Is This the Most Hated Bull Market in History?

Over the past few months, Scott and Ed have spoken to an exceptional lineup of guests on the Prof G Markets podcast — from professors and journalists to investment strategists and analysts — each offering a distinct view of what 2026 might look like.

No one can predict the future. As Scott says, the best way to do that is make it. But each conversation offered a unique, constructive perspective on the year ahead.

Tech companies are becoming a bigger part of our lives, so naturally they’re taking a larger share of spending. If you go back to 1930 and look at simple demography, every time population growth outpaced the increase in the prime-age workforce, you’ve seen a technology cycle emerge.

We entered the third era of labor shortages in 2018, and it will likely last through 2035. That means technology spend isn’t discretionary — it’s a necessity, because there simply isn’t enough labor available.

Tech is now so central to the economy, especially under these labor shortages, that rising tech intensity gets mistaken for a bubble. In reality, economic necessity is driving it.

When it comes to valuations, I wonder whether these large language models (LLMs) will become somewhat commoditized. 

What’s shocking is that with enough money and enough Nvidia chips, you can now build a competitive model in a year. That’s essentially what Elon Musk has done with xAI. If you had told me that Google, Microsoft, OpenAI, and others had been working on this for years, and then someone could spin up a rival in 12 months… that really makes you question the defensibility and moat of LLMs.

To the extent that there’s gonna be a correction, there’s no place to hide in stocks. If the Mag 10 goes down by 40%, the panic that creates is going to ripple through the equity market.

My advice is that this might be a time where you think about moving a portion of your portfolio into cash or maybe even collectibles.

I’ve never owned collectibles, but for the first time in my investing history, I’m thinking maybe I should hold something that is not going to be affected if inflation goes to 10% or if there’s a market and economic crisis that is potentially catastrophic. 

The chance of that happening is perhaps greater than it’s been anytime in the last 20 years.

It would be shocking if there wasn’t some kind of profit-taking correction in 2026 at some point on the order of 10% to 15%.

Let’s say AI becomes a winner-take-all market — the best model is far better than the second-best, and OpenAI becomes a monopoly much like Google in search. In that world, OpenAI can charge extremely high prices. If that happens, workers won’t get rich, employers won’t get rich, but the stockholders of OpenAI come to own the entire universe.

If we don’t have competition among LLMs, one model ends up owning most of GDP. I’m mildly overstating it, but not by much. That’s why we need competition, which is hard, because we also need incentives for innovation, and markets don’t naturally provide both.

So this isn’t just a competition problem; it’s a market structure problem. The stakes are enormous and potentially transformative. This is the most important economics conversation we aren’t having.

The market has posted three strong years in a row, yet sentiment remains historically weak. AI could be the start of a productivity boom, or catalyze the next correction — or both, or neither. Rates are falling, deficit projections are rising, and investors are waiting for a pullback that refuses to arrive.

Against that backdrop, here’s how Scott and Ed are thinking about the markets and their own investments heading into 2026. Note: This isn’t investment advice.

I’ve never seen a bull market that more people hate. I almost feel as if people would be somewhat relieved if it just went down 20%, but the market continues to climb the wall of worry.

I’ll tell you how I’m responding. I’ve never successfully timed the market, so I’m not trying to do that. Instead, I’m diversifying across different asset classes.

Selling Down Tech Exposure: I’ve sold 60% of my Apple stock, and I’m selling the rest. It’s trading at a P/E of 33 to 35 while growing single digits. I bought it in 2010 and it’s been great, but I’m done. I’m keeping Amazon, as it’s my Big Tech pick for 2026.

Investing in Companies I Control: I’m making multi-million-dollar investments in Section and Prof G Media. Section is the company that upskills enterprises for AI:  It went sideways for six years and is suddenly exploding. Prof G I thought would be a lifestyle business, but podcasting’s booming, and it looks like it will garner real enterprise value. I’m investing where I have influence, control, and where I can find good valuations.

