Here are some survey results from Deutsche Bank about the biggest risks investors think we will face in 2026:
There are no surprises here.
Investors are concerned about AI trading and the Fed’s policy blunder. It’s not real but what else do you expect them to say?
I could come up with a bunch of other dangers that could appear in the left field, but my thinking is that predicting the dangers in advance is more important than how you prepare for a wide array of landmines.
Being right gives an ego boost but you don’t get extra points for being right about what happens next if you don’t position your portfolio correctly.
The biggest risk to me is that investors’ expectations are off because returns have been so high in recent years.
Just look at the performance of the S&P 500 year-to-date since 2019:
2019 +31.2%
2020 +18.0%
2021 +28.5%
2022 -18.0%
2023 +26.1%
2024 +24.9%
2025 +19.4%
Sure, 2022 was a bad year for the markets but look how good the returns have been in 6 of the last 7 years.
Even with a Covid Crash in 2020 and a bear market in 2022, the S&P 500 is up more than 200% overall since the start of 2019, a solid annual return of nearly 18% per year.
Bull markets can last longer than you think but we cannot have above average returns forever.
Where the biggest risk lies is in 2026…or 2027 or 2028 or some undetermined year in the future.
Ultimately, above-average returns lead to below-average returns. Sometimes the biggest reason for a bad return is because a good return took too long.
It’s just hard to know when that will happen or what the trigger will be.
Michael and I talked about the biggest dangers of 2026 and more in this week’s Animal Spirits video:
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