This month, in honour of the recently completed World Cup, we blow the whistle at Half Time of the 2026 stock market. 

So, grab a “Hydration Break” of your choosing and enjoy some of our thoughts on what to look out for the remainder of this year.  As we all know, the game isn’t over when you win the first half!  Egypt can definitely relate to that in their knockout game against Argentina, when their 2-0 lead evaporated in the final minutes.

Soccer (football?) and investing can be exciting and volatile, or slow and methodical.  While the exciting version often gets all the headlines, slow and methodical just lifted the trophy (congratulations Spain!)  The lesson here?  The strategy that may have worked in the short-term is not guaranteed to work forever.  In last month’s newsletter, we pointed out the potential danger of chasing parabolic gains in memory chip companies such as Micron, Intel & Sandisk, stocks which were responsible for an outsized portion of the S&P 500s gains in the first half of 2026 (see below for the top contributors as of June 30^th - you’ll see them prominently).

Times have changed.  Since we published that newsletter, Micron and Intel shed over 30% of their market value in less than a month.  (Not to be outdone, Sandisk dropped over 40%.)  All of these stocks are still significantly higher than they were to start the year, so the ball is up on the air on their next direction, even after this significant correction.  Perhaps there is a rebound after such a significant drop, but investors are now aware there is downside in play – the momentum is broken. Sometimes, certain stocks just deserve a Red Card – don’t play! 

Over that same time period (June 25^th to July 20^th), the S&P 500 went UP 1%.  So, investors were not selling and leaving the market, they were just shifting capital to other sectors and companies.  This can be considered healthy market behaviour. 

One segment of the market that is starting to regain some investor attention is the Magnificent 7 (Nvidia; Apple; Microsoft; Amazon; Alphabet; Meta and Tesla).  All of these companies (except Tesla) have reacted positively during this rotation out of memory-chip stocks, with Microsoft, Meta, Apple and Amazon up double-digit percentages since June 25^th.  This group of stocks was recently at their lowest relative valuation compared to the S&P 500 in about 10 years (see chart).  Perhaps this recent bounce can ignite a longer-term reversal in that trend.

The 2^nd half of 2026 also brings politics to the forefront (what else is new?) with the U.S Midterm election in November.  Just be aware that there can be lots of noise this time of year and markets tend to get volatile prior to midterm election day.  This doesn’t mean you need to make any major changes to your strategy, especially since gains after any midterm year low have been extremely positive the following year (see below).  As England found out against Argentina, moving into a “prevent defence” strategy doesn’t always work out.  To be successful, you still need to play some offense.  There are also no guarantees that this midterm-year pattern continues in 2026, but there will still likely be plenty of “exciting” headlines coming out of the White House in the coming weeks to keep everyone on their toes.

Let’s end this newsletter on one final “half” chart.  If you were to segment the entire calendar into half-months (24 of them), you’ll note that the recently completed 1^st half of July is arguably the most-positive period for investors.  2026 was no different, as the market went up 0.97% on the month through July 15^th. Historically, these 15 days have been positive for the U.S. market 70% of the time, averaging a 1.5% return since 1928 – the highest of any period!  Only December’s 2^nd half (which includes the famous “Santa Claus Rally”) has a higher winning percentage at 75%.  Though that does feel like an unfair comparison since Santa Claus has magic powers – just like Lionel Messi. 

Enjoy the rest of your summer and best of luck in the 2^nd Half!