Alternative Assets: I’ve never bought art or wine, but after speaking to Professor Damodaran, I thought maybe I should put some money into a piece of art just in case. If sh*t gets real and the apocalypse happens, it’s gonna be me with a kitchen knife in front of this piece of art fending off the zombies. 

But here’s the bottom line: I have access to the world’s brightest people, and I still don’t know what to do. I literally walk around most of the time going, I should buy — no I should sell. 

My point is, if you’re out there and you’re not sure what to do, welcome to the club. Buy low-cost index funds and make sure you’re diversified.

 Let me lay out my bear case and then the bull case, and then what I’m actually doing about it.

The Bear Case: 

AI could be a bubble. AI capex hit $350 billion in 2025, up from $200 billion in 2024. Amazon, Google, Microsoft, Meta, and Oracle raised over $100 billion in debt this year — that’s more than 3x their nine-year average. We’re seeing circular deals where Nvidia invests in OpenAI and then OpenAI takes that money and buys compute from Nvidia. OpenAI could be the triggering event for some painful market drawdowns.

Second, valuations look expensive. The S&P is trading at 31x earnings — not quite dot-com levels, but we’re at 1999 levels. It’s uncomfortable to invest when prices appear this high.

Third, maybe we’re just due for a correction. We’ve had three big years in a row: 24% return in 2023, 23% in 2024, and we’re tracking 17% in 2025. This level of consistent returns doesn’t usually continue.

The Bull Case: 

Interest rates are coming down. Rates are at their lowest level in three years. Powell’s Fed tenure ends in May 2026, and Trump’s new Fed chair might just keep cutting rates. In a lower interest rate environment, earnings should lift across the board. It doesn’t make sense to sell when we’re entering a low-rate environment.

Second, deficit spending is going to prop things up. The Big Beautiful Bill will add $480 billion in fiscal support. Yes, it’s irresponsible long term, but for 2026 specifically, that’s free money pumping into the economy.

Third, while AI might be a bubble, it’s not a particularly dangerous one yet. Companies like OpenAI, CoreWeave, Oracle, and maybe Palantir are behaving dangerously. But the Big Tech companies that really matter — Microsoft, Google, Meta, Amazon — have tons of cash on their balance sheets and incredible businesses that work with or without AI. 

So I’m not fully bullish, but I expect subdued returns next year.

My recommendation: If you don’t know what to invest in, invest in yourself. This could mean investing in education, or getting a new certification, but you could also think about your health in this way. Maybe you were thinking about a gym membership, but you were worried about savings. Well, if we’re in a subdued market, then now would probably be a good time to consider getting the gym membership. You can always cancel. 

Investing in yourself just makes more sense when you look around and you see that there is a market in which the returns are probably not going to be stellar.

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It looked like Netflix had effectively won the bidding war for Warner Bros. Discovery — until, two days after announcing its acquisition, Paramount blew the process open with a $108 billion hostile bid. What happens now?

Paramount’s bid is a tender offer, which is a bid to purchase shares directly from shareholders, instead of negotiating with a company’s board. This offer expires Jan. 8. Warner has until Monday, Dec. 22 to tell shareholders whether it views Paramount’s bid as the superior proposal. If it does, Netflix will get a chance to match or improve its offer.

Then, Warner Bros. shareholders have until Jan. 8 to decide whether to sell their shares to Paramount.

Polymarket shows Paramount and Netflix are in a dead heat to close a deal by the end of June 2027. The odds of no deal at all are 19%. 

Zooming out, the competing bids reflect two possible futures for Hollywood, with Paramount representing a belief that theatrical still matters, whereas the Netflix bid suggests that streaming has already rendered moviegoing irrelevant. 

This whole saga is actually a perfect case study in why acquisitions almost never work out well. Two-thirds of the time, they don’t create value for shareholders. Despite this, people keep doing acquisitions for a few reasons. The best ones can completely transform a company.

