RiskReversal Mailbag: 2025 Market Recap & 2026 Predictions

2025 Market Review and 2026 Outlook

• 📈 The year 2025 is described as a turbulent year, with a desire to move beyond comparisons to the late 1990s tech boom and see more dispersion in the market beyond just the AI trade.
• 💡 A potential theme for 2026 is companies effectively using AI technology to gain a return on investment, rather than just the companies providing the tools (picks and shovels).
• 📉 Despite market volatility discussions, the VIX and other volatility indices are trading at lows, indicating a lack of broad market volatility, though individual stock volatility can still be high.

Company and Sector Analysis

• 🚗 Uber is discussed as a company with strong fundamentals and a good valuation, but facing headwinds related to its autonomous strategy and potential earnings decline next year, with a target price around $112.
• 💰 Gold and mining stocks, particularly Newmont Mining (NEM), have seen significant gains, driven by a belief in the ongoing gold rally, with potential for pullbacks to $85 being buying opportunities.
• 🏦 Regarding banks, Citibank is highlighted for its attractive valuation relative to tangible book value compared to peers like JPMorgan, suggesting potential upside.
• 💊 In healthcare, while a direct Eli Lilly competitor is unlikely in 2026, there's anticipation of significant M&A activity with big pharma acquiring smaller biotech names.

Economic and Market Trends

• 📉 A comparison to the Great Depression is discussed, noting that while extreme unemployment rates are unlikely due to government tools, there are significant economic headwinds for a large portion of the population living paycheck to paycheck.
• 📊 A divergence between GDP and GDI is noted, with GDP growth potentially skewed by factors like AI buildouts and inventory builds, suggesting a less robust underlying economic expansion.
• 📊 Equal-weight S&P 500 (RSP) is predicted to outperform the market-cap-weighted S&P 500 (SPY) in 2026, suggesting a broadening out of market gains beyond the top tech stocks.

Trading and Risk Management Insights

• 🧮 A method for calculating a 50% retracement is explained by adding the stock's high and low prices and dividing by two, with Fibonacci retracement levels (61.8% and 38.2%) also mentioned.
• 📚 Resources for learning options trading strategies beyond the basics include CME Group, CBOE, and educational content from platforms like Robinhood and Fidelity.
• ⚠️ Risk management on a per-trade basis is not formulaic but depends on conviction and situation, with a general caution against concentrated positions over 10% for individual investors unless there's high conviction.

Bold Predictions

• 🏀 Guy Adami predicts the New York Knicks will win the NBA championship in the upcoming season.
• ⚾ He also predicts the New York Mets will have a 70-92 record and the New York Giants will be the next New York NFL team to win a championship.
• 🚀 Dan Nathan predicts the RSP (equal-weight S&P 500) will outperform the SPY in 2026, signaling a broadening of the market rally.