Ten Things For 2026 - The Chickens Come Home To Roost

Every year at this time, I like to look ahead to the New Year and make forecasts in the spirit of Byron Wien, who used to put out his “10 Surprises” list. Mr. Wien would put out 10 possible events for the new year that he noted were outside the consensus thinking, but for which he thought had a greater than 50/50 chance of happening. I am not placing a probability on these events, so I will simply call them “10 Things For 2026.” I became familiar with Mr. Wien’s work during the 1990’s when I was still an equity analyst who thought he knew everything and Mr. Wien was an investment strategist for Morgan Stanley, and who knew much more than I did. Most of Mr. Wien’s predictions naturally centered around the financial markets. Mine will include the financial markets but will also include other areas of interest to me.

Overall, I am not optimistic about 2026, either from a financial market perspective or any other perspective. Next year should be a year that this country should be in quite a celebratory mood, as it will mark the 250^th anniversary of the passage of the Declaration of Independence, in which we declared our separation from Great Britain. This was one of the most notable events in all human history, and yet I am not convinced that the citizens of the United States appreciate what our Revolution truly meant. As Abigail Adams wrote to her husband John, “Future generations who will reap the blessings will scarcely know the hardships and sufferings that we’ve endured on their behalf.” We are becoming – or have become – the very people that we rebelled against 250 years ago.

In short, 2026 is looking like a year in which our chickens will come home to roost. Our culture has been building up towards some sort of catastrophic event, or events, for a number of years. We live in a restless and angry age. We are losing our humanity. We are losing our soul. We are normalizing political violence and have become accepting of it. We place a lower value on human life. Our closest and most intimate relationships are becoming transactional.

I know that many will see reasons to be optimistic. I look for AI to continue producing strong results, although we are seeing a noticeable slowing in that sector. Inflation looks like it is well tamed, wages are rising and this bodes well for affordability.

Here are my 10 Things For 2026:

1.      I know that I am way outside the consensus on my first “10 Things” outlook for 2026. The consensus is calling for stock indexes to rise by double digits next year. What I see is that stock market indexes will produce a negative return next year. There are several factors at work here. First, valuations are historically high, specifically with the “Mag 7” stocks that have continued to soar higher. Higher stock prices do not fall simply because they are overvalued. There needs to be a catalyst, a reason to send the stocks down, and that typically comes from either a slowing economy or from some sort of financial crisis. Second, an historically high amount of stock has been purchased on margin (ie debt). Falling stock prices produce margin calls, which makes dramatic drops in stock prices even worse. Finally, the stock market tends to follow a Presidential cycle. During that cycle, the year of the mid-term elections usually produces a below average return, and I believe we will see more of the same in 2026.

2.    Another area where I am outside the consensus is economic growth. According to The Blue Chip Survey, GDP is expected to come in at 1.9% for 2026, which is below average. I think economic growth might be less than that, more in line with 1%. Minds much smarter than me see many tail winds that will produce higher than expected growth with moderate inflation, but I see head winds that could slow down the economy. For the economy to hold up like the experts are predicting, employment will need to hold up. I think employment is highly vulnerable next year.

3.     I talk of chickens coming home to roost in 2026, and this will occur in several places. First, household debt is at record levels and continues to climb. Mortgage debt, auto debt, credit card debt and personal debt are all at record high levels. This can go on as long as employment holds up. However, the latest employment report put the unemployment rate at 4.6%, the highest level in four years. My personal belief is that the economy has been a house of cards for the past 3-4 years, largely because the growth has built by an unsustainable mountain of debt. Job growth in full-time employment has been stagnant during this time and the growth in jobs has come from areas like contract jobs, gig economy jobs and part-time jobs. I would not be surprised to see unemployment rise to more than 5% - 5.5% in 2026, which would produce in spike up in credit defaults and bankruptcies.

