Why 2026 Will Reward Patient Investors: Slower Gains, Higher Volatility, But Still Positive

Markets shake off precious metals chaos, rally on manufacturing strength

The quick scan: US stocks kicked off February with solid gains as investors refocused on earnings momentum and economic data after last week's dramatic precious metals selloff. Manufacturing activity expanded for the first time in a year, signaling unexpected resilience as commodities and cryptocurrencies continued their volatile swings.

S&P 500: +0.54% to 6,976.44 – Near all-time highs as economically sensitive sectors led the way, with technology and growth stocks providing support despite Nvidia's OpenAI investment uncertainty
Dow Jones: +1.05% to 49,407.66 – The biggest gainer of the day, led higher by Caterpillar (+5.05%), Walmart (+4.14%), and Apple (+4.06%) as cyclicals and industrials strengthened
NASDAQ: +0.56% to 23,592.11 – Tech stocks climbed as pressure from last week's selloff eased, with AMD up nearly 5%, Micron surging over 5%, though Nvidia slipped 2% on stalled $100 billion OpenAI deal.

What's driving it: Precious metals and cryptocurrencies stabilized after Friday's chaos – gold had plunged 11% and silver crashed 30% (its worst day since 1980) while bitcoin dropped below $80,000 for the first time since April. With those worries easing, investors returned focus to strong manufacturing data (first expansion in a year) and upcoming Big Tech earnings from Amazon and Alphabet. Kevin Warsh's Fed chair nomination also shifted sentiment, while oil tumbled as Trump signaled talks with Iran.

Bottom line: The market's ability to rally despite ongoing volatility in precious metals and crypto shows resilience – but also reveals how quickly "crowded trades" can unwind. For L-Plate retirees, this reinforces why diversification matters: when gold, silver, and bitcoin all stumble together, having exposure across stocks, bonds, and sectors provides stability. Monday's manufacturing strength suggests the real economy is holding up, which matters more for long-term investors than weekend commodity drama.

The 2026 Investment Forecast You Actually Need to Hear

The scoop: After 2025's good-to-great gains for global stock markets – with the Straits Times Index up another 6% as of late January – what should investors expect in 2026?

According to legendary investor Ken Fisher: another positive year, but don't get exuberant.

Gains should slow from last year's 29% STI surge. Volatility could be high. But patience will be key to unlocking 2026's rewards. World stocks should top their 10% long-term annualized average even while lagging history's 22-plus percent average bull market years. And non-US stocks should lead again.

A year ago, Fisher predicted that dour sentiment would pave the way for positive surprise and a better-than-expected year, with non-US stocks leading. He was right. European stocks soared 28%, while world stocks rose 14% in Singapore dollar terms (21% in US dollars). US stocks lagged. In local currencies, 35 of 47 nations in MSCI's All Country World Index hit record highs, with 30 achieving this in the fourth quarter alone – including Singapore.

Many argued in 2025, as they do now, that US tech and AI froth masked an otherwise flimsy market. Five of America's "Magnificent Seven" tech giants actually lagged broad US markets, which again lagged the world. Some domestic names touted AI integration and productivity gains, but that didn't drive Singapore's outperformance.

What did? Chiefly, banks and industrials – up 26% and 28% respectively in Singapore for 2025. Those categories roared even louder in Europe: up 87% and 33% respectively. Tech-bereft European nations like Italy, Spain, and Austria, along with big bank hubs including Singapore, outperformed big-time.

What AI "bubble"?

Perhaps you see the STI's huge gains as a reason to invest solely at home. But eschewing global diversification is risky. Sure, bank stocks in Singapore helped 2025 returns and may again in 2026... or not. Narrow index booms easily become busts or deliver big lags, like in 2023. Global diversification is always vital.

But yes, big recent gains have stoked spirits somewhat. Of 73 professional forecasts for the S&P 500, only four see US stocks down more than -1% in 2026, with few outright pessimists. Meanwhile, tepid forecasts surround the median of 9.6%, broadly in line with history's long-term average. Few strong optimists.

