It’s that time of year again. Wall Street is lining up, crunching data, and offering up its best guesses for what the stock market has in store for investors in the year ahead.
As I can attest from over 27 years of experience navigating the stock market through more than my share of good and bad times, most of those forecasts will be wrong, some wildly so. Still, they can help investors understand sentiment, and some analysts were pretty close to the mark with their S&P 500 targets for 2025.
S&P 500 returns by month (2025):
- December (as of 12/30/2025): 17.3%, according to The Wall Street Journal.
- November: 0.13%
- October: 2.27%
- September: 3.53%
- August: 1.91%
- July: 2.17%
- June: 4.96%
- May: 6.15%
- April: -0.76%
- March: -5.75%
- February: -1.42%
- January: 2.7%
Source: YCharts
For example, last January, our long-time market veteran writer,Charley Blaine, compiled all the S&P 500 targets for 2025 from major analysts. Carson Group’s Ryan Detrickalmost perfectly predicted where the S&P 500 would end up. He targeted the benchmark index climbing to 6900, a practically perfect outlook, given its current value of 6896 as of December 29.
That’s quite an accomplishment. According to Bespoke, most predictions are wrong, and often by a significant margin. Since 2000, analysts have missed the mark by 14.1%.
Detrick, Carson Group’s Chief Market Strategist, thinks stocks have a shot at double-digit gains in 2026.
“We’re looking at three spectacular years in a row. That doesn’t mean, though, that this fourth year can’t be solid,” said Detrick in an interview with TheStreet. “We probably don’t gain 20%. Well, you know what? You know, 12 to 15%, we think makes a lot of sense in 2026.”
Still, he recently offered a stark warning to investors on X, formerly Twitter, that the middle year of the four-year presidential cycle can be perilous for investors. As a result, 2026 could see a substantial intra-year pullback.
The S&P 500 is on track to finish the year up 17%. The outlook for 2026 is murkier.
Reuters
Analyst offers stock market warning for 2026
The stock market tends to perform best in the first and final years of the Presidential cycle, likely due to election-year promises, such as lower taxes, and first-year optimism as promises get proposed as legislation.
Since starting my career as a Wall Street sell-side analyst in 1997, I’ve kept the Stock Trader’s Almanac on my desk, because, as Twain once said, “while history doesn’t repeat, it often rhymes.”
The Almanac has focused on the impact of the Presidential cycle on sentiment and markets since the 1960s.
Related: Every major analyst’s S&P 500 price target for 2026
“Presidents and their parties engage in a quadrennial dance to hold power that impacts geopolitics, economics, and the stock market profoundly,” writes Jeffrey Hirsch in the 2026 edition of the Stock Trader’s Almanac.
The dance often means volatility in the mid-year of the cycle, as midterm elections cause uncertainty. The situation could be particularly acute this year, given President Donald Trump’s polarizing personality.
“Midterm election year 2026 promises to be fraught with crisis, bear market action, and economic weakness,” notes Hirsch.
Midterm Election Years offer the Lowest Returns in the Presidential Cycle.
Carson Investment Research, YCharts, TheStreet
Carson Group’s Detrick is also a fan of stock market history, often quoting past precedents to help investors digest market moves. In a post on X, Detrick reinforced the risks associated with the middle year of the cycle.
“No one knows when the low will be next year,” wrote Detrick. “Just remember that midterm years see the largest peak-to-trough pullbacks.”
Detrick shared a chart to back up his point. Since 1950, the average pullback in the first, third, and fourth years of the cycle has been between 11.2% and 12.9%. The second year has seen an average intra-year drop of 17.5%.
Midterm Years see the largest intra-year pullback in the Presidential stock market cycle.
Carson Investment Research, FactSet, TheStreet
Dig into the data, and some of the returns during the downturns are downright nerve-racking. There have been nineteen Presidential cycle mid-years, and 20% bear market drops have happened six times, including a 33.8% retreat in 2002 and a 25.4% drop in 2022.
A 2026 pullback may create major buy-the-dip moment
While Detrick warns that drawdowns can be particularly painful in the second year of a Presidency, he is also quick to point out that second-year selloffs have historically created big gains for risk-tolerant investors who buy the dip.
Since 1950, the S&P 500 has produced a remarkable 31.7% average return in the year following a second-year tumble, significantly better than the one-year returns on average after drawdowns in other years of the cycle.
Again, digging deeper into the data shows that some of the post-drop recoveries have delivered arguably life-changing style returns. After the lows in 1982, the S&P 500 returned 57.7%, and in 2018, it gained 37.1%. Overall, one-year returns following mid-year pullbacks have been 30% or more 13 times, or roughly 68% of the time.
Hirsch agrees with Detrick that if the typical swoon happens, it may precede substantial gains.
“Where there is great danger, there is also great opportunity,” wrote Hirsch in the Stock Trader’s Almanac. “This sets up the ‘Sweet Spot’ and the next great buying opportunity.”
Hirsch says history suggests a tough second and third quarter for stocks, setting up a “rally in Q4 at the outset of the ‘Sweet Spot’ pushing the market into the black with a net gain for the year of 4-8%.”
What investors can do now
I’ve seen more than one investor extrapolate forecasts to guarantees and pay the price. If I’ve learned anything over all these years, it’s that the stock market can go much higher (and lower) than anyone thinks possible, and intrayear zigs and zags will do their best to derail you from your financial plan.
We may or may not follow history in 2026, experiencing a significant pullback, but even if we do, it could be short-lived, given Detrick remains bullish.
“The stock market is the only place where things go on sale, and everyone runs out of their store screaming,” Detrick told TheStreet. “So there’s going to be a sale at some point. Things are going to pull back. Do not use it as an opportunity to panic. Use an opportunity to follow your investment plan.”
I echo that sentiment. Instead of reacting emotionally, take inventory. If you’re a long-term investor with a plan, stick to it. Stocks historically go up and to the right, and selling with the hope of buying back later at lower prices requires you to be right twice – when you sell and buy — an unlikely proposition without lots of real-world experience.
That said, if you have stocks in portfolios that you bought a while back for a reason that no longer applies, consider taking some of the table. Similarly, if a holding has become keep-yourself-awake-at-night large, consider pairing a little back so that a downdraft in 2026 won’t leave you wrestless. A little prudent pruning here and there can provide you with dry powder that you can use to stair-step your way into any sell-off, allowing you to buy low with money you pocketed by selling high.
Related: Goldman Sachs resets bets on US economy in 2026
