The losses have sometimes been gargantuan, like the 38.5% crash in 2008.
If you look at just the overall averages, you might not see how ludicrously bad the professional stock forecasters really are. The average annual forecast of price gains for this entire period was 8.9%, not too far from the actual average performance of 7.7% for the S&P 500 annually.
But because the consensus was positive in all of the down years, and because many of the good years were far better than the consensus predicted, the Wall Street forecasts were off by an average 14.1 percentage points annually. In other words, on average, the error was more than 50% bigger than the forecast.
The mistakes were so large that they were like predicting warm, sunny weather before the arrival of a major blizzard.”
Here’s a related Tweet …
2025 was fantastic – don’t get fooled again
2025 was a crazy year, but crazy-good for investors who ignored all of the noise. Year to date, in Canadian Dollars:
- Canadian stocks up 32.65%
- U.S. stocks up 13.12%
- International stocks up 25.4%
- Balanced 60/40 Portfolio up 13.85%
Who had Canadian stocks outperforming on their 2025 bingo card? Likely no one.
Or that the Canadian Dollar would do this. Just Loonie …
Ignore the weather reports, get some glue
Here’ was my last post of 2024, exactly one year ago – Hello 2025. Investing in the zero visibility age.
And the first paragraph from that post …
While there are only two trading days left in 2024, it is clear that it is another year that fooled everyone. The year 2023 fooled economists and market prognosticators with U.S. stocks up over 26% in U.S. Dollars (and up more in Canadian Dollars). 2024 is shaping up as a carbon copy in performance and in big swing and miss predictions. Canadian stocks are looking to finish the year up over 20%. Good luck making predictions as we enter 2025 – a zero visibility age. Trump economic ‘policy’ will likely shape the year. There’s just no tellin’ what will happen.
Heading into 2025 I suggested that investors should ignore the Trump threat – it doesn’t matter who is in the White House, historically. And even with Trump threatening to destroy Canada (economically) that has not played out. At least, not in the stock markets.
But for those who wanted to manage risk – Managing risk in the age of uncertainty.
The global portfolio
In March – Don’t avoid U.S. stocks embrace a global portfolio.
When markets were down I suggested that you enjoy those lower stock prices, really.
We should simply develop an investment plan and stick to it like glue. Those are likely the words that I have repeated most often on this blog.
Here are some core ideas on getting an investment plan and sticking to it like glue.
If you’re in the accumulation stage with 15 years or more before your retirement start, you might ignore valuation and just keep on keepin’ on adding money on a regular schedule. You likely have the time to wait out any market correction, and buying through a dip might be beneficial in the end. You’ll pick up your stocks and ETFs at a bargain price.
For accumulators check out the Wealthy Barber’s big idea. On the investment front, author David Chilton like’s the idea of the asset allocation ETFs. These very well-diversified, managed, all in one global portfolios might be the easiest way to ignore everything. They mix with glue, very well.
Of course we always have to invest within our risk tolerance level.
If you’re within 10 years of retirement consider that you are in the retirement risk zone.
Retirees – get a life and financial plan
In 2025 I launched Retirement Club for Canadians along with Brent Schmidt from Strategic Fuel. Brent is a long-time Cut The Crap Investing subscriber. I helped Brent leave his very poor advisor many years ago. He has enjoyed fabulous life-changing returns, ever since. Brent got a plan, he sticks to the plan like glue.
Extensive research allows us to understand that there are a few simple strategies that can set us up for retirement success. It centres on developing a retirement plan that also includes an optimized retirement cash flow plan. It’s where the life plan meets the money plan. Most of us can DIY our retirement. Retirement Club will help you do retirement right. Certainly there’s a segment that will have to seek and pay for more advance financial planning.
You can use the Contact Dale form at the top of this page if you’d like to join us for the next online tour of Retirement Club.
Personally I pay attention to valuation
While this is not advice, everything in this blog is under that banner of ideas for consideration, I pay attention to the valuation levels in the U.S. stock market.
It’s a personal decision, but valuation matters in retirement. For the record I am semi-retired, my wife will semi-retire within the next 1-5 years.
I like this chart …
On navigating the valuation issues I wrote this piece for Findependence Hub – Challenging times for recent retirees?
In early February on this blog I wrote on Slanting to more value stocks.
Of course, as the above chart shows, the markets are still ignoring valuation ‘issues’. That’s more than fine. I’ll continue to rebalance from more growth oriented equities and move the monies to the value tilts and defensive equities …
When markets waiver, our defensive U.S. stocks suggest they are ready to do their thing …
Of course, rebalancing can also mean moving profits to cash, bonds and gold. I like bitcoin in the mix, but bitcoin has had an off year. True to script I will stick with bitcoin as well, and will keep rebuilding that position.
Some perspective for 2026
The value of ignoring …
The Sunday Reads
More at Findependence Hub, Bob Lai of the Tawcan blog asks – What if you run out of life? The spend/save balance.
It’s true that many and perhaps the majority of retirees have trouble spending to their full capacity. It can be so liberating to create a retirement cash flow plan to see and know the spending and lifestyle path. MayRetire is a free-use calculator.
At Booming Encore – The Corporate Hangover: Learning to slow down without the guilt.
A look at Dividend Hawk’s portfolio news for the week.
Dan at Stocktrades looks at his worst performing stocks of 2025. Is he still adding?
From the Loonie Doctor – Investments for your First Home Savings Account.
Don’t forget to open a First Home Savings Account (FHSA) even if you don’t plan on adding money in 2025. You need to open the account to accrue the contribution space.
GenYMoney offers her 2025 financial goals recap.
From the Retirement Manifesto 9 proven ways to boost your happiness in retirement.
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2026 is just looking to be an ugly year. I do not know how analysts are bullish, but they have to be or else everyone would sell. That is why there is no point in listening to projections.
https://www.blossomsocial.com/posts/SandP-500-vs-Gold-Chart-Analysis-and-Market-Outlook__POST-1762992503622-ofTBwVzr_6HJo4ILQ6VP4RrGQ
Thanks Carlos, it’s their job to guess and their job to be wrong. It’s a strange industry where the experts are wrong all of the time, but that’s what makes the market. It’s our job to ignore them and stay the course.
Thanks for stopping by.
Dale
The US$ is falling against other currencies including the Cdn$. The prediction at TD is that it will continue to do so in 2026. Would you comment on how this will affect Canadian investors with US investments.
Hi John, back to the post theme, no one knows what will happen. That said, the falling U.S. Dollar impacts our U.S. investments reducing their return by the value of the currency depreciation. A 12% investment gain becomes a 10% investment gain in Canadian Dollars, with a 2% U.S. Dollar decline vs the Loonie. That said, if the U.S. Dollar is falling against many currencies as it is today, that will boost foreign revenues for companies. I’m with the experts who suggest that we do not currency hedge.
I don’t mind the idea of a retiree holding some U.S. assets non currency hedged to remove currency risk for some shorter term spending.
Dale, thank you for having the ‘courage’ as you put it, to say you do not know what the markets will bring us in 2026 (or at any time for that matter). Invasions, pandemics, strikes, revolutions, … no one knows what will happen or how it will affect the markets.
Have a plan, stick to it like glue. Sage advise.
Best wishes for you and your kin in 2026.
Cam
Thanks Cam. Watching the markets and listening to all of the guesswork, even making some guesswork, can be fun but we have to remember it’s all for entertainment purposes only.
We stay the course. Happy Holidays, and all the best in 2026.