Stock Talk - 1H26 Stock Market Outlook: Part 1 -Cycles and Seasonality

Episode Date: December 19, 2025

Here's your sneak peak of what our team expects for the 1st half of 2026 in the markets. I'll walk you through what investors can realistically expect when it comes to equity returns, market drawdowns, and volatility, and how those cycles tend to show up over time. You will come away with a clearer understanding of how often pullbacks actually occur, why volatility is a normal cost of long-term investing, and how historical seasonality, market cycles, and presidential terms may influence the path ahead into early and mid-2026. I also explain how our investment team thinks about tailwinds, headwinds, and elevated volatility, not to make predictions, but to help you build better perspective, discipline, and visibility around risk and opportunity so you can stay grounded through both calm markets and bucking bull markets.   About Chris Perras, CFA®, CLU®, ChFC®, Chief Investment Officer: As CIO, Chris is the lead investment strategist and director of research at Oak Harvest Financial Group. Chris develops the firm's core market outlook, putting his decades of experience and expertise to work for our clients. He hosts Oak Harvest's podcast, "Stock Talk," available on the website with new episodes each week. He completed his undergraduate studies at Georgia Tech, and went on to obtain an MBA from the Harvard Business School. Driven by a desire to maximize his knowledge and skill set, he acquired financial planning and investment management qualifications, becoming a Chartered Life Underwriter (CLU®), a Chartered Financial Consultant (ChFC®), and a Chartered Financial Analyst (CFA®).   Stock Talk is a weekly vlog/podcast dedicated to discussing the Oak Harvest Financial Group Investment Team's perspective on what's happening in the market. Hosted by Chief Investment Officer Chris Perras, each episode brings you our views on stocks, the market, and the economy — with a little education thrown in for good measure. Listen each week and help stay connected to your money!   Do you need a retirement plan that goes beyond allocating funds to truly fit your needs? We can help you create a retirement life plan customized for your retirement vision and legacy. Call us at 877-896-0040 or fill out this form for a free visit: https://click2retire.com/lets-connect   Important disclosures: Content of Oak Harvest podcasts expresses the views of the speaker and is for informational purposes only. Oak Harvest believes that any data, articles, or information cited are reliable at the time of creation, but does not warrant any information contained herein to be correct, complete, accurate, or timely. References to third-party analysts should not be seen as an endorsement of their views or recommendations, and you should do your own research before investing. The views and opinions expressed herein may change without notice. Strategies and ideas discussed may not be right for you, and nothing in this podcast constitutes personalized investment, tax or legal advice, or an offer or solicitation to buy or sell securities. Indexes such as the S&P 500 are not available for direct investment and your investment results may differ when compared to an index. Any specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing involves the risk of loss, and past performance is not indicative of future results.  

Investors, the reward for investing in equities, it's a return. The risk is enduring bouts of downside volatility at times. Here's the data we've previously shared from the S&P 500 and Charlie Bielo of drawdowns and their frequency. Take a look at the chart. A minus 5% decline in the SV500 happens nearly every year. Minus 10% decline usually happens a bit over once every 18 months. Bare market decline defined as minus 20% happens a little over once every four years. Investors, long enough. Expect at some point during your lifetime the S&P 500 will lose over half its value. Minus 50%. Given its rarity, let's call that one a generational decline. With these downturns in mind, we're going to add some details to last week's sneak peek

to El Corvis' first half market outlook. This week, we are covering seasonality and cycles and how they might both be a tailwood at the beginning of the year, but a headwind throughout most of the mid-year. Our goal is not to be. precisely accurate, but to give Oak Carver's clients and prospects an idea of what issues, as well as what opportunities our investment team thinks, the first half of 2006 might present investors. Some years, like 2017, lack volatility. The bull strolls out at the gate, and your ride is over in eight seconds. An investor looks back at the year, looks at their portfolio, and it looks like nothing eventful happen, but your portfolio stocks gained. More frequently, however, like

Like last year, 2025, you look back in the markets and your investments endured a few bouts of downside volatility. Most years, even in strong bull markets, the bull tries to buck investors off its back onto the ground. Hopefully, investors at the end of the year are not gourd and bloody. For the early first half of 2006, our team is thanking the tailwinds for the current bull market extend, pushing the major indices higher in early first quarter. Historically, late December, and very early first-quarter seasonality is positive and on investor's side. Here's the monthly return data chart. Merrill Lynch dating back to 1927.

December tends to be a strong positive return month, but positive return is generally all back-end loaded. The second half of December stands out as the strongest second half month of the year with most gains coming after the 15th trading day in December, which happens to be today. Here's the intrammonth return chart. from December, from market gauge, and seeking alpha.

