2nd-Half Forecast: A Greed/Fear Tug-of-War (How to Win No Matter What)

I don’t spend a lot of time on Reddit …

Other than news on the Pirates, Steelers and Penguins — and maybe a movie review or two — I don’t really see the point.

Fact is, I’m more interested in the innovative thinking and ahead-of-the-curve research the team does here at Stock Pickers Corner (SPC) than I am in the trainwreck insanities of the day-trading crowd … or the emotional overreactions of everyday investors who have yet to “see the light.”

The market-related “subreddits” are useful in one way: It’s a way to gauge market sentiment — which is useful to long-term, Wealth-Builder Contrarian Investors like you and me.

On Tuesday, I wandered over to Reddit to check on the latest Pirates and Penguins news — and figured I’d drop in on a few of the day-trading and investing forums.

It was yet another reminder that I’m right to be scornful …

There were the usual posts from day traders — acknowledging the pounding they’ve taken — but vowing that their “next strategy” would be a winner (kind of like the horse players who believe their next winning wager is “just around the corner”).

Even sadder was this question – posted in the investing subreddit: “Does anyone know why the stock market is crashing today?”

You heard me right — “crashing.”

I actually checked to make sure I didn’t miss something … and was glad to see that I hadn’t.

I’ve lived through (and worked through) stock-market crashes. The “Crash of ‘87” — a single-day plunge of 22.6% off the Dow Jones Industrial Average – launched my interest in stocks and investing. I predicted — and then reported on — the “Dot-Bomb” implosion of 2000, which ultimately scythed away 78% of the tech-focused Nasdaq Composite Index. Then there was the Great Financial Crisis — a 50% hatchet job on the S&P 500.

By contrast, the Tuesday “crash” that had the Reddit investor so worried? We’re talking about drops of 1.2% in the Nasdaq, 0.5% in the S&P and 0.3% in the Dow.

That’s nothing. Those are day-to-day “wiggles” — and are far short of the threshold that experts view as a peak-to-trough drop of 20% … or more.

My story reminds us, yet again, of our cornerstone belief here at SPC: There are two kinds of investors — and only two; you’re either a Wealth Builder, or a Wealth Killer — and if you’re not one, you’re the other.

Here at the starting line of the 2026 second half – with a bull market that’s aging, prices that are gouging and uncertainty that continues to spiral – that Wealth Builder/Wealth Killer lesson is one we all need to stay focused on.

That’s what we’re going to do here today … talk risks … opportunities … the 2026 second half – and beyond.

It’s the long game that matters most — and always will. But the near term shows you what others are thinking, the mistakes they are making, the risks that are mounting — and the Wealth windows that are there for the taking … but everyday investors don’t see.

Here’s a look at what to watch for between now and New Year’s Eve — and a few things you need to do.

The Three Reasons I’m Heartened

Bullish Trigger No. 1: Earnings Matter

Corporate America is just starting to share how it did during the second quarter (if anyone tells you that reporting earnings only twice a year is okay, tell them to get stuffed). According to FactSet Research, S&P 500 companies will deliver year-over-year profit growth of 23.3%. That’s up from the 18.8% increase analysts were forecasting back on March 31 and would represent the second-straight quarter of earnings growth above 20%.

The Zacks Investment Research forecast is very similar: Earnings will advance 24% on a top-line surge of 11.3%, with 11 of the 16 sectors it covers projected to report increased profits.

Over the long haul, as we often say here, stock prices tend to follow earnings — a reality this FactSet chart shows you.

The U.S. tech sector — a bull market rocket engine since the 2023 third quarter — is expected to stand tall. Zacks is projecting profit growth of 48.5% (without which, S&P 500 earnings growth would advance only 12.2%, instead of 24%). “Magnificent 7” companies will post year-over-year profit growth of 28.5%, the stock-market research firm says.

There are risks, of course. Ahead of earnings season, 48 S&P 500 companies have issued “negative guidance” (where they throttle back on profit forecasts). But 63 have boosted their outlooks — a bullish Trigger. We want to see companies boost guidance as part of their earnings announcements. Indeed, we always hope for the Holy Grail — what I refer to as the “Earnings Trifecta,” when a company beats forecasts on sales and profits, and caps it off by boosting its forecast.

