1H2026 Market Outlook Summit Livestream Highlights

Troy Sharpe:
We will jump right into 2026. So Chris, I’m throwing it to you first. What is the primary reason that stocks should do well in 2026?

Chris Perras:
Thanks, Troy. So yeah, we titled this year’s outlook, some years it’s harder to be a bull rider. So we’re positive on the market, but we’re expecting there to be a fair amount of volatility here, particularly in the first half.

But the number one positive thing that we see, and this is usually Charles’ point more than mine, is earnings for the overall market look to be good and probably accelerating throughout the year.

The first quarter will grow high single digits. By the last quarter, the projections are to be in the 13 to 15 percent range, I think, for the fourth quarter. So throughout the year, earnings accelerating in the S&P 500.

We’ve talked about in the past why that’s possible, whether it’s the big, beautiful bill, no tax on tips and tax refunds that are coming in April to help stimulate the consumer, and a lot of capital spending going on here in the United States.

That’s a big tailwind for the market for the whole year, starting after we get through kind of the first quarter as things start to improve throughout the year. So that’s the first big one.

Troy Sharpe:
So when we look at the consumer spending aspect of this, you talk about no tax on tips and some of the aspects of the big, beautiful bill. It’s not going to impact many of you who are retired or about to retire, but why is this important to the people paying attention tonight when they’re concerned about the potential direction of the market?

Chris Perras:
Yeah, well, it provides lower taxes to a consumer, provides higher tax refunds, so there’s more cash in a consumer’s pocket. And we know most consumers here in the United States, when they have cash, they don’t generally save it, they spend it.

So I think the estimates are anywhere between $1,000 and $3,000 in additional tax refunds this year coming up in April, or whenever you file. So that should build really towards the late part of the first quarter and help in the second quarter.

Troy Sharpe:
Logic tells us stock prices have a strong chance, no guarantees, to fall.

Charles Scavone:
They’re not going to do very well either.

Chris Perras:
I think those are the right numbers. Yeah, for last year, Troy, as you said, and then we had that detour in the middle of the year. Tariffs cut the earnings growth to nothing at one point.

Charles Scavone:
And that’s estimates, right? Think about how you were characterizing them, and it’s exactly right. It’s an important point. And that’s why it popped back into my head, is an estimate. And those estimates can change, and that’s very important too.

One of the things that we follow is where, in looking at individual companies, where are estimates going up? Because that’s usually an indication that businesses are doing better, fundamentally doing better, generating more profits. Those are the sort of names we want to own.

Chris Perras:
Truly, and Charles has a great point. It’s what the marginal dollars that they’re spending is. It’s not that Microsoft might not earn a return on all this money. It’s that relative to in the past, you went out and you bought a PC and Microsoft got a check for $100 and it cost them nothing, or a subscription revenue.

Now they’re spending tens of billions of dollars with the hopes and dreams that new revenue is going to come in, whether it’s through Copilot or other software services that they sell.

It’s still a great business, but the market is very unforgiving from a timeline standpoint of what are you doing for me this quarter or next quarter. What’s that marginal return?

Even if it’s high, but if it’s worse, say 50 percent going to 40 percent, the market really hates that. It much would rather it be negative return going to positive, like negative 10 going to zero. Your stock generally works better in that scenario. It’s what are you doing for me.

Troy Sharpe:
Do you think it’s impacted at all that interest rates are higher? Or do you think it doesn’t matter because the returns are so high, zero percent versus four percent, five percent, eight percent, what’s the difference?

Chris Perras:
I mean, the market would be much higher at zero percent. And I don’t expect them to take it to zero percent. But transitioning to the next positive is we’re going to get a new Fed chair in the next couple months.

We don’t know who it is yet. It sounds like it’s been delayed. It sounds like we’re going to be told next week. They will be more dovish.

My expectation is we eventually do QE4 or something else like that this year, which I’m hoping causes kind of rampant speculation and we make a lot of money for our clients.

Charles and I have seen this before. We’re kind of on the path that we were on during dot-com and these other cycles, but it doesn’t look like we’re in the ninth inning. It looks like we’re kind of midway, maybe the sixth inning of it.

For all those people who call it a bubble, I’ll say, well how come you haven’t been long stocks and you’re just kind of talking it’s a bubble?

Our job is to maximize our clients’ returns in their investment accounts for the risk that we take. And right now, from an earnings standpoint, from an economic standpoint, there doesn’t look like there’s bubble risk in the public stock market.

There might be bubble risk in the private stock market. A lot of that stuff we talked about in a prior meeting with clients last week. Charles and myself went through in 1999. A lot of these companies that are now funded in the private markets used to have come public very early on and we saw them early.

Charles Scavone:
That’s what I was going to say. You bring up a really interesting point, Troy, of what if interest rates were zero.

So it’s effectively saying what if their cost of capital was zero. During the internet bubble, their cost of capital was effectively zero, even though interest rates were higher because the market kept accepting those deals. They kept funding the IPO.

