This year’s outcomes really underscore the trends I had anticipated and set the groundwork for our biggest opportunities in 2026.
Hello there, reader.
Business thinker Peter Drucker once said, “The only thing we know about the future is that it will be different.”
Looking back over the last year really proves this point. Different, unexpected, unprecedented…you can pick any word that fits.
With everything that’s gone down this year—like the continuous trade conflict, the longest government shutdown in U.S. history, and the remarkable (but costly) progress in AI—it might seem like many market forecasts from earlier this year have become irrelevant.
But one of my predictions has stood the test of time.
As I noted to members of the fly investment report, I predicted that the highly valued Mag 7 stocks would experience a decline in their appeal.
The reasoning was pretty straightforward. Valuations have skyrocketed, and the price of gaining a competitive edge in AI remains high.
This week validated my predictions once again.
Wall Street veteran Ed Yardeni announced on Monday that he will officially lower his expectations regarding “The Magnificent Seven,” which includes Amazon.com Inc. (AMZN), Apple Inc. (AAPL), Alphabet Inc. (GOOGL), Meta Platforms Inc. (META), Microsoft Corp. (MSFT), Nvidia Corp. (NVDA), and Tesla Inc. (TSLA).
Mr. Yardeni pointed out that the Mag 7 firms are facing unique and fierce competition, and he anticipates that the remaining 493 companies in the S&P will become increasingly valuable.
Moreover, HSBC’s prediction of a significant economic slowdown in 2026 and an uptick in earnings growth for other S&P companies supports what I’ve been saying…
The valuations of our most loved investments are nearing unsustainable levels.
Following the success of this accurate prediction, I’m eager to explore how my other forecasts have fared, especially as certain trends seem poised to extend into 2026.
Next, I’ll explain how to act on these predictions.
Let’s get into it…
Breaking Down the Predictions for 2025
1. Corporate profit margins will rise
I had anticipated that companies would find ways to boost their profits this year, and that’s exactly what transpired.
The S&P 500 index recorded earnings growth of 12.9% in the first quarter and 12% in the second. In the third quarter, a remarkable 81% of companies in the index exceeded revenue expectations, compared to an average of 73% in 2013.
Looking ahead to 2026, Yardeni projects that “total earnings per share for S&P 500 companies will increase from $268 this year to $310 next year.”
This is one prediction that could very well continue to hold true.
2. The pharmaceutical sector will outperform the S&P 500
This prediction didn’t exactly take off at first, but the pharmaceutical sector rebounded in the latter half of 2025, backing my forecast.
The evaluation of the pharmaceutical industry, as indicated by the iShares US Pharmaceutical ETF (IHE), was mostly down until late September. However, it has since surged to a 28% year-to-date increase, compared to the S&P’s 17.6% rise.
We’re relieved that recent breakthroughs have shifted the year’s outlook positively.
Consider that the fly investment report is holding shares in Bristol-Myers Squibb Company (BMY), which has resumed its Phase 3 study on Cobenfi as a potential treatment for Alzheimer’s disease after a pause for issues at a trial site.
Such news certainly excites us about our healthcare investments.
3. Some foreign markets will surpass the S&P 500
This appears to be on track. For the third time in the last decade, the S&P 500 is likely to lag behind international markets.
Currently, the S&P 500 ranks 41st out of the top 60 stock indexes globally, while the iShares MSCI Non-US ETF (ACWX) has climbed 30% since the start of the year.
That’s why I’ve invested in some of the strongest foreign stocks, including one that has gained 80% in just eight months.
Investing Amidst Uncertainty
I’m referring to one of my recommended international stocks. The fly investment report portfolio features a global luxury and lifestyle brand.
Although this company produces its goods outside the U.S., it holds a competitive edge here over similar brands that face high tariffs on imports from China and Southeast Asia.
Click here for more details on this stock.
Even though the dollar has stabilized this year, I believe foreign stocks will continue to appreciate due to low valuations and widespread growth observed overseas, and this trend is likely to persist into 2026.
In the fly investment report, we’re preparing for the variations, sameness, and everything else that the future has in store.
In fact, I’m set to release the final version of the fly investment report soon, probably within a few days. You can get on board before the release by clicking here to gear up for next year.
Nice to meet you,
Eric Fry