Here's the thing: professional forecasters' consensus never happens one year out. Stocks pre-price that consensus. Hence, two 2026 outcomes look likeliest: stocks fall, or they top 10% gains. Fundamentals favor the latter.

The global yield curve is steep, spurring lending. US loan growth is a strong 6.1% year-on-year, more than double year-ago rates. The eurozone's business lending hit 3.6%, the highest in nearly three years. More lending fuels global economic growth, which should top dour consensus expectations.

Many fret over Trump's tariffs, threats, and geopolitical gyrations. Almost everyone argues "this time is different" while ignoring 2025's lessons. Those worries are already in stocks now – which makes them bullish.

The impactful political story of 2026 will be America's mid-term legislative elections in November. Early on, extreme primary campaign season rhetoric routinely spurs fears, grinding stocks sideways. After? The president's party routinely loses relative power in midterms, increasing gridlock. And stocks love gridlock.

Why? Big legislation stokes uncertainty by creating winners and losers – an anchor on stocks. Midterms kill that risk. So stocks soar. Political bias blinds most to this repeat "Midterm Miracle."

In US dollars, America's S&P 500 usually suffers meager returns in midterm years' first three quarters. But in Q4, stocks celebrate midterms – and gridlock – explosively, rising in 84% of history's midterm year fourth quarters. They climbed in 88% of each of the next two quarters, too.

It all spills into tightly correlated global markets – including Singapore and Europe – in one big rally. Developed markets normally parallel one another. What's good for US stocks is good for the world.

Geopolitics, uncertainty over new Fed chair pick Kevin Warsh, Trump's unpredictability, and more can still stoke volatility – maybe a correction like last April's. And the world isn't risk-free.

But 2026, overall, calls for moderate, patient bullishness.

For L-Plate retirees, this forecast offers something valuable: clarity without false promises. You're not being told to expect another 29% year. You're not being warned of impending doom. You're being given a realistic framework: positive returns, higher volatility, and the need for patience.

This is exactly the kind of environment where disciplined investors thrive and nervous ones stumble. The investors who'll succeed in 2026 aren't the ones chasing last year's winners or panicking at every correction. They're the ones who maintain global diversification, resist home bias, and understand that volatility isn't the same as risk.

Patience, in other words, isn't just a virtue in 2026. It's a strategy.

Actionable Takeaways for L-Plate Retirees:

• Maintain global diversification: Don't let Singapore's strong 2025 performance tempt you into home bias – narrow index booms easily become busts, and global diversification remains vital even when local markets shine.

• Expect slower gains with higher volatility: After 2025's 29% STI surge, recalibrate expectations for more modest returns in 2026 while preparing emotionally for bigger swings – positive doesn't mean smooth.

• Watch the midterm election pattern: US midterm elections in November typically create sideways market action early in the year, then explosive fourth-quarter rallies as gridlock becomes certain – plan accordingly rather than panicking during the quiet period.

• Focus on fundamentals, not fears: Steep yield curves, strong loan growth (US at 6.1%, eurozone at 3.6%), and improving lending conditions support continued economic expansion – the worry in headlines is already priced into stocks.

• Don't chase last year's winners: Banks and industrials drove 2025 outperformance, but sector leadership rotates – maintain balanced exposure rather than concentrating in what just worked.

• Remember that consensus forecasts never happen: With 73 professional forecasts clustering around 9.6% S&P 500 gains, expect either less than 10% or significantly more – stocks don't do consensus.

Your Turn:
Are you tempted to abandon global diversification after seeing Singapore's strong performance, or do you understand why that's exactly when diversification matters most?
How will you mentally prepare for higher volatility in 2026 while maintaining the patience needed to capture positive returns?
When markets grind sideways during midterm election season, will you remember the historical pattern of fourth-quarter explosions, or will you let media fear-mongering shake you out?

👉 Hit reply and share your thoughts – your answers could inspire fellow readers in future issues.

If this newsletter helped you set realistic expectations for 2026 – patient bullishness instead of exuberance or fear – consider supporting L-PLate Retiree on Ko-fi. Your support helps us cut through market noise and focus on what actually matters for long-term investors.

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