Why market leadership may shift away from mega-cap tech in 2026, and where investors can find the next gains.
00:00 Introduction
00:13 Best Investment for 2026
01:33 Year of the Other 493?
02:41 Opportunities Beyond Big Tech
04:06 Return Expectations for 2026
05:40 Preparing for a Pullback
06:47 Unpopular Market Take
07:52 One Rule for Investors
Transcript:
CAROLINE WOODS
Let’s look ahead to 2026 with Jay Woods, Chief Market Strategist at Freedom Capital Markets. He joins me here at the desk today. Great to have you here.
JAY WOODS
Great to be here.
CAROLINE WOODS
Let’s kick things off. What’s your best investment idea for the new year?
JAY WOODS
Wow. That’s an investment. I shrug when I say this, but I think Tesla, from a tactical point of view, maybe time to get back in. But if you’re going to get in this, have a stop loss set. This stock just broke out of a five year base, a one year trend, a five year trend, multiple time frames. As a technician, I look to price action to tell us what’s going to lead and going into year end.
JAY WOODS
This is a historical breakout. Then when you put the fundamental story, you got to hold your nose when you buy this one. Because if you’re going to focus on car sales, you’re going to be disappointed. We are buying this on the hopes and dreams that Elon Musk gets things going with that pay package and the robotics story and the autonomous driving story is really what we buy into.
JAY WOODS
Going forward, the car sales that where that ship has sailed long time ago. But the technology, what he’s doing and those goals for the future. And then think about it, he just navigated a whole year in the Trump administration and came out okay. So I think this could be the year of Musk and the year of Tesla. If this does drop below 420 a favorite number of Mr. Musk, I would get out and take a little bit of a loss.
JAY WOODS
But I think it’s poised to have a great 2026.
CAROLINE WOODS
What about the rest of the magic seven? Is 2026 going to be the year that tech leaves again, or is it going to be the year of the other 493?
JAY WOODS
Yeah, I think this is going to be the year of the other 493. And I think 2025 when we look at it, it kind of was that magic seven was more of a lag seven, where you only had two performing stocks in it. Google and Nvidia that actually outperformed the S&P 500. So to me that those other five still have their time, but meta has broken down.
JAY WOODS
Microsoft is a little toffee apple slow and steady. Not a bad stock to own. But is you going to have that explosive growth? No. Google is where I still want to be. I think their story, the whole picture there is just tremendous technically major breakout. Amazon is the disappointing one to me. Is someone that owns the stock and touted it last year.
JAY WOODS
I want to see it break and stay above 240. It struggles to do that. I still think it’s there for them to actually have a great year. We’ll see if they can go. But you know, the magic seven right now. It’s probably in a congestion phase where it goes sideways in a neutral trend for a while.
JAY WOODS
And that explosive growth, the momentum, it seems to be losing that, steam. So we’ll look at other places for opportunities.
CAROLINE WOODS
And where are those other.
JAY WOODS
Well, that’s the problem. Boring is back. We’re going to see the financials, which had a great year this year. Continue to do well. Industrials continue to do well. Nice trajectory strong growth. The growth is there. The economy is doing fine. It’s just not those high growth names with the explosive upside that we’re going to see. So we’re going to have more winners than losers in 2026.
JAY WOODS
But when the leadership or stocks that don’t have the big enough weighting to carry the major indexes to highs, I prefer the Dow over the S&P 500 because it’s price weighted. I still think Goldman’s going to have a good year. JP Morgan looks great. And my favorite in the financials would be Citigroup. So financials still where you want to be.
JAY WOODS
Materials starting to pick up a big energy is the X factor. I don’t want to say hey go in on energy because it hasn’t shown us that it’s there yet. With crude breaking now 55, as we take this along the trajectory to go a little lower, I think that will be a big opportunity at some point in 2026 to jump into the energy names Exxon Mobil in particularly.
JAY WOODS
But right now I want to see how, you know, the turmoil with Venezuela, Ukraine, Russia, they resolve themselves before I jump in. But I think oil is something to keep an eye on as well.
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