Troy Sharpe:
You’re saying that it was effectively zero because they could borrow it at six and then the price of whatever they were investing in would go—

Charles Scavone:
Well, they weren’t even using debt capital. They were just using straight equity capital, venture. It was.

Chris Perras:
Effectively, dilution was the cost.

Charles Scavone:
That’s right.

Chris Perras:
Towards the end of the dot-com bubble run in 1999, the Fed was cutting rates. They were cutting rates because of Y2K. They were afraid the economy was going to shut down, no computers would turn on, everything would go black.

So they were cutting rates, which helped what caused the 100 percent run in the NASDAQ the last six or nine months of the bubble.

Troy Sharpe:
What are some of the things that could go wrong this year?

Chris Perras:
So the two things that were kind of on the list are it’s the second year of a presidential term, which is usually the sloppiest, choppiest, most difficult.

The incumbent president is trying to get everyone reelected. They’re leaning on policies, but for whatever reason, the market tends to sniff things out and test them.

Usually the first quarter is not particularly good in the second year of a first presidential term, which we’re in. Think about 2018 with Trump. We opened up very strongly in January and then the market tanked like 12 percent in three weeks in February during Volmageddon.

Not saying that’s going to happen in the first quarter, but there are some things out there that there’s risk to the first quarter if something happened. We saw it today. The market was down 1.5 percent intraday and then rallied all the way back.

Charles Scavone:
And then earlier this week, tariff threats and the market in a heartbeat down two percent sort of thing.

Chris Perras:
Yeah, as we wrote in one of our weekend updates, President Trump is back. He’s out tweeting. He’s making changes. He’s very tough, shooting from the hip almost every week.

Right now it looks like Iran is the thing everyone’s starting to worry about for the weekend. So that’s the first one, presidential cycles.

The second one is the market usually tests a new Fed chairman during the first year. That would be the second half of this year. I don’t know why, but they usually do.

You know, the talk on TV is different than people’s actions a lot of times in the stock market. If I was watching TV, I’d probably be negative all the time because CNBC, Fox, and the other ones like to sell fear.

Troy Sharpe:
TV, it’s crazy.

Chris Perras:
Fear catches people’s attention. They stay, they watch. If you say everything’s great, everything’s hunky-dory, people just change the channel. They like train wrecks.

The sentiment data that have come out recently have shown a big uptick in positive sentiment the last couple of weeks, which is historically quite the opposite. When sentiment is low in the stock market, it’s usually time to invest. When sentiment is high, it’s time to start to slow down and curb your enthusiasm.

Charles Scavone:
What we do, we either build internally or vet all the investment products that go into client accounts. But if we don’t have the skill set, to Chris’s point, we will outsource that to whoever we think does the best job at the best price.

Troy Sharpe:
We spent a lot of time over the past month critically looking at some of the most popular private equity investments out there.

It really accelerated in private credit, and we began to see some cracks.

Charles Scavone:
It was private credit.

Troy Sharpe:
We’re talking about private debt, private credit.

We lived this. It was publicly traded before. Now the same risk is being privately traded, which systemically creates a massively bigger potential crisis because publicly we were able to identify it. Privately, you don’t identify that until—

Charles Scavone:
It’s pretty opaque.

Troy Sharpe:
Yeah, extremely opaque.

So yes, we do have access to private equities, but the opaqueness of what’s actually transpiring inside a lot of these private deals is beyond our comfort level to recommend to you in retirement.

For many of you, if you want to take fifty thousand, a hundred thousand, two hundred thousand, a small portion of your overall retirement, and you understand the risks, one of two things is typically going to happen.

By the time a private equity deal comes to you, you’re almost the last person to be aware of it. Your returns are maybe seven to fourteen percent.

One of two or three things happens: you lose everything, your money is tied up and you probably don’t make a lot, or you make seven to fourteen percent. That’s what I’ve experienced throughout my career.

I’ve seen people come in with oil and gas deals, real estate deals. I put $500,000 here, I can’t access my money, it’s tied up, plans aren’t going as expected, or they lost it all.

And the sales pitch is, well, even if you lose money, it’s a write-off. I don’t want to lose half a million bucks and then you tell me it’s a write-off.

We’re retirement planners. Our number one job is to protect your money. Yes, those are available. We have access to them. We have reputable people. But there is a tremendous amount of risk.

Chris Perras:
The other question we got was about valuation metrics like the Shiller CAPE model and the Buffett indicator. We don’t look at either. Neither one is proven really predictive to timing cycles and markets.

I understand Warren Buffett’s valuation technique. Berkshire Hathaway is an insurance company. It’s not really an investment company that much anymore.

He’s getting billions of dollars of premiums every month and has the luxury to let the cash build up. The Shiller CAPE model, I’ll hold my comments because I’ll get in trouble otherwise.