One of my favorite movies growing up was Field of Dreams. It’s about Ray Kinsella, an Iowa farmer who one day hears a voice in his cornfield whisper, “If you build it, he will come.” With no explanation and no proof it will work, Ray plows under his crop and builds a baseball field where corn once grew. His family and neighbors are convinced he’s lost his mind.
Weeks pass. Then months. Nothing happens. The field sits empty, and Ray starts to look less like a visionary and more like a man who’s made a very expensive mistake. Then one day, the players appear. They’re real to Ray, yet invisible to anyone who doesn’t believe. When the voice returns and tells him to “go the distance,” even as foreclosure is imminent, Ray doesn’t lose faith. The movie’s final moments show headlights stretching for miles as visitors from all over arrive to witness the miracle on Ray’s field. In the end, Ray’s leap of faith is rewarded. He built it, and they came.
AI’s own “build it” moment
This movie popped into my head as I thought about what’s happening in technology as it relates to the markets. Across the globe, companies and investors are pouring hundreds of billions of dollars (over one trillion is committed) into data centers, advanced chips, and power infrastructure to prepare for what they expect will be massive growth in artificial intelligence. Much of this buildout is based on assumptions that AI usage will skyrocket, computing demands will continue to rise, and applications or business models that don’t exist today will ultimately justify today’s spending. Big Tech companies see this spending as both defensive (to protect their existing businesses) and opportunistic.
To the skeptics, this spending looks as reckless as Ray’s empty field. But the builders (and believers) see a global game already in progress. If AI demand grows faster than expected, then underbuilding, not overbuilding, would be the real mistake. Building first and trusting demand will follow is exactly what we’re seeing now.
Speculation speeds up progress
We are not experts in artificial intelligence, but we do have decades of experience investing in technology companies under our belts. We’ve seen this pattern repeat whenever a transformative technology comes along. Every major technology cycle creates a divide between those willing to act on belief and those waiting for proof. Early gains attract capital, capital attracts hype, and hype fuels the fear of missing out (FOMO), creating a feedback loop that accelerates both investment and development. That speculation speeds up progress and quickly separates what works from what doesn’t by identifying winners and losers far sooner than would otherwise occur.
While it’s easy to question the scale of today’s spending on AI and data center buildout, the infrastructure for what comes next is being put in place. And as with Ray’s field, not everyone sees the same thing at the same time. The tension between belief (the bulls) and proof (the bears) is now showing up in the investment markets as Wall Street looks ahead to 2026.
Bullish or bearish for 2026?
Even after three up years in a row for stocks, which saw the S&P 500 gain 24%, 23%, and 16%, many Wall Street analysts are bullish on the market for 2026. Projections for where the S&P 500 will end the new year range from a low of 7,100 to a high of 8,100 (a projected gain of 4% to 18% based on the S&P’s close of 6,846 on December 31st.
Here are the main bullish arguments according to the analysts:
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- Company earnings growth – Goldman Sachs expects Magnificent 7 companies to grow earnings by 23% in 2026 and 19% in 2027. They expect the other 493 stocks in the S&P 500 to grow earnings at 11% and 12% in the next two years, respectively.
- Lower interest rates – Current market expectations are for two rate cuts by the Federal Reserve in the first half of the year.
- One Big Beautiful Bill impact – Big tax refunds and other provisions add stimulus to economy. See our blog articles about OBBBA here.
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A market wouldn’t be a market without someone taking the other side of the trade. Here are the main concerns heading into 2026:
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- Inflation – Will rate cuts, fiscal spending, and easy money policies cause inflation to come roaring back? Will the Fed have to pivot?
- Mid-term elections – How will mid-term election results impact the economy or markets?
- AI regulation – Will politicians and regulators attempt to slow AI’s development, or will they see it as the next Manhattan Project?
- Circular financing deals in AI – Will OpenAI, the company behind ChatGPT and so many spending commitments, be able to fulfil their extreme growth and revenue plans? Or will Sam Altman be the next great storyteller who couldn’t deliver?
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2026 will have its share of surprises, like any other year. The prevailing narrative is that AI will change the world, but how and when, no one really knows. When markets are driven more by belief than proof, discipline matters more than prediction. As Jimmy Buffett once sang, “I can’t see the future, but I know it’s coming fast.”
The P&A way
As we wrote about in our last client letter, “Sensationalism Revisited,” our focus is on intelligence, consistency, quality, and patience (ICQP). The changes you see in your portfolio involve regular rebalancing, decisions related to individual companies’ fortunes, and tax management (for after-tax accounts). If we sell a stock, we buy another. We don’t let that money sit in cash in the hopes we’ll be able to buy in at a lower price. Over the years, our clients have benefitted from staying fully invested to their target investment mix.