Stocks are pricey right now, FactSet says. The forward 12-month P/E ratio for the S&P 500 is 20.4. That’s higher than the five-year average of 19.9 and even the 10-year average of 19.

What to Watch: High valuations lower the margin for error. Disappointments of any kind — on sales, profits, margins, forecasts, growth rates or in key business units — can lead to steep, knee-jerk selloffs. (For a detailed look at the “games” companies play with earnings reports — tricks I learned during my 22 years as a business reporter — check out the brand-new e-book, Wealth Builder/Wealth Killer, on Amazon. I outline storylines to follow, strategies to embrace, risks to avoid and a blueprint for true wealth).

Bullish Trigger No. 2: That Thing Called “Momentum”

It’s crazy when you think about the laundry list of landmines that could’ve blasted stocks and the economy:

• The military action in the Middle East.

• Energy-price spikes that exacerbated America’s affordability issues.

• Volatile stock prices.

• Skidding gold-and-silver prices.

• And some worrisome financial reports.

And yet, the second quarter was strong.

The S&P 500 was up 9.6% in the year’s first half. But that included a first-quarter decline. And the second-quarter gain of 14.9% was the best midterm second quarter ever and the fifth-best of any year since 1950, says the Carson Group, an investment-management firm.

And when that bellwether index is up between 5% and 10% at the midpoint, stocks are up 88% of the time in the last half of the year, Carson says.

Historically, “a monster quarter like this often begets more strength … not less,” Ryan Detrick, Carson’s chief market strategist, wrote in a research note this week. “We found nine other times the S&P 500 gained double digits in Q2, and the forward numbers are about as good as it gets: Q3 was lower only once and Q4 was never lower. Even better, the final six months of the year averaged a gain of 11.7%, more than double the 4.9% you get in an average year. Big ‘up’ quarters aren’t something to fear. Historically, they’ve been a sign the trend has legs.”

What to Watch: We’re more concerned with the next three, five or seven years (or longer) than we are with the next six months. So look for the opportunities that have legs: Remember, we believe that “if you find the best storylines, you’ll find the best stocks.” Find those “best stocks” — and Accumulate more shares on pullbacks. For new purchases, search out stocks and other assets that have a promising long-term story, but are out of favor now. More on that in a moment.

Bullish Trigger No. 3: There Is Still No Great Alternative

In Wealth Builder/Wealth Killer, I showed folks that the U.S. stock market is one of the greatest inventions in modern history. It’s one place where self-reliant, independent thinking, proactive investors can stake their own claim and create true financial independence. And that’s still true. Despite splintering politics, a growing wealth gap and a surging list of “wild cards,” the United States is still the best place on earth when it comes to opportunity – for jobs, entrepreneurship, property rights, innovation and investing. Money flows follow opportunity.

Four Reasons I’m Worried

Bearish Trigger No. 1: Debt is a Four-Letter Word

The U.S. national debt has soared to $39.4 trillion. Of this, about $31.4 trillion is “public debt” —money borrowed from outside investors and foreign governments.

The near-term challenge is something experts have nicknamed “The Debt-Refinancing Wall.” Between $7.5 trillion and $8 trillion is held in short-term T-Bills, with rolling maturations in days or months. Washington’s debt addiction — we’re running a structural budget deficit — means the government will have to issue $2 trillion in new bonds. So Washington will have to borrow as much as $10 trillion over the next 12 months.

Then there’s the mid-term challenge — more than $16 trillion in U.S. Treasury Notes with maturities of two years to 10 years. Trillions of notes issued at near-zero rates back during the COVID-19 pandemic are maturing — meaning they must be refinanced at rates in the range of 4.2% to 4.6%.

That’s the “wave.” Washington’s net interest costs are surging past $1 trillion. And a growing debt burden — at higher rates — means all the numbers keep getting bigger.

