Market Risks Worth Watching in 2026

Transcript

Ken Fisher:

People will say to you, "Are there any market risks you're watching that you don't think anyone else is watching?" Now, first let me just say, for me to say that no one else is watching something that I'm watching sounds pretty darn arrogant, I'd say. So, I would never really say that. I'd prefer to think about this in this way. Are a lot of people paying attention to it? Are most people discounting it? I have no way to know what everybody's thinking. But you do have ways to know what lots of people are thinking. I also see in every risk some version of an opportunity. So, let me talk to you about what I consider to be a risk that I don't see a lot of people talking about. I see more of them talking about it as an opportunity. This one. There's this fairly large universe. We have not had a buoyant IPO market with a lot of big IPOs. We have had a building through venture capital, and subsequent to venture capital, private equity, a fairly large inventory of big private companies that are looking to go public and may likely go public in 2026. I like to refer to SpaceX as the poster child for this. This would be hundreds of billions of dollars in an IPO. There's all of these other ones, however. Databricks is another, Kraken's another, Anthropic's another. And there's another ten behind that. that would be in the $200 billion range and up. We've never seen mega IPOs like that. Now, a hero of mine, always, long now deceased Sir John Templeton famously said "Bull markets are born on pessimism, grow on skepticism, mature on optimism, die on euphoria." And I say that often, and people suffer mightily, distinguishing between a fair amount of optimism and euphoria, which is a different thing. The fact is, how mega IPOs would be received in the marketplace is apt to be a good telltale indication of us crossing over into euphoria. Now, I didn't say those mega IPOs occurring is that. That's not what I'm about to say. What I'm about to say is how they are received by the public is a good indication of are we in a euphoric world or not. And again, I'm not talking about 1 or 2 of them. I'm talking about a group of them.

If they're received with optimism and after their initial public offering, And, you know, 35 years ago, I wrote about how "IPO", initial public offering, really means "it's probably overpriced", because they're always brought out at a time where the pricing is favorable for the issuer, not for you. If then they go up in price as a group nicely that's a pretty good sign of euphoria. Mega IPOs coming out for the first time, as a group, and rising after the offering, would be a pretty good sign of euphoria and a risk. And most people aren't talking about that. On the other hand, if the mega IPOs occur and yet after they're issued, they perform poorly as stocks, that's a sign you don't have euphoria. You're still just an optimism. So, this is a risk worth watching as 2026 proceeds. Let me give you another one that's a risk and an opportunity. And I don't quite know how to define the gradations of this perfectly. But it's this: Long ago, and ever since western nation governments in their equivalent to our Department of State, and their equivalents to our intelligence agencies, have long believed what George W Bush's President, who is never really thought of as a president who uttered a tremendous number of wise, memorable statements that catch our thinking the way, let's say, say Warren Buffett has in one realm, or Yogi Berra did in another realm, did issue one that was short, pithy, and encapsulated the thinking that state departments have had around the world, which is, "You can't negotiate with terrorists."

Now, that's obviously false, because you obviously can. His implication was you can't and have it be successful. You obviously can negotiate with them. The question is, is there success that comes out of the negotiation? If you look at the history of President Donald J. Trump, and more in his second term by far than in his first term, it is perfectly obvious that he believes that is wrong and that you can't negotiate with terrorists. The poster child for that is the Israel-Gaza-Hamas negotiation. But you can see a parallel function in the aftermath of his initial strike into Venezuela. And you can see a sequencing that he tends to deploy routinely, which is to say, terrorist country, I want you to do this. If you don't do this, I'm going to do that. And then he'll say it again in a different way, and then he'll say it again in a different way. And then if they do not do what he wants, he does that. So, for example, that's exactly what he did before he bombed the Iranian nuclear sites. And then when they didn't, he bombed them. But he does believe he can negotiate with them. And he's made utterances as 2026 originates that he is hopeful of negotiations with Iran in the year. Hopeful. Now, why am I saying all this? I'm saying all this because he might be right, and he might be wrong. The fact is, if he's right, that actually an opportunity for the world. If he's wrong, it's a risk. If he's wrong, and he does it, and he enters into treaties and they do not work, when people think they're working, where markets would be pricing that they were working, but then they do not. That would be a risk.

So, the bellwether to look for at this point in time is rather obviously, the one that that I'm paying attention to most is obviously Israel-Hamas, because Hamas has not been living up to all of the agreement points that were made in the negotiations. And if they do not, in the longer term, you would expect Israel and Hamas to break down their peace agreement as an evidence that the negotiation did not work, and that state departments and intelligence agencies, and the phrase that George W. Bush uttered are, in fact, correct. Will we see that, or won't we see that? Or will President Trump be able to go back and renegotiate again with Hamas to keep a continuous, peaceful relationship between Hamas and Israel? I don't know, but it's a risk that's very much worth watching in 2026 and could have some shock impact. Not, so much singularly about Israel, Hamas, but more importantly about something more major, like negotiations that he might enter into with Iran or with Russia. And maybe, perhaps some others that we're not thinking about. So, those are two that I think are very worth watching as 2026 evolves. There's a plethora of lesser ones, and I'll talk about those over the months ahead. Thank you very much for listening. I hope you found this useful. Hi, this is Ken Fisher. Subscribe to the Fisher Investments' YouTube channel if you like what you've seen. Click the bell to be notified as soon as we publish new videos.