Author: David I. Templeton, CFA, Principal and Chief Investment Officer

Historically one of the challenges facing investors was gaining access to financial and market data to help one in their decision-making process. This has come full circle today and the challenge today is sorting through an environment where there is simply too much information (TMI) available to investors with the advent of the internet. Going forward, once or twice a month, this blog will highlight a research writing or two that I have recently encountered that readers might find of interest as well as timely.

With 2026 just getting underway there isn't a shortage of forecast letters and commentary on expectations for the coming year. Some are more positive than others, and it is important to understand the pros and cons of a particular investment, but a recent strategy paper titled, The Baton is being Passed (PDF), is a worthwhile read as it highlights underlying issues impacting some market forces this year. The strategy paper (web link) is written by Ph.D. economist, James Thorne, Chief Strategist for Wellington-Altus Financial Inc. Some highlights are below:

• In the short term, investors should ignore the fear of a massive U.S. midterm elections correction that dominates Wall Street narratives. Over the longer term, the world is entering a great rebalance in which the baton passes from a hollowed-out, financialized, post-Cold War order to a revived American System rooted in productive capital, manufacturing, and critical supply chains. With interest payments on debt exceeding military expenditures, there is no alternative to change; the current path is unsustainable.
• In 2026, that baton pass becomes more visible as once controversial ideas—strategic tariffs, supply-side reform, running the economy hot—move from the fringe toward consensus, and the S&P 500’s intermediate-term path opens toward 14,000 by decade’s end.
• None of this is risk-free: geopolitical shocks, energy price spikes, conflict, cyberattacks, premature policy clampdowns, uneven AI adoption, or a surging dollar destabilizing emerging markets could all trigger brutal repricing. These are risks to manage—not excuses to sit out.
• In 2026, the familiar four-year market cycle begins to break down, returning control to the private sector and the underlying business cycle. Investors should expect risk-asset movements to be increasingly sentiment-driven, with prices often diverging from reality as fundamentals strengthen or weaken in ways the tape fails to reflect. Such disconnects should be expected during a generational innovation wave.

An underlying theme of the report is the economy is in a growth period and will be supported by a dovish Federal Reserve with its interest rate policy. A lower rate policy typically occurs in a slower growth economy with the rate reductions creating stimulus that serves as a tailwind to economic growth. Markets do not move in a straight line, but this paper highlights reasons for a positive 2026 and the rest of the decade.

This next article by Oguz Erkan, was only published on X (formally Twitter) and highlights the difficulty in timing the market. Many famous investors, Warren Buffet, Peter Lynch and Bill Ackman say, "You can't time the market". One of Peter Lynch's famous quotes is "time in the market is more important than timing the market". The X post is titled, Howard Marks; This is How You Can Time the Market.

The theme of the article is one can't time the market but can take steps to position one's portfolio to have some cash available to put to work in a market pullback. The overriding thought is the fact the market does tend to move in cycles from undervalued to overvalued. We know this occurs with the economy as it cycles through slowdowns, recessions and then expansions Similar cycles play out with the stock and bond market. As stated in the article:

• There is nobody who can manage to become more successful with every step they take in their life. When you become very successful, the bar for success is raised so much that it becomes exponentially harder for you to pass it. This is the seed of failure in success. When the economy grows so much, it sets a high bar for itself to pass, and it inevitably fails to reach that bar. Once that happens, everything is ripe for a recession. Economic growth includes seeds of recession.
• In the short-term debt cycle, the stock market follows the route from optimism & excitement to fear & panic, and then it repeats itself. This is the theoretical background of buying in fear and selling in euphoria.

As one reads the article a conclusion is, "Timing when the cycles reach a turning point is impossible, but positioning yourself according to where you think we are in the cycles is possible and recommended."

In conclusion the above paper and article seem timely. With 2026 and the rest of the decade appearing to be a favorable time period for investors, this comes on the back of three favorable returning years in the equity market. Portfolio positioning can be important as recent returns in the equity market are indicative of one that is broadening out and investors should be aware of this in the event one's portfolio is over or underweight certain asset classes or market segments during this transition.

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