Two Major Trends to Watch in 2026

Editor's note: January is a great time to position your portfolio for the year ahead. As our Director of Research Matt Weinschenk explains, we can't predict the future... But we can prepare, based on the trends we're seeing in the market today. In this issue, adapted from the weekly This Week on Wall Street, Matt reveals how you can prepare to profit from two trends he's keeping an eye on this year.

"Prepare. Don't predict."

That's the mantra of Stansberry Research's own Dan Ferris.

Most folks think investing is about prediction... Predict the earnings. Predict the stock price. Predict the future.

But what Dan's telling us is that instead of trying to forecast what comes next, you should prepare your portfolio for various possibilities.

That's how you protect and grow your wealth. But knowing what you should prepare for and how you should prepare for it... well, that can be difficult.

For that, you do need to look into the future. You need to find businesses and opportunities you think may come to fruition. Then you need to carefully align your portfolio... all while respecting that those possibilities may not come true.

Today, we're going to look at some of the potential market moves you should prepare for this year...

Keep in mind, the two trends we're looking at today are relative trends. That means we're comparing assets against each other... not predicting which way a certain stock or sector will move.

But these trends are extremely important. As you'll see, they'll lay the framework for how to position your portfolio.

Let's start with the biggest reversal you need to watch for...

The 493 Are About to Catch Up

The Magnificent Seven and other mega-cap tech stocks have dominated the market for half a decade.

Many folks predicted this trend would turn around... only for the Mag 7 to keep plowing ahead.

But 2026 is the year the rest of the market catches up.

Let me be clear: Big Tech has earned its outperformance with incredible earnings. But that's going to taper off – and when it does, it won't mean these businesses are turning south... Rather, these companies are spending so much on AI that it's going to slow profit growth.

Now, I'm not bearish on AI. I just see the productivity gains spreading throughout the rest of the economy. AI efficiency will boost other firms' margins, allowing their stocks to catch up.

In other words, AI will do less for AI stocks and more for others.

This is more of a trend for the second half of the year, but there are already signs...

Take C.H. Robinson Worldwide (CHRW), for example.

Its business is far from a hot AI stock. The company manages shipping logistics by setting prices and scheduling transportation for cargo across the world. It links shippers from all sorts of industries with its massive network of independent ground, ocean, and air carriers.

Even so, C.H. Robinson has more than 30 AI "agents" scanning its databases to automate work. And management claims that the time to deliver a quote has dropped from around 20 minutes... to 32 seconds.

After the company's latest earnings report revealed this and other productivity news, its stock soared nearly 20%...

As AI efficiency spreads, expect better returns from "the 493" – the remaining S&P 500 companies outside the Mag 7.

Specifically, that means an S&P 500 equal-weight fund like the Invesco S&P 500 Equal Weight Fund (RSP) would outperform the market-weighted SPDR S&P 500 Fund (SPY).

And I expect you'll do even better if you go smaller...

Small-cap stocks like those in the S&P Small Cap 600 Index or the Russell 2000 Index have lagged large caps since 2021.

In the chart below, you can see the ratio of the Russell 1000 Index (representing large-cap stocks) to the Russell 2000 (representing small caps). When the ratio rises, large caps are outperforming. When it declines, like it has in recent months, small caps are outperforming...

Again, many have called for this reversal for years... and so far, it hasn't happened.

But it's time. Valuations have reached extremes. Lower interest rates favor smaller stocks. Big Tech spending will crimp margins. And AI will start to create efficiencies for smaller businesses.

This shift will take place in 2026.

Specifically, look for both the State Street SPDR Portfolio S&P 600 Small Cap Fund (SPSM) and the iShares Russell 2000 Fund (IWM) to outperform the S&P 500.

Moving on, let's look at an important trend that will continue this year...

Growth Is (Still) the Place to Be

Just as many have called for a small-cap rebound, many have argued for the return of value stocks.

I don't see it happening this year. Here's why...

In the market, there are times when expensive stocks with high growth keep getting more expensive. There are also times when cheap stocks trading below their intrinsic value see huge upside.

In other words, sometimes it pays to bet on growth... and sometimes it pays to bet on value.

Using a similar ratio chart to the one above, you can see that growth stocks (as measured by the Russell 1000 Growth Index) have outperformed value stocks (as measured by the Russell 1000 Value Index) for nearly a decade. And it has reached an extreme...

But this trend isn't about to reverse. It will persist throughout 2026.

Even if AI enthusiasm cools for a bit, we're still in a period of technological change. And if a company is trading for a truly cheap valuation, it's likely headed for obsolescence. As a value investor would say, there are too many "value traps" out there today.

Moreover, lower interest rates favor growth stocks (since future earnings have a greater present value).

I love value stocks. They'll return someday. But for now, keep your portfolio tilted toward growth.

As 2026 continues to unfold, these broad perspectives can inform the way you construct your portfolio... They can also lead you to the right hunting ground for your investment opportunities this year.

Good investing,

Matt Weinschenk

Editor's note: If you're serious about growing your money in 2026 and don't want to take big, unnecessary risks, you can't miss our firm's must-see event. It's available to watch for a limited time. In it, five of our firm's most respected analysts shared their complete game plan for 2026... and even named their top individual stock ideas 100% free of charge.