FEAR & GREED | Business News Q+A: The bull and bear cases for equities in 2026
Feb 2, 2026
Roger Montgomery, founder and Chief Investment Officer at Montgomery Investment Management, offers sharp market perspective. He reviews 2025 drivers like the AI boom and a shift beyond US megacaps. He lays out both bullish and bearish cases for US equities in 2026. He discusses the role of the US dollar, commodity rallies, and why diversification may matter as volatility returns.
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Episode notes
The Great Broadening Of 2025
- 2025 saw an AI euphoria followed by a broad shift away from US megacaps into small caps and international markets.
- Gold and silver rallied strongly as the US dollar weakened and investors searched beyond US exceptionalism.
Bull Case: AI-Driven Earnings Growth
- There is a clear bull case expecting AI-driven EPS growth to lift the S&P 500 significantly in 2026.
- The bull thesis relies on analysts upgrading earnings and sustained productivity gains from AI deployment.
Valuation Risk In US Equities
- The bear case points to elevated cyclically adjusted P/E ratios, implying low expected long-term returns from US equities.
- Historical CAPE readings above 25 have preceded weak five-year returns, warning of possible zero returns over the next decade.