Here’s a riddle for investors: What will the 2026 stock market give you more of – while also giving you less of it?
The answer: This bull market.
After a roaring 2025 that shocked almost everyone (excepting yours truly, see below), expect more gains – just don’t expect too much. No boom, no bust. A choppy year with early political headwinds flipping to tailwinds late – and rewarding patience.
First, my 2025 report card: Last January, I told you sour sentiment, chiefly in Europe, teed up a third straight big year. I forecast 15% to 25% gains or better for world stocks, with Europe leading. And so it was. World stocks topped 21%. Europe soared 35%, nearly doubling America’s 18%.
Now? The bull’s slowing down – although reports of its death are greatly exaggerated.
Pessimists claim the S&P 500’s 86% surge since 2022’s end is “too far, too fast”. They see stocks as fragile and frothy, fearing that US AI hype portends Tech Bubble 2.0.
In a word: No. First, this bull market is vastly broader than tech. Look globally. Of 47 nations in MSCI’s All-Country World Index, 35 hit record highs in local currencies in 2025 – 30 of them in the fourth quarter.
Many of those nations have zero tech. Oh, and five of the supposedly “Magnificent Seven” US tech stocks actually lagged the S&P 500, which trailed global stocks.
“Too far, too fast” worries also overlook something basic: While US stocks annualized 10% returns over the last century, that includes bull and bear markets. During bull markets, they annualized 23%. Annualized returns the last three years? Exactly 23.0%. Average.
2026 should land between those averages – above the long-term overall average, but below the average bull market year.
As for sentiment, recent gains have stoked spirits – somewhat. Of 72 trackable professional forecasts, only four see US stocks down more than 1% in 2026. Few real pessimists. Forecasts cluster around the median, 9.6%. Few real optimists.
Europe? Gloomier. Of 17 strategists forecasting the Euro Stoxx 50, the median is 5.3%. The highest: 10.5%. Pervasive pessimism favors Europe – again.
Note that the consensus of professional forecasters doesn’t happen. I proved that decades ago. Why? Similar training leads most to similar conclusions. Career risk incentivizes herding. (Being wrong is fine. Being wrong and alone? Career suicide!) Markets pre-price the clustered consensus, then do something else.
That rules out zero to 10% returns. Hence, two probable outcomes: 1) Stocks fall, or 2) Stocks post above 10% gains. Fundamentals favor the latter. The global yield curve, a key loan growth motivator, is nicely steep. US loan growth doubles the year-ago pace. The eurozone’s is the highest since early 2023. Britain’s is accelerating.
More lending fuels economic growth. Yet economists fret recycled bugaboos like tariffs and inflation, forecasting pedestrian US growth – and worse abroad. European expectations remain dour. That means easy to beat. Bullish!
Politics? Midterm hype will dominate. Expect a slog early, but later a “midterm miracle,” which goes like this: Early in midterm years, extremist campaign rhetoric spurs fear. Stocks grind. Then midterms arrive. The president’s party routinely loses seats, spurring increased gridlock.
Stocks love that. Why? Big legislation stokes uncertainty, rattling markets. Midterms kill that risk.
Hence, the S&P 500 typically chops to modest returns in midterm years’ first three quarters, rising in only 48%, 56% and 60% of them, respectively. Then, in Q4, stocks celebrate gridlock’s arrival, rising in 84% of Q4s and averaging 6.4% gains. Stocks climbed in 88% of Q1s and Q2s the following year, too.
Republicans’ current slim congressional margins mean Democrats could flip one or both chambers. Maybe you like that, maybe you hate it, but one thing is clear: Stocks love gridlock.
So be patient, and don’t let early 2026 wiggles shake you off that bull: Yet another “miracle” is likely on the way.
Ken Fisher is the founder and executive chairman of Fisher Investments, a four-time New York Times bestselling author, and regular columnist in 21 countries globally.
