1. Market Drivers and Future Outlook
• Leadership of MAG7 (the seven major tech companies): Supported by increased investments in generative AI, the **Mag 7** is expected to continue driving overall market performance as a backbone of earnings growth.
• S&P 500 Target Level: Applying the forward EPS (earnings per share) of 356 points for the next year and the recent upper limit PER (price-to-earnings ratio) of 23 times, there is potential for the index to rise to around 8,200 points over the next year.
2. Polarization of Corporate Earnings and Its Evolution
• Current Situation: While MAG7 shows high profit growth rates, other groups of companies exhibit relatively lower growth, indicating a structure with significant reliance on a few large tech companies.
• Future Forecast: As the impact of tariffs on earnings stabilizes, an acceleration in profit growth among non-MAG7 companies is anticipated. This broadening will further support the upward trend in US stocks.
3. Key Metrics and Forecasted Values
The key figures derived from the Bloomberg forecast as of January 16, 2026, are as follows.
Indicators Forecast (1 Year Later / 2 Years Later)
S&P500...

2026 is shaping up positively for both US and Japanese stocks due to several converging positive factors.
① Bullish forecasts from financial institutions: Many institutions predict an increase in the S&P 500 (to the 7,200–8,000 point range).
② Expansion of corporate earnings: Expectations for double-digit growth in S&P 500 earnings per share (EPS).
③ AI boom with substance: Unlike the IT bubble, major tech companies are generating enormous profits through AI.
④ Monetary policy and politics: Predictions of interest rate cuts by the Fed and hopes for tax cuts and easing policies under a Trump administration.
⑤ Presidential cycle anomaly: Data shows that the second year of a second presidential term has historically delivered positive returns 100% of the time.
⑥ Tailwinds for Japanese stocks: Anticipated active fiscal policies under a potential Koike administration and a trend of over 1,100 trillion yen in cash and deposits being redirected into investments.
Four Measures You Should Take Now
①Continuation of Dollar-Cost Averaging: Staying invested in the market without being swayed by short-term fluctuations generates the greatest returns.
②Preparation for a possible correction in the first half of the year: The year of midterm elections tends to be weak in the first half, so view any decline as an "opportunity to buy low."
③Holding foreign currency-denominated assets: There is a possibility that the yen will continue to weaken due to structural factors such as a digital deficit...

Let’s explore the structural reasons why capitalists and investors are able to secure profits first and build wealth more efficiently.
1. The priority order of 'profit distribution' in capitalism
In a capitalist economy, there is a clear hierarchy in the order in which profits from revenue are distributed.
1. Expenses & Taxes: Cost of raw materials, utility fees, and taxes paid to the government.
2. Labor Distribution (Salaries): Compensation for workers. This is essentially a 'fixed cost,' and even if the company makes explosive profits, it is rare for salaries to increase several-fold immediately.
3. Capital Gains (Dividends & Retained Earnings): All remaining profits belong to the capitalists (shareholders).
Workers’ compensation is additive, based on selling their time, whereas capitalists’ compensation is multiplicative, generated by the 'system.'
2. The 'r > g' rule (Piketty's theory)
The famous equation r > g, proven by economist Thomas Piketty, symbolizes this issue.
• r (Return on Capital): The rate of return earned from investments or capital.
• g (Economic Growth): The rate of economic growth (the growth rate of labor wages).
Historically, the wealth generated from capital (r) has...

The 'Localization' of Geopolitical Risk
• Surprisingly, stock prices are performing well because the division of spheres of influence has become clear, which, contrary to expectations, has reduced the risk of a full-scale war between major powers, and the market has judged that 'predictability' has increased.
• This military operation also has an aspect of being a 'measure against China' aimed at curbing China's expansion of influence, and investors have viewed it positively as a move contributing to the stabilization of the current situation.
In a nutshell, 'an era where realistic order based on the adjustment of interests among major powers (bloc formation) takes precedence over ideals (international law) has arrived, and the market is welcoming this as a form of ‘stability.’'

Here’s a concise summary of the "Outlook for the 2026 US Stock and AI Market" in three key points.
1. Transformation of the 2026 AI market: From a uniform pattern to selective stock picking
The simplistic view that 'if NVIDIA rises, everything rises' is coming to an end as the AI market moves into its second stage.
Shift in power dynamics: The dominance of NVIDIA is giving way to new leaders such as Micron (memory) and Google.
Theme diversification: Attention is expanding beyond semiconductors to include apps, software, power demand, custom chips, and more specialized themes.
Intense rotation: With rapid shifts between stocks, it will become harder to chase specific names; adopting a broader perspective using indexes like NASDAQ 100 or ETFs will be crucial.
2. Understanding market ‘waves (rhythm)’ and ‘sentiment’
Markets don’t rise in a straight line but follow certain ‘waves’ driven by collective psychology.
Information lag: News such as "If prices fall, it's a bubble burst; if they rise, it’s due to expanding demand" merely reflects price movements. It’s important not to overreact and instead maintain a medium-term perspective of several months to a year...

