'Highly Likely' We'll See A True Bear Market In 2026 | New Harbor Financial

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**John Lodra** (0:46)
I think there's a very good chance we get, you know, some very, very, very significant turmoil next year. Would not at all be surprised to see markets down or barely up. You know, but the ride along the way, I think it's highly likely we see a true, true bear market, you know, if you use 20 percent as the metric. I think it's quite likely we see a pretty sizable drawdown next year.

**Adam Taggart** (1:16)
Welcome to Thoughtful Money, I'm Thoughtful Money founder and your host, Adam Taggart, welcoming you here for a special end of the year recap with the team at New Harbor Financial, one of the endorsed financial advisory firms by Thoughtful Money. I'm joined as usual by lead partners, John Lodra and Mike Preston. Gentlemen, how are you? We're interviewing, we're recording this interview right before Christmas Eve, so let me start just by wishing you both a very Merry Christmas, even though this will be running after Christmas.

**Mike Preston** (1:44)
Hope you have a great Christmas, too, Adam. And here we are on Christmas Eve. And yes, I know your viewers will see this after Christmas, but certainly looking at the market, the market has delivered holiday cheer, hitting a new all-time high here today on the day before Christmas. And this is a shortened holiday day as well. And so hopefully this continues for some time. We'll see. We'll talk about it today.

**John Lodra** (2:07)
Adam, I'll just add my Christmas wishes to you and your family and your viewers. I'm joyed to see that we have a white Christmas here outside my window here in Massachusetts. And just makes for a nice little twist to a special holiday for a lot of people, including my family.

**Adam Taggart** (2:23)
Well, that's very nice. We're back in California visiting my wife's family for the holidays. We're having a very wet Christmas here. Probably part of the reason why you can hear from my voice. I am a bit under the weather here. I'll apologize in advance, folks. I'm going to lean hard on John and Mike in this discussion because my head feels like it's filled completely with cotton, except for the like 100 gorillas with sledgehammers that are trying to bash their way out of my brain. So yeah, this flu I've got, I just tested last night. I've got the influenza A strain, I guess. And I'll just tell you folks, it's not as fun as it looks. So if you can avoid it, I would recommend you do so. But anyways, on to more fun topics. So Mike, as you said, looks like Santa has arrived on Wall Street. We're getting a Santa Claus rally. The S&P is at a record, I think, pretty much as we speak here. As are the precious metals, which we'll talk about in just a moment as well. It's been another hell of a year for the markets. We've had two 20 plus percent returns in 23 and 24
Pretty improbable to have another really big up year for the third year in 2025, but that seems to be what the market has now delivered. Looks like it's going to be close to what, like an 18 percent return or so for the year. So I guess, why don't you tell me about what indicators you guys are looking at? Is this kind of giving you guys the green light going into 2026?

**Mike Preston** (4:08)
I wouldn't say to get too excited here. I mean, our suite of indicators are solidly bullish. They're in the green zone. And we're starting to see some broadening out. But I'm going to share some charts here so we can take a look at a number of the different indicators, or at least a number of the different charts. So that should be up now. This is the S&P 500 And as I mentioned, we hit a new all-time high. So there's the new all-time high as of right now, 6937
But actually, before the last couple of days, you could go back to late October. We essentially went nowhere for about two months. And here, just the last couple of days, we eked out a new all-time high. Not that much to get excited about other than it is an all-time high. And don't forget, there's still a few days left in the year. So even though we're up 18% or so, as you stated, who knows where we're going to be at the close on December 31st. And another thing we've noticed is that we started to see a broadening in the market. So if I change the symbol here and we start to look at the equal-weighted S&P 500, we can see that we had about two weeks ago, we had a new all-time high. So here's a broadening. Now it's done some backing and filling here at the last week. Not at a new all-time high today. How about the Russell 2000? The Russell 2000, same thing. We're broadening out. These are good signs for a broader rally. And it immediately backed and filled. The NASDAQ is not at a new all-time high today. Still struggling about maybe a percent or two below an all-time high. So what is this really saying? We've got to take a look at what the indexes, the indices are actually doing and combine that with our bullish indicators, which you have to be careful. You don't ever know what the immediate future is going to bring. But now that we're back above the 50-day moving average, we've successfully tested that 50 And 50 is the red one. And the light blue is the 21-day moving average. And we're at an all-time high. There's a much higher probability that we're going to get a squeeze to new highs. And so if I went to weekly, you can see that we're basically we went nowhere for two months, as I just said. And now we're coming out of that base. That could be a launch pad well up into the 7,000s. So everything really needed to think about the risk control. But if we had to guess, I think we're going to get a squeeze higher here in the next few months. And so we're not trading aggressively from that perspective. Let's stop sharing. We are nudging up our equity exposure just a little bit. We were at 45% equities. We just increased it to 47.5, increased it by two and a half. We have very few covered calls or hedges at this point. If we get more extended, if we start to go vertical, we'll start to add, I think, some more hedges, particularly covered calls. We may even reduce equity into that ramp depending upon what the other indicators were saying. But for right now, it is green light and you have to be careful about getting too aggressive because the macro and the valuation says that we could easily be a lot lower than this in the market. We just don't know when that turn is going to come. So number one goal here is to try to make returns for our clients, but not give back much on the turn and that's what we're trying to do. Right now, the arrow is pointed up.