Investors who were hoping for a Santa Claus rally have been disappointed. After a promising move higher on Dec. 26, markets were down heading into 2026. But it’s a good reminder that investing, particularly long-term investing, isn’t about what happens during one period of time.
The setup for stocks continues to look bullish in 2026. First, the major indexes are near record highs despite investors having to navigate a cloudy macroeconomic picture. Second, while many stocks, particularly in the technology sector, are objectively overvalued, Morningstar’s December 2025 fair-value work shows that U.S. equities are trading at about a 3% discount to intrinsic value.