Longer time periods also look similar. You can see the first quarter of the year is historically strong, averaging about a 3% gain through April. This historically strong seasonality owes well for returns in the next few months. Besides the much-discussed positive seasonality of first-quarter and fourth-quarter stock performance, with recent strength of the S&P 500 from April through October 2025, registering seven straight monthly gains with a 20% gain. This two has been historically a good forward return profile for investors.

Historically, what comes after such a rally per data from RBC and the market stats average. S&P 500 records a positive return in the next three months after a normal flat to down period of four to six weeks. This aligns with current market seasonality as the SEP 500 has now gone nowhere. since late October, it would place the market in a position to re-accelerate higher after December option expiration starting next week should history hold true to form. Investors, the above data would triangulate the S&P 500 to peak in late January, February period between, say, 7166 to 7266, up between 5 to 6% from where this was written, and up about 3 to 4% above previous all-time highs. These stronger returns appear not to be random,

events. These winning streets have occurred when earnings are strong, equity is high, where major shifts are driving markets. Today, it's the AI CAP-X spending, it's the easing financial conditions, and a resilient consumer. As always, history is not a guarantee. Festers, unfortunately, while seasonality is a tailwind for equities over the next few months, 2026 does usher in the dreaded second year of a presidential term. As we've discussed in previous election cycle pieces. A second year is historically the worst of a four-year presidential cycle with a mere 3.3% average return during the year and a positive return only 54% of the time since 1929. Here's the data from Charles Faw and Ned Davis Research, as well as the monthly

data from Merrill Lynch per Policiana. Take a look at the data while you have a chance. Even if we look at more recent data, from the 50s forward, the gains and President's second year from, say, 1950 through 2020 period, have been only about 4.6% less than half the average annual S&P 500 gain of about 10%. Investors, remember, these are point-to-point returns at the start and at the end of the year, and they don't include entry-year highs and lows. This history, combined with our team's outlook for elevated volatility for most of 2026, makes the case for trying to be a little more tactical in one's investments in 2006.

Throw in the presidential cycle equation the market's history of testing a new Fed chairman during their first term, investors should be wary of the middle few quarters of 2006. What am I talking about? I'm talking about here's a list of recent FOMC chairs and what happened during their first 12 months in the lead. Lots of negative peak to trough numbers in this list for winding up this video. I'm sure a few viewers are wondering about this outlook and forecast might compare versus the prior.com investment cycle from 1995 through 2000. Specifically, how might the first half of 2006 play out if markets continue to move along a very similar path as the one we've laid out in previous videos the last seven months since the current April 4th, 2025 tariff tantrum low, overlaid with a rally in dot com after October 8th, 1998, long-term capital management,

bottom, and blow-up through the end of dot-com boom, which was in 2000. Vestors, here's the updated overlay of those two time periods. Yes, still generally traveling along the same path in both price and time. That's good news and bad news sometime, if it continues. A similar outcome prevailing in the first quarter would triangulate to over 7,200 plus in mid-first quarter of 2026 for the S&P 500, followed by a sharp falloff into mid-year. I'm still finding this to be an amazing replay of investor behavior or just an amazing total coincidence, but it bears watching still as what events may slated to take place in early mid-year, 2006, right around when a future low should show up if this cycle continues to reply.

Yes, a new Fed chair appointment hits the FOMC. One can see there will be pushes and polls in 2006, and we'll address more of these in each of our upcoming videos. For 2006, one of the things that's top of mind for our team is sustained heightened heightened market volatility. The good news is our investment team has experience in these types of volatile and bucking bull markets. Remember that elevated volatility also means elevated opportunity for longer term investors. Historically, investors' biggest incremental returns come from investing when volatility

is high, not when it's low. What does all this mean for you? investors, our advice is for you to keep following our investment content on Oak Herbis website and our YouTube channels and we'll be addressing more of our outlook in the next few weeks and tune in to our live stream, YouTube, or our 2026 Market Outlook on January 29th. Investors, whether 2026 plays out as a bucking bull ride or something different, the entire Oak Harvest team is here for our clients doing what we can to play for you, your family's future, regardless of what stage you're at in your career,

in your retirement. All content contained with an Oak Harvest podcast expresses the views of the speaker and is for informational purposes only. It is based on information believed to be reliable when created, but any cited data, indicators, statistics, or other sources are not guaranteed. The views and opinions expressed herein may change without notice. Strategies and ideas discussed may not be right for you and nothing in this podcast should be considered as personalized investment, tax or legal advice, or an offer or solicitation to buy or sell securities. Indexes such as the S&P 500 are not available for direct investment, and your investment results may differ when compared to an index.

Specific portfolio actions or strategies discussed will not apply to all client portfolios. Investing involves the risk of loss, and past performance is not indicative of future results. Thank you.