4.   Crypto currency will be another area where the chickens come home to roost. Bitcoin is down about 8.5% on the year as I write this, and this is an asset that can easily see a big drop in a hurry. As anyone who has ever sat in finance class at an accredited university knows, the intrinsic value of any financial asset equals the present value of the future cash flow streams. The intrinsic value of bitcoin is literally zero. What backs its valuation? Air? Right now, this is an asset that looks like it is dependent on the greater fool theory, and the world will be running out of greater fools in 2026 (the world will not be running out of greater fools – those greater fools will be running out of money). Any flight to quality, which I believe we will see in 2026, will not include Bitcoin or any other crypto currency.

5.   Gold and silver will be two assets that will hold their value in 2026. While both have experienced tremendous rallies in 2025, a flight to quality will include both assets. Both assets tend to spike up in price during inflationary times. I do not see inflation being a problem in 2026. I do see inflation staying in the 3%-3.5% range for the year, which is higher than the fed would like. However, given the struggles that we will see in other areas of the economy, I do expect to see interest rate cuts during 2026.

6.    I really hope I am wrong with this one, but I think we will see a significant act of political violence in 2026. Perhaps multiple acts. We live in a restless and angry age, one in which people feel justified in committing acts of violence.

7.    In the fall mid-term elections, I expect the Democrats will retake the house and I believe the Republicans will hold onto the Senate.

8.     By the end of 2026, I expect that we will see increasing calls for President Trump to resign coming from an unexpected source: Republicans. The President gave us quite a glimpse into this with his appalling reaction to the tragic death of Rob Reiner, which he managed to make about himself. Republicans widely condemned the President’s reaction. When confronted about this by a reporter, Trump doubled down on his awful take. I get that Mr. Reiner said awful and nasty things about the President on social media. But when you are the President, you must be the bigger person and take the high road every time. The overall reaction was not one of an emotionally and mentally healthy person. Reactions like this will become more frequent and equally as extreme, if not more so. Of course, President Trump would never consider resigning. This is akin to losing in his book and he honestly does not have a mentally healthy approach to losing.

9.  The Ohio State Buckeyes will repeat as college football champions defeating the Texas Tech Red Raiders, and the Los Angeles Rams will win the Super Bowl over the Houston Texans. The Michigan Wolverines will beat the Arizona Wildcats for the college basketball national championship.

10.  Venezuela promises to be a hot spot in the world in 2026. This is ultimately about the oil. Venezuela has the largest proven reserves of oil in the world. Larger than Saudi Arabia, larger than any Middle Eastern country and most definitely more than either Russia or the United States. And yet, their economy is on the verge of collapse (how does that happen with that much oil? – See below)

I want to close out with thoughts about a couple of things that made advances in the marketplace of ideas in 2025. When I was a fresh-faced rookie equity analyst back in the early 1990’s, I was given a great piece of advice. That advice was that these are the five most dangerous words on Wall Street: “It is different this time.” The words not only apply to Wall Street, but to all parts of life. Yes, people have different tools and different toys at their disposal, but human nature has not changed since Biblical times and will not change in the future. When you argue that it is different this time, you are saying that human nature will change. It never will. I thought about this as I saw two recycled – and failed – ideas from the past come forward again in 2025. Those two ideas are: 1. Tariffs and 2. Socialism. President Trump has made tariffs a foundational piece of his economic program. But I do not think he really knows what a tariff is. A tariff is a tax, pure and simple. It is a tax paid by the end consumer. I believe that President Trump thinks that other countries will dip into their Treasuries to pay the tariffs. Nothing could be further from the truth. There is not one school of economic thought that says that higher taxes – whether it is a tariff, a higher income tax, or an increase in any other tax – produces widespread prosperity. In fact, every school of economics believes that taxes hold down economic growth. As for socialism, it always sounds appealing in theory, but in practice has produced miserable results. In the present debate of “Socialism vs Capitalism,” I will always side with capitalism. Socialism revolves around state ownership of the means of production, and governments have proven them highly inefficient allocators of capital. A recent article (https://bit.ly/4saAppt) explains it well and echoes my beliefs on this subject. I am a big believer in free markets and free enterprise. I am also a big believer in the idea that human nature does not change.

