Investment Outlook for 2026

This time last year, I sat down to write my 2025 investment outlook amidst a strange mix of optimism and skepticism. On the one hand, investment banks were optimistic about the year ahead, with their view obscured by recency bias, as it has been in almost every year since I’ve been writing my annual investment outlook. Recency bias is the cognitive tendency to believe that recent events will occur again in the near future, often leading to inaccurate assessments. The average prediction from the major investment banks was for the S&P 500 to rise 12.46% to reach 6,635. Yet there were concerns about the surge in AI-related stocks and the impact on already stretched valuations. This led to fears of a possible dotcom-style crash in 2025. Meanwhile, the potential for a full-blown Trump trade war was a shadow hanging over the market as we entered 2025.

However, as it turned out the majority of investment banks weren’t optimistic enough.