Investing resolutions for 2026: Tips to help you make money next year

Key Concepts

• Investing Resolutions: Proactive steps to improve investment strategy and knowledge.
• GAAP vs. Non-GAAP Accounting: Understanding the difference between Generally Accepted Accounting Principles (GAAP) and non-GAAP reporting, and prioritizing GAAP results.
• AI & Data Center Impact: The growing influence of Artificial Intelligence and the infrastructure supporting it (data centers) on investment opportunities and market dynamics.
• Market Cyclicality: The understanding that markets don’t move in a straight line and corrections are inevitable.
• Activist Investors: Investors who purchase shares in a company with the intention of influencing its management or policies.
• K-Shaped Economy: A situation where economic recovery is uneven, benefiting some segments of the population while leaving others behind.
• Corporate Earnings Resilience: The ability of companies to maintain or improve profitability despite economic headwinds like inflation and tariffs.
• Basis Points: A unit of measurement used in finance to describe the percentage change in an interest rate or yield (1 basis point = 0.01%).

Investing for Continuous Improvement & Market Awareness

The discussion centers around the importance of continuous learning and adaptation in investing, acknowledging that even experienced investors don’t have all the answers. The core message is that complacency is dangerous, especially given the current market environment which, while seemingly strong, could quickly reverse. As stated, “Anyone that tells you they have the investing game all figured out is well a dope. Like on a scale of 1 to 10, think 15 level dopiness.” The speakers emphasize that markets “do not go up in a straight line” and preparation for potential downturns is crucial.

Ten Investing Resolutions for the Coming Year

The primary focus of the conversation is a set of investing resolutions proposed for the next year. These resolutions are designed to enhance analytical skills and improve decision-making. They are:

1. Skepticism towards Management “Gibberish”: Critically evaluate information presented on earnings calls, avoiding blind acceptance of management’s narratives.
2. Executive Compensation Analysis: Thoroughly understand the structure and incentives behind executive compensation packages to discern potential conflicts of interest.
3. Prioritize GAAP Financial Results: Focus on financial results reported under Generally Accepted Accounting Principles (GAAP) as they are more conservative and reliable than non-GAAP results, which can be manipulated. (GAAP is a common set of accounting principles, standards and procedures that companies use to compile their financial statements.)
4. AI-Driven Profit Boost Assessment: Accurately assess the impact of Artificial Intelligence (AI) on company profits, assigning higher investment scores to companies demonstrably benefiting from AI implementation.
5. Activist Investor Target Identification: Identify companies vulnerable to activist investor intervention, potentially leading to value unlocking.
6. Physical Data Center Visits: Conduct on-site visits to AI data centers under construction to gain a firsthand understanding of the infrastructure supporting AI growth.
7. Tech Company Capital Expenditure Tracking: Closely monitor capital expenditures (CAPEX) of the 15 largest tech companies to identify investment trends and potential growth areas. (CAPEX refers to funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, and equipment.)
8. S&P 493 Value Screening: Screen for the 10 cheapest stocks within the S&P 493 index (likely a typo for S&P 500) using tools like Yahoo Finance’s comparison tool.
9. Stock Formation Recognition: Improve the ability to identify and interpret key stock chart patterns (formations) to anticipate price movements.
10. Small-Cap Exploration: Actively seek out promising small-cap companies (companies with a relatively small market capitalization) that are demonstrating innovation and growth.

Contrarian Investment Strategies & Market Sentiment

Sam offered a rules-based strategy: “if last year was an up year, you want to let your winners ride. Uh if last year was a down year, you want to own the three worst performing sectors.” He notes that this approach has historically yielded a 300 basis point outperformance and a 70% success rate, suggesting potential for contrarian gains. George advocated for a long-term, “stay on the ride” approach, emphasizing the importance of avoiding market timing.

Emerging Trends & Surprises in 2024

The discussion highlighted several key trends and surprises from the past year:

• Bitcoin vs. Precious Metals: A developing rivalry between Bitcoin and precious metals investors, with metals investors “taunting” crypto investors due to the strong performance of precious metals.
• Market Rebound Speed: The surprisingly rapid market recovery following what was referred to as “liberation day” (the context of this is not fully explained but implies a significant market event).
• Inflation Resilience: The unexpected lack of significant inflationary pressure despite the implementation of tariffs.
• Energy Market Dynamics: The interplay between increasing demand for energy due to AI and data centers, and lower oil and gasoline prices. The speakers expressed interest in how this will play out, particularly in relation to the “affordability crisis” and the “K-shaped economy.”
• Corporate Earnings Resilience: The remarkable ability of corporations to maintain and even grow earnings despite inflationary pressures and tariffs. Keith noted that companies have “baked in” tariff costs and exceeded expectations.
• Consumer Spending: The continued strength of consumer spending despite economic uncertainties.

Notable Quotes

• “Anyone that tells you they have the investing game all figured out is well a dope. Like on a scale of 1 to 10, think 15 level dopiness.” – Brian
• “Markets do not go up in a straight line.” – Brian
• “Don’t time the market. Stay on the ride. Enjoy while it lasts.” – George
• “Corporate earnings and resilience…has really flexed over the last couple of years in a material way.” – Keith

Logical Connections

The conversation flows logically from a general call for continuous improvement in investing to specific, actionable resolutions. The discussion of market trends and surprises provides context for the resolutions, highlighting areas where increased vigilance and analysis are needed. The contrasting perspectives on investment strategies (rules-based vs. long-term) demonstrate the diversity of approaches within successful investing.

Conclusion

The core takeaway is the need for proactive, informed, and adaptable investing. The speakers emphasize the importance of critical thinking, thorough research, and a willingness to challenge conventional wisdom. The proposed resolutions offer a practical framework for investors seeking to enhance their skills and navigate the complexities of the market, particularly in light of emerging trends like AI and evolving economic conditions. The overall tone is one of cautious optimism, acknowledging the potential for future gains but also recognizing the inherent risks and the need for constant vigilance.