Market Insights for December and Beyond

Recently, I touched on how December tends to be a prime month for purchasing stocks. It’s that time of year when both retailers and software companies can expect their highest sales volumes, thanks to holiday shopping and some businesses making the most of their remaining budget. Additionally, it’s a period when corporate performance numbers often get a boost to hit year-end goals.

Historically, the market has shown a 75% chance of closing higher in December since the 1950s.

As we wrap up the year, there are favorable conditions alongside a bit of selling pressure. Despite a decline this week, the S&P 500 has risen 15% since the start of the year, largely fueled by robust corporate earnings. Typically, strong earnings have a way of continuing into following months.

However, I can’t help but think we might be in for a rough patch in 2026.

Looking back at the last two presidential terms, stock valuations have dropped significantly in the second year, once the initial excitement of a new president fades. This period often reveals the real impact of management policies on the economy, leading to a less rosy market outlook. Below is a graph illustrating the economy-adjusted P/E ratio of the S&P 500 throughout the last two presidencies.

Interestingly, even with profit growth of 6% observed in the last two medium-term intervals, a fall in valuations has brought market levels down.

Data going back to 1928 indicates that stocks typically yield only around 3.3% in the second year of a president’s term, which pales in comparison to the average return of 9.7% in other years. Additionally, U.S. Bank analysis suggests that this 3.3% is even less favorable when evaluating performance from November to November since the 1960s.

The cyclical challenges of U.S. elections are quite evident.

It’s also worth noting reasons to be wary about the 2026 market.

• Narrow growth: Growth in the U.S. economy seems increasingly reliant on a handful of AI companies. Louis Navellier pointed out that investment in data centers and related AI tech represented a staggering 92% of U.S. GDP growth in the first half of 2025. This focus is putting financial strains on other capital-heavy sectors. According to FactSet, profit estimates for real estate, healthcare, energy, and finance have been revised down by over 10% in the last two months.
• Consumer confidence: The latest data reveals consumer confidence has plummeted. In October, the University of Michigan’s Consumer Sentiment Survey reached its lowest point ever. Predictions for the 2025 holiday season by PwC indicate that average gift spending might decrease by 11%, in part due to a decline in spending from Gen Z and general price drops.
• Job Cuts: Perhaps most alarming is the resurgence of layoffs reminiscent of 2022’s “year of efficiency.” Large companies are beginning to trim workforce numbers to minimize expenses. For instance, Amazon recently announced a reduction of 14,000 jobs, not limited to just entry-level positions. Verizon also revealed plans to cut 15,000 jobs, reducing its workforce by 15%.

These actions are not what you want to see in a booming market.

On a brighter note, some savvy investors are still spotting opportunities in certain market areas. Just last week, we highlighted three companies with notable insider buying activity. This trio has gained a percentage point over the past week, even amid the S&P 500’s downturn, which might indicate a search for safer investments.

This week, I plan to share two more stocks poised for resilience ahead of potential market dips.

Preparing for Market Volatility

Over the last few weeks, it has been evident that some neutral market strategies are faring surprisingly well. Our trading team, led by Jonathan Rose, has successfully closed several profitable deals, such as:

• Viasat Co., Ltd. (VSAT). +158%
• Bitmine Immersion Technologies Inc (BNMR). +73%
• Corbo Co., Ltd. (QRVO). +283%

These gains illustrate how Jonathan’s approach does not hinge on market fluctuations. Instead, it capitalizes on volatility by maintaining a neutral market position.

Jonathan’s system is adept at identifying when significant institutional investors make large trades, which often becomes evident in volatile conditions. These opportunities could become increasingly crucial as we approach 2026, given that heightened uncertainty and tighter consumer spending are likely to escalate market volatility.

Last week, Jonathan collaborated with analysts to explain how his system captures buying and selling trends from hefty firms, making it effective even in challenging market conditions.

Now, let’s return to the two stocks that may hold their own even if investors start to tighten their expenditure in terms of profit valuation in 2026.

Two Promising Stocks as 2026 Approaches

The first stock to consider is Bloomin Brands Co., Ltd. (BLMN), owner of Outback Steakhouse and other dining establishments. Last week, its CFO made a significant insider purchase of 150,000 shares at $6.38 each, which is a noteworthy move as this marks the first substantial insider transaction since the CEO’s acquisition of shares back in March 2025, following challenges from “Emancipation Day” tariffs.

Currently, the stock’s trading multiples are compelling. It’s going for six times expected earnings—well below the long-term average—and is still profitable despite a small decline in revenue compared to its COVID-19 peak.

Moreover, the turnaround efforts are starting to yield positive results. On November 6, the management stated that same-store sales experienced positive growth across all four brands for the first time since early 2023. They’ve been focusing on simplifying menus and launching advertising efforts while also providing both economical and premium options.

On the flip side, the restaurant sector as a whole isn’t in the best shape right now. Yet, if the CFO’s assessment holds true, there’s potential for Bloomin’ stock to double in value by 2026 as the market gravitates towards lower-priced stocks.

The second stock to watch is Mosaic Co., Ltd. (MOS), a major player in the fertilizer industry in the U.S.

Recent market conditions due to global events have significantly altered the fertilizer landscape. While Mosaic’s stock has dropped by a third post-July amidst fears of a U.S.-China trade conflict, it’s essential to note that producer prices have been on the rise since mid-2023, which bodes well for their outlook. Potash prices, a significant contributor to Mosaic’s profitability, have increased recently, reinforcing the potential for future gains.

With a potential upside of 40% if prices stabilize, the attractive multiples Mosaic offers may provide room for a buffer, even amidst potential market challenges.

Looking Ahead to 2026

It has become quite clear that the market is displaying signs of trouble, despite some favorable indicators last week.

• The U.S. government is functioning again…
• Tariffs have been reduced to help lower food costs…
• Data suggests U.S. inflation remained controlled in October…

Nonetheless, all three major U.S. indexes have taken a hit this week, and even small dips can trigger selling frenzies when valuations are high.

The takeaway? Savvy investors are starting to liquidate while retail traders remain more hopeful. As we navigate this landscape, it could be beneficial to explore Jonathan’s strategies and insights from our analysts regarding upcoming market fluctuations.

Just a reminder, the replay of the informative session is available until Monday night. I encourage you to check it out soon.

Until next time,

Tom Yong, CFA