The Market’s Phantom Carriage

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The S&P 500, that most meticulously charted of illusions, has indeed performed a curious dance these past few years. A flourish in 2023, a further pirouette in 2024, and a continuation of the spectacle into 2025 – all fueled, it seems, by the airy whispers of artificial intelligence. And now, in 2026, a tentative step forward, a mere percent or so, as if testing the strength of the ice. One might almost suspect a mischievous imp is guiding the index’s movements, delighting in our attempts to predict its next leap.

Yet, lurking beneath this seemingly buoyant surface are the tariffs, those peculiar edicts issued by the esteemed President Trump. They are not merely numbers on a ledger, mind you, but rather a subtle disruption of the natural order, a tightening of the purse strings that causes businesses to… hesitate. The hiring of workers, once a steady rhythm, has slowed to a mournful waltz. A mere 181,000 souls added to the workforce in 2025, a paltry sum compared to the 1.2 million of the previous year. It is as if the very gears of commerce are beginning to grind, coated in a fine dust of uncertainty.

And so, we arrive at the paradox. A slowing economy, a richly valued index… a situation ripe for observation. The Wall Street soothsayers, those gentlemen of impeccable tailoring and questionable foresight, predict, predictably, continued gains. Double-digit returns, they proclaim, as if summoning them with the sheer force of optimism. One wonders if they consult tea leaves or perhaps the entrails of pigeons. But let us examine their pronouncements, shall we? For even in folly, there may be a glimmer of truth… or a particularly amusing deception.

The Consensus and Its Curiosities

The collective wisdom, as it were, suggests a 10% ascent for the S&P 500 in the remaining months of 2026. A tidy sum, to be sure. They speak of robust revenue growth, propelled by tax cuts and the aforementioned artificial intelligence, and the gentle easing of interest rates by the Federal Reserve. It is a vision of harmonious prosperity, a world where numbers align and fortunes multiply. One almost expects a chorus of angels to descend and confirm the forecast.

Below, a table displaying the pronouncements of these esteemed analysts. Note the varying degrees of optimism, the subtle shifts in perspective. Each firm, a miniature principality, issuing its own decree. Oppenheimer, with a bold 17% projection, leading the charge. Deutsche Bank, a more cautious 15%. Morgan Stanley, ever the pragmatist, at 12%. And so on, down the list, a parade of predictions, each as likely to be correct as the last.

Wall Street Firm S&P 500 Year-End Target Upside
Oppenheimer 8,100 17%
Deutsche Bank 8,000 15%
Morgan Stanley 7,800 12%
Seaport Research 7,800 12%
Evercore 7,750 12%
RBC Capital 7,750 12%
Citigroup 7,700 11%
Fundstrat 7,700 11%
UBS 7,700 11%
Yardeni Research 7,700 11%
Goldman Sachs 7,600 10%
Canaccord Genuity 7,500 8%
HSBC 7,500 8%
Jefferies 7,500 8%
JPMorgan Chase 7,500 8%
Wells Fargo 7,500 8%
Barclays 7,400 7%
CFRA Research 7,400 7%
Societe Generale 7,300 5%
Bank of America 7,100 2%
Median 7,650 10%

Twenty firms, each peering into the crystal ball, each offering its pronouncements. The median forecast, a comforting 10%. But let us not be lulled into a false sense of security. History, that most unreliable of narrators, suggests that such forecasts are often… optimistic. In the last four years, the median estimate has been off by a staggering 16 percentage points. A margin of error large enough to swallow a small principality.

The Spectre of Valuation and the Midterm Shadows

The S&P 500 currently trades at 22 times forward earnings. A valuation it has maintained for the past 18 months. A lofty perch, to be sure. One reminiscent of the dot-com bubble of the late 1990s, or the feverish heights of the Covid-19 pandemic. In both cases, the inevitable correction arrived, a sobering reminder that even the most inflated bubbles eventually burst.

And now, looming on the horizon, the midterm elections. A time of heightened uncertainty, of shifting allegiances, of nervous investors. Since 1950, the S&P 500 has returned a paltry 4.6% in midterm election years. And, more concerning, has suffered an average intra-year drawdown of 17%. A chilling statistic. A harbinger of potential turbulence.

Let us be clear. I do not suggest abandoning the market today. Such a move would be… precipitous. But caution is warranted. Limit your purchases to your most confident ideas. And never, ever, invest in anything you are not prepared to hold through a steep and unsettling decline. For the market, like a capricious phantom, is prone to sudden and unpredictable movements. And those who chase its fleeting illusions often find themselves… lost in the shadows.

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2026-02-13 12:02