We think that you should already be preparing your portfolio (and mindset) for 2026. How can you do that?

1) Think through what the environment might be like
2) Resize and consider dry powder
3) Carefully choose who you listen to
4) Formulate your own conviction
5) Act accordingly.

Here’s each step broken down.

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We can’t say much with certainty, but one important thing seems highly likely: Trump has strongly signaled that Kevin Hassett will be Jerome Powell’s replacement as Fed Chair, and that probably means more rate cuts (maybe a lot more). We could be looking at a long period of quantitative easing (where the Fed injects liquidity into the market). Lower rates are typically positive catalysts for stocks and crypto.

However, that might not matter if the AI industry crashes. But will the US government allow the AI industry to crash? We don’t know anything for sure, and this is not financial advice, but in our opinion, the US government seems bent on paying off its debt by outgrowing it. Investors who lean toward that interpretation of things may allocate more capital to tech stocks in the coming months; investors who think we’re in for a mighty crash will likely do the opposite. It depends on who you listen to and what you believe (more on that below).

And there are so many factors at play here… like, look at Finance Wrapped’s Top Enemies list:

Berkshire Hathaway’s cash reserves hit a record $318.7 billion last month. That means Warren Buffett is looking for better buying opportunities in markets and is probably anticipating lower prices. However, Berkshire also just made a huge purchase of Google, so the company isn’t entirely bearish on the stock market (or even AI specifically like Michael Burry).

The lesson here is that there are good opportunities available right now, but also that new opportunities might present themselves next year (and if you want in, you have to have cash). Not telling you what to do, just making a point.

AltIndex is highlighting some stocks right now with a high chance to outperform in the coming six months according to its AI model. They span across the AI industry, alternative asset management, a multimedia conglomerate, and more:

Everybody has their favorite voices in the finance space, and everyone thinks someone has the smartest take. In reality, no one is right 100% of the time, and accuracy is even lower in something as volatile as financial markets. But it’s important to know who you’re listening to and why, and to check whether his or her thoughts on where the market will go in 2026 are backed up by logic and reason or just fluff.

Is your favorite finance influencer just saying we’ll hit new all-time highs next year because that’s what people want to hear? Or is he maybe saying that Burry’s right about the bear market coming because he knows it will get views and clicks?

Or is the analysis based on historical data, market signals, and sound macroeconomic understanding?

It’s important to really vet your sources out, because…

Hypothetical: If our sentiment about the market switched every time we read a new tweet or watched a new video about the AI industry, we should maybe not take big swings on individual stocks. That’s not a roast, it’s just that if you don’t have true conviction in your plays (especially in a market as volatile as this one), your P&L might be better off if you just dollar cost average into stocks or ETFs over time.

Again, this is not financial advice, we’re just sharing our opinions. And we think it’s key for traders to form their own opinions. Why? Because at the end of the day, if we lost 50% of an investment on a stock and we only bought it in the first place because an influencer on Twitter said it would go up, that’s ultimately on us. We can’t blame that Twitter account for our own lack of due diligence! (To be clear, Twitter traders can be a great source of trade ideas, it’s just that you need to marry them with research.)

“Conviction” is a word that investors love to throw around but that not many people live by. If you make a plan, you should probably not deviate from that plan. If you do, it might mean that the plan wasn’t that good in the first place. 

This is why it’s better for a lot of people to just invest in index funds instead of picking stocks: because it takes conviction to trade stocks successfully. A lot of people without it just end up buying and selling stocks in reaction to price movement instead of having a longer-term goal in mind.

There’s certainly room for making mistakes with trading, and we aren’t trying to gatekeep the stock market or anything. We just see a lack of conviction in trades, and we think that a lot of people could probably unlock a higher level of performance if they put in the work and research required to form that conviction.

The point isn’t to be perfect, but to put enough effort and work into forming your investment idea that you know why you’re buying a stock. That way, you have a real thesis; and you can only tell if your thesis still holds up or not if you have one in the first place!

At the end of the day, the most important thing is for you to find your own take on what the market will do, determine your conviction level, and act accordingly.

If that’s a low conviction level, maybe it looks like dollar cost averaging some index funds for now (a valid strategy with how crazy things are).

If you have massive conviction, maybe it looks like betting on (or shorting) some of the biggest companies in the world.

It’s all up to you, which is the great (and scary) part. But that’s why we’re here: to bring you the most important market signals every day, and to help make you a better investor. Cheers.

That’s all for today’s special edition. We hope you got value from it. Reply and let us know if you did. 

Until next week,

— Brandon & Blake