Kersten Wealth Management Group - Money Sense 12-13-25

·50 min·4 clips

Kevin Kirsten shares a 100% positive track record for the market when the Fed cuts rates under specific conditions.

The episode begins with hosts Kevin and Brad Kirsten introducing their analysis of LPL Research's 2026 market outlook, cautioning that such outlooks should be viewed as high-level guides, not precise predictions. They critique the tendency of research firms to provide narrow return ranges like 7-11% as a 'cover for all bases'. The hosts then shift to discussing the week's news: the Federal Reserve meeting where rates were cut as expected, accompanied by an unexpected bond-buying program they describe as stimulative 'quantitative easing'. They compare the current Fed stance to December 2018, noting key differences like balance sheet expansion versus contraction back then. A significant historical statistic is presented: when the Fed cuts rates with the market within 1% of an all-time high and no recession, the market has been positive 21 out of 21 times with an average 18.2% return. The hosts then delve into the 2026 outlook, starting with AI spending, which they identify as the biggest economic driver, estimated to contribute 1.6% to the 2.2% GDP growth forecast. They note the current bull market officially started October 12, 2022, and is entering its fourth year, which historically averages a 12.8% return. However, 2026 is also a midterm election year, which historically brings more volatility and lower average returns (6% vs. 18% in pre-election years). The hosts discuss the broadening of earnings beyond the 'Mag Seven' tech companies to other sectors benefiting from AI spending. They cover fiscal stimulus from the 'One Big Beautiful Bill', including corporate tax incentives and higher individual tax refunds. The conversation turns to fixed income, noting higher starting yields make bonds more attractive than in recent years, though they advocate including liquid alternatives in a portfolio. They defend the 60/40 portfolio, which had a bad 2022 but strong rebounds in 2023 and 2024. The hosts warn against illiquid private investment products being marketed to Main Street. They conclude with equity allocation ideas for 2026, suggesting a focus on 'quality' factors (high cash, low debt) and low-volatility sectors like utilities and consumer staples, while still including tech names that pass quality screens.

As heard by us

A practical 2026 market outlook shaped by AI spending, bull-market history, and forecast limits.

Money Sense treats the 2026 market outlook as a planning tool rather than a forecast to follow too closely. The advisors keep the view broad, using market and economic expectations as a way to shape investment thinking while staying clear about how limited those expectations can…

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Want a 2026 market outlook that treats forecasts as a high-level map, then checks AI spending against bull-market history?

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