I feel as though I must apologize to the reader for such a pessimistic outlook for 2026. I hope that in many ways, I am wrong in my outlook. If you made it this far, thank you for reading.

I wish everyone a blessed 2026 with much love to all.

Where Does The Love of God Go?

 

This past November 10 marked the 50^th anniversary of the sinking of the freighter, The Edmund Fitzgerald on Lake Superior. Twenty-nine men lost their lives as the ship sank to the bottom of the lake. This event was forever memorialized about a year later as Canadian folk singer Gordon Lightfoot (1938-2023) wrote, recorded and released his hit song, “The Wreck of The Edmund Fitzgerald.” This is one of the most haunting songs I have ever listened to, but one part of the song really stands out to me. He has just sung about the final wreck of the big ship and then there is a musical bridge which is both eerie and terrifying at the same time. The bridge fades out, the music softens and Mr. Lightfoot comes back and sings this line: “Does anyone know where the love of God goes when the waves turn the minutes to hours?”

Gordon Lightfoot was a terrific storyteller and this song was a masterpiece. The question he asks above hits hard. For those raised in church, the easy answer is that God’s love is always there and never leaves. Our God is an awesome God! Yet, the easy answer leaves you unsettled and unsatisfied when life hits you hard and knocks you down. For me those moments when “the waves turned the minutes to hours” were when Angie died. All of us have moments like that, whether it is tragedy or betrayal or something else sinister. Like I am prone to do, I turned to the word of God for answers. Again, what I found was troubling. 1 Kings 19 tells us how the prophet Elijah ran as far as he could from Queen Jezebel (that name just sounds wicked) after she had sent a messenger to Elijah. The messenger relayed that the Queen was sending an army of men after him to slaughter him in the next 24 hours. Elijah had slaughtered the prophets of the god Baal after challenging them to call their god and they failed, as told in 1 Kings 18. It is quite a humorous story. Then we get to verses 11 & 12 in Chapter 19 that say, “The Lord said, “Go out and stand on the mountain in the presence of the Lord, for the Lord is about to pass by. Then a great and powerful wind tore the mountains apart and shattered the rocks before the Lord, but the Lord was not in the wind. After the wind there was an earthquake, but the Lord was not in the earthquake. After the earthquake came a fire, but the Lord was not in the fire.” I have always been told that I worship an omnipotent God, that he is everywhere all the time. Yet this tells us that He was not in the powerful wind, that he was not in the earthquake and he was not in the fire. Where was He? And where was He when Jesus cried out on the cross, “My God, my God, why have you forsaken me?” (Matthew 27:46 & Mark 15:34) And no doubt, God was not in the storm that night on Lake Superior. Verse 12 goes on to tell us that the voice of God is a whisper, implying that we need to find ourselves in a quiet moment to truly hear His voice.

I will state here that I do not doubt that God loves me, that He is Almighty and all powerful. But, sometimes I have questions. We all have questions, and that is good. For the time being I leave this question without a good answer. And sometimes not getting a good answer is all I get for now. I keep pursuing the answer, knowing by faith that the answer will be revealed to me.

I will close out with another master storytelling song from Mr. Lightfoot, my personal favorite of his, “Carefree Highway.” It is a story of reminiscing about a love lost. I think of the Carefree Highway in Arizona, a 30-mile stretch of road that is north/northwest of Phoenix. For those not familiar with the highway system in Phoenix, they name their highways. If you are driving on I-10 in Phoenix, you are actually on the Maricopa Freeway (Phoenix is in Maricopa County, Arizona). I have spent a small portion of my life in Arizona, particularly the Phoenix/Scottsdale area and I have many fond memories. Everything from a summer job while I was in college (1988) to a guys’ weekend golf trip to spring break trips with my sons. Obviously, I highly recommend Arizona. The Grand Canyon remains the most amazing place I have ever seen. Still on my bucket list is a trip to Sedona. Back to Mr. Lightfoot’s song. In it, he sings an unforgettable line to me: “Now the thing that I call living is just being satisfied with knowing I got no one left to blame.” So give me a convertible (I’ll settle for an open sunroof), an open stretch of highway basking in the sun, some good tunes turned up loud and not a care in the world. Carefree Highway, let me slip away on you!

