Why 2026 Could Be A Riskier Year For Stocks

Market Overview - The S&P 500 has annualized about 11% since 1970, but it is currently up over 23% per year for the last three years [2][3] - The consensus forecast for the S&P 500 entering 2026 is double-digit growth, driven primarily by earnings [4] Economic Conditions - Monetary policy is expected to remain accommodative with a new Fed chair likely not changing this stance [4] - Fiscal policy is anticipated to provide a tailwind, with expectations of significant tax refunds early in the year and a potential decrease in corporate taxes [5] Investment Strategy - The company’s hedged equity ETF, HEG, is designed to be a part of a diversified portfolio, providing market participation while managing volatility [11][12] - The product has annualized at about 11.7% over the last three years, which is lower than the market's performance but offers better downside protection during market downturns [16][17] Risk Management - The product aims to reduce portfolio volatility, traditionally exhibiting about 40% of the S&P's volatility [13][14] - There is a trade-off between downside protection and upside potential; while the product cushions against market declines, it may not fully participate in strong market gains [15][16] Future Outlook - The market conditions for 2026 are viewed as generally favorable, but there is an expectation of volatility [18][19] - The company emphasizes the importance of being analytical and prepared for unexpected risks that may arise [18]