Sometimes I sit at my desk, coffee gone cold, charts open on three screens, and I just laugh. Not the happy-laugh. More like the laugh you let out when you realize the entire global financial system is running on vibes, hopium, and a Fed printer that never seems to run out of ink.
Welcome to December 2025. The S&P 500 is within spitting distance of all-time highs, unemployment is still low-ish, inflation is “under control,” and yet… something feels deeply wrong. Like walking into a party where everyone is smiling but you can smell smoke.
The One Thing Everyone Agrees On: Nobody Knows
Let’s get the uncomfortable truth out of the way first. Despite the avalanche of 2026 “targets” about to flood your inbox from every sell-side desk on the planet, no one actually knows what happens next. Not the permabulls, not the doomers, not the algo quants, and definitely not the guy writing this blog at 1 a.m. with a glass of bourbon.
Anyone claiming certainty right now is either selling something or coping hard. The range of plausible outcomes for 2026 is absurdly wide — from new all-time highs with zero drawdown to a 40% crash that makes 2022 look cute. Both feel possible on any given day.
The Bull Case Isn’t Stupid (It’s Just Drunk on Liquidity)
Look, I get why people are bullish. I really do. The script has worked for fifteen years: economy wobbles → Fed panics → rates down → risk assets moon. Rinse, repeat, retire in peace.
And right now the market is pricing in the happy version of that script with almost religious fervor. Why? Because there’s a non-zero chance the next Fed chair is someone who thinks rate cuts are basically a moral imperative. When your monetary policy sounds like a Reddit meme, stocks tend to like it.
“Liquidity doesn’t need fundamentals. It just needs a green light from someone wearing the right jersey.”
In this world, it doesn’t matter if commercial real estate is in freefall or if credit-card balances hit another all-time high. The only thing that matters is whether the Fed can be bullied, flattered, or politically pressured into hitting the “print” button again.
And history says: yes, yes they can. The Fed independence died sometime around 2018–2019. We just stopped pretending.
But the Bear Case Is Screaming in Your Face
Then there’s the other side. The one that keeps me up at night.
American households are now carrying more than $18 trillion in total debt. Credit-card balances alone just punched through $1.2 trillion at average rates north of 22%. Auto delinquencies are spiking. Student loans are about to turn back on like a horror-movie villain everyone thought was dead.
Meanwhile, the corporate sector refinanced at 3% during the pandemic and now faces a wall of maturities at 6–8%. Private credit is a $2 trillion shadow banking monster that nobody understands until it blows up.
- Regional banks are still stuffed with underwater commercial real estate loans
- Office vacancy rates in major cities are at Great-Depression levels
- The consumer savings rate is flirting with zero
- And somehow the stock market acts like none of this exists
It’s not one single trigger I’m worried about. It’s the everything being stretched to the absolute limit at the same time. That’s when complex systems fail — not with a bang, but with a sickening crack that everyone hears at once.
The Most Dangerous Delusion: “This Time It’s Different”
Every bull market dies with the same four words whispered by people who should know better.
Passive investing now owns roughly 50% of the U.S. equity market. That means price discovery is increasingly broken. When the only buyer left is an index fund that purchases shares regardless of price, valuations can detach from reality for years. We’ve seen it in Japan. We’re seeing it now in U.S. tech.
Add in stock buybacks at all-time highs (funded with cheap debt, naturally) and you get a market that can stay irrational literally until the bond market revolts.
So Where Does That Leave Us for 2026?
Two broad paths, in my view:
- The “Nothing Matters” Path
The Fed (or Treasury via backdoor QE) rides to the rescue again. Rates drop. Risk assets rip. We kick the can another 3–5 years. Valuations go from nosebleed to whatever is beyond nosebleed. Gold, bitcoin, and meme stocks outperform everything. Pain delayed. - The “Gravity Reasserts Itself” Path
Something — anything — breaks the liquidity spell. Could be a regional banking crisis 2.0, could be a sovereign debt scare in Europe, could be China property finally imploding for real. The Fed tries to cut but inflation ticks back up. Bond vigilantes return. Stocks crater 30–50% while everyone screams “no one could have seen this coming.”
Honestly? I lean toward door number two eventually. But “eventually” could be 2027, 2028, or beyond. The system has proven shockingly resilient at finding new ways to levitate.
My base case for 2026 is volatility. A grinding, confusing, headline-driven year where the market makes a series of higher highs and lower lows, finishing roughly flat while driving everyone insane. The kind of year that makes you want to throw your laptop out the window by March.
What I’m Doing Personally
Full disclosure — I’m positioned defensively but not hiding in a bunker. Some cash, some gold, some bitcoin, a bunch of cheap energy and materials stocks that nobody wants, and a handful of high-conviction names I’d be happy to own through a crash.
No hero long positions in mega-cap tech at 40× sales. No short-the-world apocalypse book either. Just trying to survive the volatility and pick off the debris when fear inevitably spikes.
Because here’s the secret nobody wants to admit: the best opportunities almost always come when the crowd is certain about the future. Right now the crowd is certain it’s going higher forever.
That alone is enough to keep me cautious.
So yeah. No fucking idea.
But at least I’m honest about it.
See you on the other side of whatever 2026 decides to throw at us.
