Stock Talk - 2026 Patience: Stock Market Update, Friday January 9, 2026

Starting point is 00:00:00 Okay, Mr. Ministers, in the last four weeks, our team has released our thoughts on 2026 and what might be in store for the equity markets. If you've been watching our content, you'll know that our team remains constructive overall for equities for the total of 2026. However, we are expecting a heightened level of volatility in the financial markets, particularly in the first half. We titled our overall outlook. In some years, it's harder to ride in the bowl. Given my love at 80s rock music and bands, we had a theme song for 2006 outlook, it would probably be patience. The 1988 hit by Guns and Roses. Why? Patience is a rock power ballad with navigating a difficult relationship, emphasizing that love requires time,

Starting point is 00:00:41 understanding, and calm, taking it slow some time approach for things to ultimately work out. Man, that sounds to me like a great recipe for investing most years. Sometimes, on rare occasions, it's better to act fast and put more dollars to work aggressively and walk away, and the stars align. the investment opportunities abound, the odds for higher than historic returns, are an investor's favor. We've discussed in our previous videos, we don't expect the beginning of 2006 to play out as a move fast to invest in markets. There's a repeat for the great data from Charlie Beello on the annual drawdowns and their frequencies in the S&P 500. Look at the above chart. Minus 5% declines in the SP 500 happens nearly every year, minus 10% declines happens every 18 months,

Starting point is 00:01:27 The last decline we had, over 6% was back in April of 2025. The bear market declines of minus 20% happened a little over once every four years. Or recessionary declines of 30% happens one out of 10 years. What issues as well as what opportunities the oil purpose investment team thinks the coming year might present investors. There are times when tactically investing odds favor, going fast, investing more. There are other times like going into 2020, it was time to curb your enthusiasm and proceed more cautiously.

Starting point is 00:02:02 Our team is thinking 2006 will likely be one of those more volatile years. We listed our four reasons for the non-linear 2026 in our last few videos. Let's review them again. First, it's the second year of a presidential term and a midterm election year. The gains in president's second year from 1940s to a 2024 period per Merrill Lynch has been only 4.22% net. than half the average annual SB 500 gain of about 10%. Remember, these are point-to-point returns at the start and end of the year,

Starting point is 00:02:36 and they don't include entry year highs and lows. That is, they don't include volatility throughout the year. Here's Merrill's data set. You'll notice in addition to lower overall returning years, historically, almost all the net gain of the year occurs in the fourth quarter. Besides a midterm presidential election cycle in 2006, historically, the market has hit the history. of testing a new Fed chairman during the first term.

Starting point is 00:03:00 Investors should be wary of late first quarter and second quarter of 2006. What am I talking about? President Trump is looking to nominate a more doveish Fed chairman as Powell exits in the first half of the year. While this is likely to be bullish longer term for equities, doesn't guarantee a smooth ride during the year itself. The chairman is just one vote. And while they have sway, they don't cast votes for others. Historically, the markets test the new Fed chair early in their term.

Starting point is 00:03:27 Here's a list of recent FOMC chairs and what happened during their first 12 months in the lead. Lots of negative peak to drop numbers in that dataset. A new more double-edged-fed chair would likely be cheered by the markets for a while. I don't think it'll be a straight lineup in 2006. That likely more would be a second half-26 timing. Another headwin in the first half could be a seasonal uptick in the inflation numbers here in the U.S. as an uptick in market inflation expectations in the early ones. of the year seems to be likely. As we've discussed before, inflation ratings in the U.S. tend to be

Starting point is 00:04:03 quite seasonal, rising in the first quarter and slowing the rest of the year. This serves over a catch-up effects of goods tariffs and higher New Year labor costs and stratospheric medical costs. Increase could investors and consumers slow down just as investors begin to worry about Fed independence under a new chairman in the first quarter. Lining up for a stronger mid-year move in the market is progression of earnings in the S&T 500. Currently, FACSA data has APS forecast for the fourth quarter, quarterly earnings expectations of about $18.5. per share up over 17% year every year from the fourth quarter of 2025.

Starting point is 00:04:46 Remember investors over longer timeframes. Stocks follow earnings. And historically, unlike market bottoms that anticipate recoveries, the market doesn't historically peak in front of earnings but rather coincidentally. As one can see, there will be big pushes of bulls in 2006. One of the things that's top of our mind for our investment team is sustained, heightened market volatility throughout most of the year.

Starting point is 00:05:10 And with that, the need for investors to add a little patience, at least a little more than in most other years. Keep following our investment content on our Oak Harvest website, our YouTube channels, and we'll be addressing more of our outlook in the next few weeks. And tune in to our live stream of YouTube with Troy, Charles and myself in our 2006 market outlook on January 29th this year. Investors, whether 2006 plays out to be a balking bull ride or something different, the entire Oak Harvest team is here for our clients doing what we can, plan for you, your family's future, regardless of what

Starting point is 00:05:44 stage you're at in your career or 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.

Starting point is 00:06:21 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.

Stock Talk - 2026 Patience: Stock Market Update, Friday January 9, 2026

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