Four Investment Themes For 2026

Authored by Michael Wilkerson via The Epoch Times,

Let me get to the punch line of my view on the financial markets for 2026. The remarkable equity bull run of the past couple of years is unlikely to stall, at least not in the first half of 2026. Corrections are inevitable, and we are indeed likely in an asset bubble.

But in the coming months, the benefits of President Donald Trump’s policy initiatives will go into full swing. The U.S. economy has been accelerating, with 4.3 percent gross domestic product (GDP) growth in the third quarter following 3.8 percent in the second quarter of 2025. Strong GDP growth should continue because of tax cuts, tariff easing, and lower interest rates.

The U.S. Federal Reserve, like central banks around the world, is easing monetary and financial conditions, ensuring that global liquidity will remain high. Until liquidity cracks, the markets won’t, and the world’s national governments have massive incentives in place—and massive firepower—to ensure that this doesn’t happen anytime soon.

Hopefully, this all benefits Main Street, which has struggled in what a year ago I called “the clash of the Dollar General versus Ferrari economies.” Either way, Wall Street and asset values are likely to continue going strong, at least for now.

I have four main investment themes heading into 2026: geopolitics (wars and rumors of war), artificial intelligence (AI) and tech generally, the so-called debasement trade, and American Renaissance.

Geopolitics: Wars and Rumors of War

Every major country is gearing up for war and conflict, a fact that isn’t being covered enough in mainstream media. Both the public sector (such as the government) and the private sector are making major investments in rearmament, defense, domestic supply chains, and national security generally.

There are multiple flashpoints of conflict around the world, including Ukraine, Taiwan, Venezuela, Colombia, Iran, and numerous points in the Middle East. Even if we get a peace deal for Ukraine, and with Nicolás Maduro out of Venezuela, that won’t change this underlying reality.

This dangerous fact is not great for our society or humanity as a whole, but it will benefit both defense industry stocks and, if things go badly, defensive consumer names as well. Central banks are continuing to stockpile gold and other precious metals, and supplies are constrained. Resource nationalism favors commodities and domestic resource companies, including mining and refining of strategic resources such as silver, platinum, and a long list of rare-earth elements.

AI Will Change Everything

2026 will be the year when productivity improvements from AI implementation will finally begin to show in corporate profits. But the fact that AI will succeed doesn’t mean investing in it will. Picking the winners from the losers will be challenging.

The history of revolutionary technology breakthroughs is instructive here. In the 19th century, railroads fundamentally changed economies, warfare, and societies around the world. Still, most railroad companies failed, including some that raised millions of dollars in capital but never laid one mile of track before going bankrupt. There were about 2,000 automobile companies in the first half of the 20th century; only a handful survived. The aggregate profits investors have made on airlines since Kitty Hawk are about zero.

What I like are the ancillary and enabling parts of the AI economy, such as electrical grid upgrades to provide for all the power capacity needed, construction, data centers, small nuclear plant development, and the like. This infrastructure buildout is good for the United States, and this approach is not as expensive as trying to predict the AI winners and losers among the already expensive chip companies (Nvidia, TSMC, etc.) and hyperscalers (Google, Oracle, etc.) investing hundreds of billions of dollars and recycling much of back into one another in a closed loop that increasing resembles a Ponzi scheme.

The Debasement Trade

Persistent government deficits and mind-boggling levels of national debt aren’t being addressed, either in the United States or anywhere among the major economies. The United States now has $38 trillion of debt at the federal level alone. Interest of more than $1 trillion on this debt means that debt levels will grow as the only means of refinancing existing debt, covering billion-dollar deficits, and paying interest.

The U.S. government can’t default and can’t tax its debt away, so it will resort to inflation to reduce its cost in real terms. The Federal Reserve and other central banks are easing monetary and financial conditions—spiking the proverbial punchbowl—to keep the party rolling. Rates are coming down around the world, and quantitative easing (by whatever name is used) is flooding liquidity into the system. These factors will fuel renewed inflation if the economy continues to grow as expected.

Holding cash with falling interest rates will mean losing purchasing power. The U.S. dollar has lost about 20 percent of its purchasing power since 2020, and approximately 40 percent since 2000, and there is more debasement to come. Equities mostly keep up with inflation, but it is the real assets—again, gold, metals, commodities, and real estate—that will perform best in this environment.

American Renaissance 

Trump’s American renewal is just getting underway. The long list of policy moves, including deregulation of various industries, will benefit wide swaths of the economy, including the U.S. industrial manufacturing base, technology companies and enablers, energy companies, infrastructure of all sorts, and mining.

As for crypto, unless you’re a trader and know what you’re doing, the only thing I’m positive about as a longer-term investment is bitcoin (BTC), which has proven to be dominant among digital tokens and in a class all its own. Still, there are near-term headwinds to BTC, and long-term threats from quantum computing and other developments.

Having said all that, “black swan” surprises can turn everything upside down. We saw stock indexes fall by double-digit percentages around “Liberation Day” in mid-2025 because of outsized fears of tariff wars. But once investors were able to absorb the likely impact, the markets then bounced back stronger. One of the biggest risks to the market is a credit crisis arising from these high levels of government debt. So it is always a good idea to have some liquidity and some gold or other hard assets that do well in shocks or downturns.