Welcome to our January 2026 Viewpoints, a monthly bulletin from PDS Planning to our valued clients and friends. Our goal with each issue of Viewpoints is to provide you with a wide variety of perspectives on life and wealth. Feel free to share with others.
Varying Lengths of Bull Markets
The chart below shows the length of the current bull market (dark blue) alongside the previous five. Today, we are in the fourth year of the current rally, which has continued to meet and exceed all-time highs. Yet consumer sentiment is below average, valuations are high, stocks are expensive, and geopolitical risks are elevated…so we’ve got to be nearing the end, right?
Not necessarily. The post-financial-crisis rally extended into year 12, and the bull market following Black Monday in 1987 lasted into year 13. Time isn’t a limiting factor here. History suggests there could still be room to run.
Fixed Income Expectations
Bonds had a great 2025 with the US Aggregate bond index posting a 7% total return for the year. As interest rates, and as a result short-term CD, Treasury, and money market rates, have fallen and are expected to continue declining, bonds and bond funds could carry on with positive performance.
The chart below first presents data on the current characteristics of the US Aggregate bond index and the current 10-year Treasury yield at 4.17%. Beneath are return estimates. If the 10-year yield falls to 3.50% by year-end, the expected total return for the US Aggregate bond index is 8.27%. All this to say – we continue to be fans of bonds in portfolios.
Geopolitical Events and the S&P 500
Tensions have escalated over Greenland, which is a territory of Denmark, with the administration pursuing negotiations for control of the island and possibly imposing tariffs on several European countries. These actions have strained relationships with NATO allies and prompted strong reactions from European leaders. Separately, the U.S. military conducted an operation that detained Nicolás Maduro in Venezuela on charges related to drug trafficking and corruption. The most important lesson from history is that geopolitical shocks tend to create short-term volatility, but don’t typically change the direction of markets over the long run. We’ve seen this pattern repeatedly in recent years with conflicts in Ukraine and the Middle East. This is because geopolitical events can temporarily affect sentiment and commodity prices. However, they rarely alter the underlying market and economic drivers in a lasting way.
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