What to Watch: There is a lot to be worried about here in the long haul. In 2026, the global bond market is worth about $143 trillion, the global stock market about $126 trillion and the foreign-exchange (currency-trading) market worth more than $7.5 trillion in trading volume every single day, says the Securities Industry and Financial Markets Association (SIFMA). The United States is the biggest player: The U.S. stock market is worth about $75 trillion; that’s five times the size of China’s and accounts for at least half the global market value. The U.S. bond market is worth about $58 trillion — double the size of its European counterpart and 40% of the global total. But the bond market’s influence is big: If that market sneezes, the stock market will catch a bad cold.

Bearish Trigger No. 2: The Top-Heavy Economy

The “wealth gap” — really a top-heavy economy – is the biggest we’ve seen in three decades. The Top 1% of U.S. households hold about 31% of America’s total wealth. But the bottom 50% owns only 2.5% of household wealth. Put another way: It takes the aggregate wealth of the bottom 90% of American households to match the $55 trillion held by that Top 1%.

It gets even better. Here in America, the Top 0.1% owns 14.5% of household wealth. We used to talk about becoming a “millionaire.” Now billionaires are the “new thing.” According to a recent Oxfam International report, in 2025 alone, the most recent stats available, global billionaire wealth rose three times faster than the average of the past five years.

There’s also a “type” of wealth disparity. Back here at home, the wealthy elite own stocks and private-equity investments. But the bottom half depends more on home equity.

What to Watch: The U.S. economy is still 70% driven by consumer spending. But that spending, too, is increasingly concentrated at the top: The Top 10% of income earners account for nearly half of all U.S. consumer spending.

Stock wealth grows faster than home-equity wealth. It’s also more liquid, and more volatile. That means it rises faster — but can fall precipitously. That creates a greater risk of a big economic downturn, should stocks correct — or crash.

Being less liquid, home-equity wealth creates a risk of its own: To monetize, homeowners turn to home-equity lines of credit — a reality that’s helped U.S. household debt to reach an all-time high of $18.8 trillion in the first quarter. Mortgage balances account for about 70% of that record number, while average debt per household exceeds $155,000, says the Federal Reserve of New York. The remaining third: Car loans, credit cards and student-loan balances.

Bearish Trigger No. 3: Inflation: From “Sticky” to Structural

Whenever I talk with folks, they tell me that “affordability” is Worry No. 1. Housing, insurance, healthcare, education and childcare costs continue to rise faster than most people get raises. The attack on Iran caused big price spikes at the pump. Years of economic growth — supercharged by the artificial intelligence data center boom — have strained U.S. electrical grids and caused utility costs to surge. Deglobalization has disrupted supply chains and ignited materials costs. Home prices are out of reach for a lot of folks. The U.S. Consumer Price Index for May came in at 4.2% — the biggest 12-month jump since the 4.9% surge for the year ended in April 2023. Demographics, re-shoring, energy infrastructure buildouts, fiscal deficits and labor shortages all point to sustained high inflation.

What to Watch: Here’s where things start to get really tricky — at least as I see it. As U.S. debt soars, the Federal Reserve’s ability to manage rates to manage the economy comes into question. If the debt burden gets too big, the Fed may have to keep rates low to hold down Washington’s interest payments. If inflation stays high, and rates drop, that could supercharge inflation. If we fall into a recession, and inflation stays high, we could end up with “stagflation” — a ruinous one-two punch we’ve not seen since the 1970s.

Bearish Trigger No. 4: Wild-Card Risk Is Underpriced

If you’re a trader or short-term investor — both true Wealth Killers — it’s what you don’t know (and don’t see) that can really hurt you. Many stocks are priced for continued perfection. If AI spending slows, earnings disappoint or interest rates remain high, P/E multiples could compress — meaning prices will fall. And short-term investors are blind to risk — even when warning signs are mounting.

What to Watch: The short-term outlook is almost always mixed — and it is right now. That’s okay. Wealth Builders like us don’t get rich predicting the next quarter. We get rich buying the best stocks from the best storylines — and owning these “money-doublers” through multiple cycles.

The real story isn’t whether the S&P 500 is 5% higher or lower by the end of this year. It’s about having a “Next Bull Market” mindset. It’s about choosing ownership over pessimism.

So Let’s Make Some Money

So what should you be buying?

Here are three areas to look at — with a bunch of stocks in each.

Let’s look …

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