Every year, a small cadre of investors truly excel at anticipating the future. They combine deep experience, world-class research, and intellectual humility in a way that occasionally allows them to foresee market turns before they become visible to most. Their insights are valuable. But they are the exception, not the norm.
For most of the industry, forward-looking commentary reflects a mix of analysis, educated guesswork, marketing incentives, and consensus thinking. That doesn’t make these investors unskilled; it simply reflects the reality that markets are adaptive systems shaped by unpredictable events, political shocks, and behavioural dynamics. Rigorous analysis is more often than not overwhelmed by randomness. It reminds me of Jane Bryant Quinn, who said: “The rule on staying alive as a forecaster is to give ’em a number or give ’em a date, but never give ’em both at once.”
The danger arises when predictions are treated as certainties rather than probabilities. With that in mind, investors are better served by examining the structural trends already shaping 2026 rather than placing faith in confident forecasts. Here are the trends I consider as I prepare my portfolio for 2026:
A supportive U.S. policy environment – but economic cycles still pose risks
The U.S. enters 2026 with monetary, fiscal, and regulatory conditions that are broadly market friendly. Rate cuts are emerging, fiscal policy remains expansionary, and regulators have adopted a more constructive stance toward business. This creates a favourable backdrop for risk assets, but it is not a guarantee of stability.
Economic cycles do not extend indefinitely simply because policy is helpful. A central vulnerability lies in the labour market, where job creation is slowing and wage growth is moderating. Should employment weaken further while inflation remains sticky, it could offset easier policy, squeeze consumer spending, and expose fragilities within corporate balance sheets. Late-cycle risks tend to accumulate quietly and reveal themselves abruptly.
Technology and AI advances are exciting, but not all create investor returns
AI continues its rapid expansion. Companies are deepening adoption, building out data-centre infrastructure, and beginning to capture real productivity gains. The technological trajectory is unmistakable.
But technological importance does not automatically translate into investor returns. When optimism is high and valuations are stretched, the real question is not whether AI will matter, it obviously will, but whether current prices already assume too much, especially in a leveraged environment. Markets have a long history of overpaying for aspiration and rewriting expectations later. The megatrend is powerful, but investors should expect a wider range of outcomes, more volatility, and the near-certainty that some of the biggest winners are not today’s most obvious names.
Geopolitical tensions persist, but credit conditions are the slow-burning issue
Geopolitical frictions will remain elevated in a world of weakening power structures. Most conflicts will produce short-lived volatility rather than sustained economic harm, unless they disrupt energy flows or critical supply chains. Conflict in Venezuela, for example, could escalate and disrupt diesel markets, and on a regional basis ammonia supplies. China–Taiwan remains the key low-probability, high-impact risk.
That said, the more enduring and under appreciated threat lies in credit markets.
Over the past decade, U.S. corporates borrowed aggressively at ultra-low rates. Much of this debt now matures in 2026 and 2027, exactly when refinancing costs are meaningfully higher. This raises the likelihood of restructurings, credit downgrades, and pockets of stress across corporate America.
Geopolitics captures headlines; credit cycles often dictate market turning points.
Rising domestic pressure on President Trump – heightening policy volatility
Although headline inflation is easing, American households still face high costs in housing, services, and healthcare. Additionally, many key policy platforms of the current U.S. administration, including immigration restrictions, tariff increases, fiscal easing (tax cuts and spending expansions), and a push for more monetary accommodation, are inherently inflationary. If these pressures persist, domestic dissatisfaction and internal Republican tensions could build throughout 2026.
In such an environment, policy actions may become more reactive, especially around trade, immigration, regulation, and global relations. Policy volatility does not automatically cause market weakness, but it increases uncertainty and makes prudent investment in growth more difficult. When political tension meets late-cycle economic fragility, the interactions can be unpredictable.
South Africa’s investment story improves, but credibility remains the key risk
South Africa is experiencing a slow but meaningful improvement in investor sentiment. The Government of National Unity, while imperfect, signals greater cooperation; policy decisions around energy, monetary policy, and fiscal management have become more coherent; and early anti-corruption efforts are shifting perceptions. With U.S. rates drifting lower, South Africa’s high yields appear increasingly attractive.
But the country’s progress is still fragile, and credibility, specifically, the willingness to act decisively, remains the central risk. The recently announced Madlanga Commission on police corruption illustrates this tension. While it is a necessary and welcome step, there is a legitimate fear – born from experience – that it could become yet another commission with limited consequences. If institutional reforms stall or produce no real accountability, the long-term damage would be significant, including a sharp reversal in investor sentiment, particularly among foreign investors who are highly sensitive to governance risks. In short, the opportunity is real but so is the risk of disappointment. A prudent balance of local and offshore assets remains essential.
Predictions entertain – preparation matters
Most year-end predictions will fade quickly. What will matter are the structural forces already in motion: supportive yet imperfect U.S. policy, advancing but volatile AI innovation, geopolitical noise with the risk of disruptions, a tightening credit backdrop and then domestic opportunities balanced against political risks.
These aren’t forecasts; they are present realities. They will not move in straight lines, and markets will remain volatile. But by focusing on structural trends rather than predictions, and by maintaining a balanced, cycle-aware posture, investors can enter 2026 with clearer expectations and greater resilience. In other words, understanding how trends unfold, not relying on empty predictions, is the smarter strategy for the year ahead.
About the Author
Dr. Nico Marais is the Chair and Co-Founder of Carmel Wealth. He has been the President and CEO of Wells Fargo Asset Management; the Global Head of Multi-Asset Investments and Portfolio Solutions at Schroders; the Global Head of Portfolio Management (Active Allocation), Multi-Asset and Client Solutions (BMACS) at BlackRock; and the Global Head of Investment Strategy, Client Solutions Group at Barclays Global Investors (BGI).
