SPY -7.0% ytd, QQQ -8.4 ytd, my account -5.0% ytd
Most major market averages are ten percent off their highs, making the market correction official. I haven’t done as much trading. AMZN, BRKB, META, MSFT are all losers for 2026. -10% from the highs is not enough for me to deploy cash reserves to buy. In my January update, I wrote that market is slightly over valued. It is more in line now, but there feels like more uncertainty now.
It is remarkable how much AI can already do, especially consumer level AI. It might be scary what high level super expensive AI is capable of, or maybe it isn’t much better. It does seem like China and Japan are ahead of the U.S. in robotics. Their societies, especially Japan, are more likely to turn over certain tasks to smart robots. Europe may become an economic backwater because they are less likely to embrace robots and AI. One historical comparison might be countries that built lots of railroads, and those that didn’t do much with that invention.
With every big invention there will be winners and losers. People might think it is easy to pick winners. Keep in mind the 1960s era movie The Graduate. The secret word is Plastics, the keystone to the future. Indeed, plastics became much more popular in the next 30 years. However, the big stock winners, mostly had little to do with making or selling plastic.
Already several of the big mega cap companies AMZN, BRKB, META, MSFT have seen their stocks under perform. It may be the beginning of a long period of that.
I am holding my own at -5% for the year. Large cash reserves and being cautious limits the downside (and upside). Sure, we would like all like to make money every month, but limiting downside during difficult markets is a big piece of the long term puzzle.
I still believe a crash is highly unlikely in 2026. Odds seem higher for late 2027.
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