As we look ahead to 2026, it’s natural to wonder what the markets may have in store, especially after a year that reminded us how quickly headlines, sentiment, and prices can change. While forecasts often attract attention, history shows that long-term investment success is less about predicting short-term market movements and more about maintaining discipline through a range of market environments. 

Market pullbacks are not rare events; they are part of the normal investing experience. Since 1928, the U.S. stock market has experienced a decline of at least 10% in nearly two-thirds of all calendar years, and declines of 20% or more have occurred about one-quarter of the time. These drawdowns are uncomfortable, but historically they have been temporary interruptions within long-term growth, not signs that investing is “broken.” 

Recent market gains are increasingly broad. More companies of all sizes and sectors now contribute. Market breadth, tracking how many stocks are rising, not just the largest, has improved. Smaller and mid-sized firms are hitting highs, risk appetite is up, and buying is more widespread than last year’s narrow leadership. 

This difference matters because markets that are broadly supported are often more resilient, even if pullbacks still occur. 

Last year, market performance was heavily concentrated in a small group of large technology-oriented companies. That concentration has begun to ease. Earnings growth is now positive across a large majority of companies, and leadership is rotating toward a wider group of stocks, including small- and mid-cap companies, and markets outside the United States. 

So what could this mean for us in 2026? History and current trends suggest: 

·         Pullbacks are likely and normal. Election-cycle years, as will occur later this year, have often been associated with increased volatility.

·         Opportunities may increasingly come from diversification rather than chasing last year’s top performers. A potential catalyst for gains this year is the productivity benefits of AI adoption across the rest of the stock market, not just among the companies that provide us with AI capabilities. 

For long-term investors, the key takeaway is not to expect smooth sailing but to expect progress over time, punctuated by volatility. Markets rarely reward impatience, but they have consistently rewarded discipline. 

Staying diversified, maintaining realistic expectations, and avoiding emotional reactions to short-term market moves remain some of the most potent tools investors have, especially as we move into a new year shaped more by broad participation than by a single dominant narrative.