We aren’t market timers. Time in the market is what delivers the results. Expect that there will be short-term volatility in exchange for long-term prosperity. Market volatility is inescapable; it’s part of the deal. To achieve the long-term average return of the stock market, we must remain invested during periods of upheaval. If this sounds like a broken record, it is. So much of investment success is behavioral.
“About once every two years, the market falls 10%. Every six years, the market’s going to have a 25% decline. That’s all you need to know. You need to know that the market’s going to go down sometimes. If you’re not ready for that, you shouldn’t own stocks.” – Peter Lynch
P&A employs multiple equity investment strategies. If you have more than one account under our management, there’s a good chance we utilize multiple investment strategies on your behalf. We prefer equally weighted individual stock positions, which helps to control single company risk. We gain diversification through asset classes (mid cap, small cap, international, etc.), which lessens our dependence on large cap U.S. stocks. And while our client portfolios are exposed to artificial intelligence stocks, they aren’t overexposed. We take our fiduciary duty seriously.
Much of the value we deliver doesn’t show up as a line item on your statement. It happens quietly and consistently behind the scenes. Here’s a list of some of the items our great team does on your behalf throughout the year:
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- Tax loss harvesting – a fancy way of saying we realize losses in taxable accounts which can be used to offset future capital gains and/or be used in part against ordinary income. A tax-smart strategy.
- Quarterly portfolio reviews – your accounts are reviewed continuously, with adjustments made as company fundamentals and market conditions evolve. Like a good gardener, we want to be vigilant in pulling weeds and planting flowers.
- Required Minimum Distribution (RMD) tracking for both your own IRA accounts as well as inherited retirement accounts. IRS rules have changed multiple times over the last decade. We stay on top of these changes for you.
- Asset location – utilizing more tax efficient investments in brokerage accounts and tax inefficient investments in retirement accounts.
- Facilitating your retirement paycheck – turning your investments into a regular monthly income stream means our trading team makes sure your account has enough cash to cover each withdrawal before it goes out.
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Like you, we hope 2026 is another fruitful year for the economy and markets. Like you, we don’t expect it to be a straight line up. If you’d like to discuss any of the topics in the letter or review your accounts or financial plan, please reach out. On behalf of the great team at P&A, thank you for being our client.
Jon J. Sevenker, CFP®
Senior Advisor/Principal
Dan Frost, CFA, CFP®
Senior Advisor & Portfolio Manager/Principal
The statements in this quarterly letter do not constitute an offer to sell, a solicitation of an offer to buy, or a recommendation of any security or any other product or service by Pittenger & Anderson or any other third party regardless of whether this letter references such security, product, or service. To learn more about our firm and investment approach, check out our Form ADV.
Links mentioned in this letter:
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- https://www.cnbc.com/2025/12/22/heres-where-the-stock-market-is-headed-in-2026-according-to-wall-streets-top-strategists.html
- https://www.heygotrade.com/en/news/s-p-500-2026-forecasts-will-the-rally-continue/
- https://www.fidelity.com/learning-center/smart-money/magnificent-7-stocks
- https://www.barrons.com/articles/mag-7-stock-trade-goldman-forecast-afcb6146?gaa_at=eafs&gaa_n=AWEtsqeXjRsI0KRFMZ30QplHWxrX0Qf-ZyO05itoV43ZoN46aFhtj9hMw4KQMm5srzM%3D&gaa_ts=695d426b&gaa_sig=ihrB9kIX92yoLdUWvLipEGKIlJB2DdyeYBmvwzpInfYcvzgL933WFGdO-IPSFxcs3B4kCM5vAsVhpBSa4OhcwQ%3D%3D
- https://pittand.com/?s=OBBBA
- https://genius.com/Jimmy-buffett-coast-of-carolina-lyrics
- https://pittand.com/2025/10/02/2025-3rd-quarter-letter-sensationalism-revisited/
- https://pittand.com/adv-and-privacy/
Clicking on the links above may result in you leaving the Pittenger & Anderson, Inc. website. The opinions and ideas expressed on these external websites are those of third-party vendors and Pittenger & Anderson, Inc. has not approved or endorsed any of this third-party content. For the full Terms & Conditions of using the Pittenger & Anderson, Inc. website, click on this link.
Pittenger & Anderson, Inc. makes no representation, and it should not be assumed, that past investment performance is an indication of future results. Moreover, wherever there is the potential for profit there is also the possibility of loss.
Pittenger & Anderson, Inc. does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Additionally, the information presented here is not intended to be a recommendation to buy or sell any specific security. To learn more about our firm and investment approach, check out our Form ADV.
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