1. Continuing dollar-cost averaging and leveraging market dips
In 2026, volatility (price fluctuations) is expected to increase, particularly around mid-year (summer to fall), due to the influence of midterm elections.
Strategy: Continue regular dollar-cost averaging while preparing to deploy surplus funds during market pullbacks of around 10-15%, using these as opportunities to buy the dip.
Reason: Even if there are temporary declines due to uncertainty surrounding the midterm elections, there is an anomaly (rule of thumb) where markets tend to recover towards the end of the year after this uncertainty clears.
2. Moving from 'S&P 500 only' to further diversification
The valuation (P/E ratio) of mega-cap tech stocks (such as the Mag 7) that have driven the market may be peaking.
Strategy A (diversification within U.S. equities): In addition to the S&P 500, consider allocating to relatively undervalued 'small- and mid-cap stocks (e.g., Russell 2000)' or 'value stocks (financials, energy, manufacturing)' outside of tech.
Strategy B (regional diversification): Avoid over-concentration in the U.S. and look at markets with attractive valuations such as 'Japanese stocks' or 'European stocks (EAFE)'...

For 2026, the US stock market (S&P 500) is expected to see a 'moderate rise (approx. +9% year-on-year)' as the main scenario. While sharp surges like those seen over the past three years are unlikely, steady economic growth supports expectations for average performance.
1. Positive factors supporting growth
Strong economic indicators: Real GDP growth rate (up 2% year-on-year) and corporate earnings growth (EPS up 13.6%) will underpin the market.
Expectations of monetary easing: Around two interest rate cuts are anticipated within the year, which will act as a supportive factor for stock prices.
Productivity gains through AI: High growth in AI-related companies is expected to push up overall market profitability and valuations.
2. Concerns capping upside potential
Overvalued stock levels: With forward P/E ratios at 22.1x, which is historically high, there is cautious sentiment about the possibility of a further sharp rise.
Anomalies (mid-term elections): 2026 is a mid-term election year, and past trends show an average increase of only 3.1%, reflecting political uncertainty.
3. Risk factors to be aware of
Uncertainty about returns (outcomes) on AI investments.
Concerns about a recession due to the deteriorating labor market.
Geopolitical risks, such as escalating U.S.-China tensions...

Currently, the consensus on Wall Street (the average view) is that the 'bullish (upward)' trend will continue into 2026, but instead of a sharp rise like until 2025, the mainstream forecast predicts a more 'moderate growth'.
🔹S&P 500 Target Forecast for the End of 2026
Many investment banks are forecasting that it will range between 7,100 and 8,100 points. Financial institutions and analysts estimate the target forecast for the end of 2026 compared to the previous year-end: Bullish (highest range): 8,000 ~ 8,100, approximately +15% ~ 18%; Consensus (average): 7,400 ~ 7,600, approximately +8% ~ 11%; Cautious (lowest range): 7,000 ~ 7,100, approximately +2% ~ 4%.
🔹Key Market Themes and Points to Watch in 2026
In terms of chart formation for 2026, the following three points are seen as crucial factors:
・The maturation and harvesting phase of the AI market: While 2024-2025 was the 'investment phase' for AI, 2026 will be the year when 'how AI has contributed to corporate profits (monetization)' will be rigorously scrutinized. The benefits for not only NVIDIA but also software companies and general enterprises adopting AI will be closely watched...

As of 2025, attention remains high on value stocks (undervalued stocks), driven by the Tokyo Stock Exchange’s request to improve PBR below 1x and strengthen shareholder returns through increased dividends and share buybacks.
Generally, value stocks refer to those with characteristics such as a PBR (Price-to-Book Ratio) of less than 1x, a low PER (Price-to-Earnings Ratio), and high dividend yields.
Below are some of the key value stocks currently attracting attention in the market, listed by sector.
🔳1. Financials (Banks, Securities, Insurance)
This is a sector where profits tend to expand during periods of rising interest rates and which includes many stocks that have traditionally had low PBRs.
• Mizuho Financial Group (8411): Among major banks, it offers a high dividend yield, and expectations are growing for enhanced returns aimed at recovering its PBR to above 1x.
• Mitsubishi UFJ Financial Group (8306): One of Japan's leading megabanks, known for being proactive with share buybacks.
• Japan Post Bank (7182) / Japan Post Holdings (6178): These stocks consistently rank at the top of value stocks due to their extremely low PBR levels and speculation around potential government sell-offs.
🔳2. Automotive and Transportation Equipment
Likely to benefit from a weak yen...