Raiders and Reunions

This past weekend, I attended my 40th high school class reunion (Shawnee Mission South class of 1985). Something happened at the events that I attended that left me amazed - I thoroughly enjoyed myself. Before I go further, I will happily acknowledge that those who put on the events that I attended - particularly the main event on Saturday night - did a terrific job and put on a wonderful reunion. They deserve all the credit in the world, and I am happy to throw that credit their way.

This was not about rehashing all the stupid stuff we did in high school. I'm sure there were some memories recounted during the evening, but it was about connecting with people and where they are today. There were plenty of smiles, laughs and hugs all around. These were all very good things. I enjoyed conversations with people that I barely said two words to in high school. But the connection today, even though it was only a few moments, was priceless. That was then, this is now. I also enjoyed seeing a few people for the first time since high school and hearing about their lives today.

I am not the same person that I was forty years ago, and for that I am grateful. If I am the same person today that I was then, what was the point of the last forty years? Each of us has had the whole range of experiences that have shaped who we are today. And it is a little bit different for each of us. And yet, in so many ways, we are all very similar. I loved hearing about it all. My favorite observation for the evening came from the lady who said that all she wanted from the reunion was the see everyone and know that we are happy in life. So simple, yet so beautiful. I completely agree with that sentiment.

Thank you to all who said hi and took the time to visit with me. I enjoyed the moments and enjoyed hearing about where your lives are these days. Thank you once again to those who organized the events of the weekend. It was a resounding success! We were a damn good class and for those few moments, I truly understood that there is nothing greater than a Raider!!

Letting Go

"Memories
Light the corners of my mind
Misty watercolor memories
Of the way we were"

Barbara Streisand, The Way We Were, 1973

I have been undergoing a massive downsizing. Going from about 3,600 sq ft to 800 means you learn about things like minimalism and you learn what you really need and do not need. Downsizing can also be quite a spiritual cleansing as you clear out the physical clutter in your life. De-cluttering does not mean just get rid of everything. You learn what things you have truly serves your soul and has value, purpose and meaning in your life.

This weekend has been an example of this in my life as I went through countless sympathy cards from 25 years ago. I realized something as I looked through them - they were no longer comforting. The cards no longer contained any value or purpose in my life. Please understand that I am forever grateful to those who took the time to express their condolences to my family and me during that devestating time. The words meant a lot to us all and provided much needed comfort. The cards and letters were eventually gathered up and buried deep in the crevices of excess storage, not to be seen again until this past weekend. I knew as I read them again that they were no longer needed. My life has moved forward, my kids' lives have moved forward, and that is good. The cards, letters and their words were good in that time and space. I am no longer in that time and space. All the condolences could do was take me back to that time that I would rather forget. 

I did choose to keep three letters which are still meaningful. The first was from one of Angie's former roommates at Baylor, who addressed the letter to my sons. The letter brought out Angie's ability to love deeply. The second was from one of her former colleagues at Ecolab who really highlighted the respect she garnered in her profession. The third was from The First Baptist Church of South Pittsburg, Tennessee. This church had a ministry at the time that would send volunteers to local hospitals to visit and bring comfort to those who were suffering. There were several members of that church who came to the hospital and played with the boys (keeping them distracted) while I was being treated for a broken collarbone. The pastor's wife, sizing up the situation, went to Wal Mart and bought some overnight clothes for the boys and grabbed some her husband's clothes for me (apparently, we were roughly the same size). I will never forget the kindness and generosity of those people who came and stayed for several hours. In my attempt to repay their kindness (which I could never truly do), I sent a donation to the church and a check to the pastor's family to repay them for their out-of-pocket expense. 

