SoFi’s Liz Thomas breaks down biggest risks and opportunities shaping the stock market in 2026.
Transcript:
00:00:00 – Introduction
00:00:17 – Market Overview: November Performance
00:01:28 – AI Trade Weakness
00:02:46 – Buying Opportunities in Big Tech
00:04:08 – Market Fragility Concerns
00:05:29 – 2026 Market Outlook
CAROLINE WOODS
Joining me now, Liz Thomas, Head of Investment Strategy at SoFi. Liz, so good to have you at the desk. Thank you.
LIZ THOMAS
Yes. Thank you for having me.
CAROLINE WOODS
All right. So let’s get your broad view of what’s going on with this market, because November is typically the best month of the year for the stock market. And we’re not seeing that play out, at least not yet. What’s going on?
LIZ THOMAS
Yeah I mean allegedly November is good and that continues into December. And then we have this nice year end rally. Call it whatever you want, year end Santa Claus, all the things. Right now, it doesn’t appear that that’s what’s happening. We’ve had this big rotation in factors. So you’re seeing factors like low volatility, dividend yield, value really come into the forefront right now.
So far, since there hasn’t been this huge drawdown in yields, we don’t necessarily see investors moving wholesale out of equities and into bonds and freaking out. But there’s clearly somewhat of a beta breakdown going on. So a lot of the high-flying names that were in that momentum camp — growth, liquidity, the large-cap names that get traded so often — giving a lot of it back.
And then the beneficiaries have been some of the other sectors. So you’re seeing some other sectors come in and try to pick up the slack. But the reality is they’re just not big enough or strong enough right now to make up for some of the drawdown in those momentum names.
CAROLINE WOODS
How are you looking at the weakness that we are seeing specifically in the AI trade? Do you look at it as just the market catching its breath after such a substantial run higher, or is it the start of something bigger?
LIZ THOMAS
Well, there’s a lot of questions being asked right now of AI companies. All of this spending that’s going on, all of the funding that’s happening in concert with the spending — there’s a little bit more scrutiny on where is all that money going, what are we going to do with it, where’s the productivity, where are the revenues going to come from?
So there’s a little bit of pressure, maybe new pressure, on those names right now because of that. But there hasn’t been anything that was proof positive of something to worry about yet. So I’m looking at this more as everybody got pretty extended. We all were talking about everything getting extended, and a lot of times you just make that a self-fulfilling prophecy, right?
We’ve all talked about we’re at these high levels of valuations that can’t go on forever. And then we have these, like I mentioned before, mini breakdowns in beta. I frankly think they’re healthy. I think it’s what keeps us out of that extremely exuberant camp. So I think this is okay. And when you’re seeing names that have run up so much give most of it back, I think it’s that momentum and maybe some of the later entrants of those trades just sort of saying, okay, you know what, I don’t want all of that anyway.
So we’re shaking out a little bit of the risk. Maybe there’s a rotation, a little bit of positioning that’s going to get better matched up. And then I think this is still a pause in an uptrend that can continue.
CAROLINE WOODS
So it’s healthy. Is it a buying opportunity specifically when you think about big tech?
LIZ THOMAS
I think it probably is in some places. I don’t necessarily think we just buy with a broad brush at times like this. I mean, still, even today we’ve bounced a little bit. The drawdown isn’t nearly as deep as it was earlier in the day. So things can change very quickly. And we’re anticipating Nvidia earnings tomorrow. So there’s a lot going on that could change even by the end of the week.
We get a jobs report on Thursday. We haven’t had a jobs report for a long time, so there’s still a lot of data that’s coming in. To figure out what you should buy here, I don’t know that we’d be looking necessarily directly at mega-cap tech and saying, that’s the spot. Now, if you’re underexposed — I don’t think most people are — but if you’re underexposed, you can probably find some good opportunities in that space if you want to get exposure to this AI trade.
But I think we all have to set our expectations a little bit longer term. So we’re buying even in a correction right now — you’re still buying at a high level. And you have to look at this over the entire cycle of what AI might become, rather than hoping to buy today and have a profit by January.
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