Here’s What to Watch as Very Bullish Stock Investors Enter 2026

Group 1 - The consensus view among investors is optimistic, with expectations for further gains in stocks as positioning in equities rises and fund managers maintain record low levels of cash [1] - Concerns about the economy are emerging, particularly due to recent weakening in the US job market, which may shift investor focus back to interest rate paths [2] - Global growth remains intact but is becoming less certain, with structural risks increasing despite benefits from AI-driven investment and solid consumer balance sheets [3] Group 2 - The long-term valuation ratio of the S&P 500 has reached an all-time high, surpassing previous peaks that preceded major market drawdowns [4] - Ongoing volatility is expected as the market enters the fourth year of the current bull phase, with high valuations creating pressure on fundamentals to support price action [5] - Concerns about a potential bubble are rising, particularly in the technology sector, where increased capital expenditure commitments by hyperscalers could strain their balance sheets [5]