I received a letter back from the church, signed by the pastor, thanking me for my donation. As I read it further, I was struck by the fact that he was hoping to purchase hand bells and create a permanent hand bell choir that would make beautiful music for many years. Hand bells really do make a beautiful sound, and when done well are joyful. Angie loved hand bells and to think that out of something so devestating, something beautiful could arise does bring a sense of happiness to my soul. Another thought has crossed my mind. I never did find out if the church purchased those hand bells. I hope they did!

One final thought. I would not recommend listening to Barbra Streisand singing "The Way We Were" while de-cluttering and parting with things from your past. It is a beautiful song, and Ms. Streisand's vocals were flawless in singing this song. But it will tear your guts out.

Scattered pictures

Of the smiles we left behind

Smiles we gave to one another

For the way we were

The Significance of Today

 

Today, the Kansas City Chiefs are playing for their third consecutive Super Bowl championship, a feat never before accomplished. However, the significance of today goes back over 50 years for me. I first became a Chiefs fan back in the early 1970’s when Hank Stram was still the Head Coach and Len Dawson was the Quarterback. The Chiefs had just begun a downward slide that would last in one form or another for 50 years.

I was there for the 18 seasons between 1972-1989 when the Chiefs appeared in just one playoff game. When the Chiefs were coached by people like Paul Wiggin, John Mackovic and Frank Gzanz, and presided over by GM Jack Steadman. I was there during the Marty Schottenheimer years where we enjoyed regular season success but suffered heartbreaking playoff defeats. Marty also suffered the same fate in Cleveland, producing regular season success and two heartbreaking defeats against Denver in 1986 and 1987. In Kansas City, Schottenheimer took the Chiefs to the doorstep of the Super Bowl in 1993 before losing to the Buffalo Bills in the AFC Championship Game. Then came crushing defeats against the Indianapolis Colts in 1995 and the Denver Broncos in 1997. Thus began a 21-season stretch between 1994-2014 where the Chiefs would not win a single playoff game. This would include home playoff losses to the Colts in 2003, and the Baltimore Ravens in 2010 and an inexplicable loss to the Colts (they sure show up here a lot) in 2013 where the Chiefs blew a 38-10 lead. This was another lost period for the Chiefs as they were coached by the likes of Herm Edwards, Todd Haley and Romeo Crennel. Then came more heartbreak with home playoff losses to the Pittsburgh Steelers in 2016, the Tennessee Titans in 2017 and the New England Patriots in 2018.

The New England defeat in the 2018 AFC Championship Game still ranks (and will probably forever rank) as the most heartbreaking defeat I have experienced as a Chiefs fan. Nothing will ever top the Royals-Yankees Game 5 in 1977 in the heartbreaking defeat department, but this was a very close second. I watched with absolute joy as the Chiefs intercepted a Tom Brady pass with about 1:30 to go in the game and the Chiefs up 28-24. Only to watch it all evaporate with an offside penalty on Dee Ford that gave the great Tom Brady the opening he needed. Needless to say, Brady and the Patriots took full advantage. What would it take for the Chiefs to break through? How much more could a long suffering Chiefs fan take?

This is where I close with some reality (I am forever a realist).  As a Chiefs fan, with this kind of history, I have felt eternally blessed by the past six seasons. We have all certainly been blessed. There are plenty of others who are much more die hard fans than I, who have a longer history with this organization. Today is for these fans. I know that no fan of any team is entitled to a winning season, much less a championship season. At the end of the day, this is just a football game. I do not put my hopes and dreams in a bunch of football players, or in a football team. To see a team that I have rooted for all my life have a chance not only at a championship season, but to make history is just cool! GO CHIEFS!!