But when you’re trying to acquire assets like Warner Bros. Discovery, most of the time you strike out. Companies underestimate how hard it is to integrate two different cultures, and they overestimate the benefits they’ll get. 

I was a consultant to Unilever when they bought Dollar Shave Club for a billion dollars, thinking it would spread a direct-to-consumer mindset across the whole company. But when big companies acquire small companies hoping for cultural change, the big company always wins and crushes the little company’s culture.

This Warner Bros. Discovery deal will be a bad deal for shareholders in almost any scenario. It’s not that these aren’t great assets, or that there aren’t potential benefits, but the only way it makes economic sense is if it consolidates the market and creates pricing power — which means consumers and Hollywood lose while shareholders win.

The real question of fiduciary responsibility here is complicated: It’s not just about who’s offering the most money, it’s about which deal has the best chance of actually closing.

Both deals face regulatory hurdles. Netflix has antitrust issues because of its size and market dominance. Paramount faces less antitrust concern because it’s smaller, but there’s a national security problem: Jared Kushner is out collecting funds from Gulf sovereign wealth funds. Do we want Gulf states having ownership in our largest media companies through this deal?

The other factor is: Does Trump prefer Ted Sarandos or David Ellison? That could influence their calculation, though maybe we’re overestimating Trump’s power since the courts could strike down his opinion.

Prof G Markets covered Figma, a collaborative design software company, in early July. At an expected IPO of $20 billion, it stood out as a company with a compelling product, strong fundamentals and reasonable valuation. 

But since its IPO, Figma has dropped 70%. What happened?

Instead of $20 billion, Figma ended its first day trading at a market cap of over $56 billion. The stock’s recent decline is simply a correction from an overinflated debut — not a sign of weakening fundamentals.

To show why Figma’s business remains strong — and to give readers a framework they can use to evaluate other companies — it’s helpful to apply Prof G’s Three Hurdles framework, taught in Scott’s Brand Strategy course at NYU. The framework can be used when evaluating investments, brands, or strategies.

Hurdle 1: differentiation 

Is this company different enough to stand out?

Figma originally differentiated itself by enabling real-time, cloud-native collaboration — something competitors didn’t offer. This eliminated version-control issues and let teams work the way they already worked in Google Docs.

Another key differentiator is usability: Learning Figma is simple and intuitive enough for nondesigners. 

Hurdle 2: relevance 

Does this point of differentiation actually matter to customers?

Figma’s core differentiator, real-time collaboration, is highly relevant to how design teams work today. Designers now spend more time interfacing with engineers and product managers, and they need a tool that supports shared workflows.

Figma is also becoming more relevant to the development process itself. With its new feature, Figma Make, users can describe an idea in text and produce a design or even working code, a process sometimes called vibe coding. 

All of this is happening in a rapidly growing industry. Design-related roles are expected to grow 7% from 2024 to 2034, more than double overall job growth (3%), and Figma is the most frequently listed tool in design job postings.

Hurdle 3: sustainability

What prevents competitors from copying?

Figma’s moat comes from network effects. As more teams inside an organization use Figma, the tool becomes more valuable. Already:

Engagement is deepening: Revenue grew 38% year over year last quarter, 70% of customers now use three or more Figma products, and multiyear contracts grew 27% quarter over quarter.

Figma may be a sustainable business, but is it a sustainable investment?

Figma trades at 12x sales, above Adobe and Salesforce (both ~6x), but its 38% revenue growth versus Adobe’s 10% supports a higher multiple. 

Interested investors may want to wait until the next lockup period expires on Dec. 31, 2025.

There’s going to be a regime change in Venezuela, and the oil and culturally-rich country is going to boom over the next three to five years. People who take enormous risks and find a way to invest in Venezuela are going to come out with just extraordinary returns.

In the most recent “First Time Founders” episode, Ed interviews Figma co-founder Dylan Field on leadership, competing at scale, and how life changes after going public.

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