I wanted to take a moment today, as the market continues to show signs of weakness, to revisit what is increasingly coming into focus as my potential strategy heading into next year.
Most of my regular readers know that roughly two months ago, I laid out my expectation that the AI bubble could begin to unravel within the following six to ten months. Since then, we’ve started to see some meaningful cracks emerge, with selling pressure spreading across some of the market’s most speculative and heavily favored names. I’ve supplemented that prediction along the way:
In my market dashboard review heading into Q4, I also began outlining how I might position myself heading into 2027, assuming the market continues along its current trajectory.
In that piece, and in a subsequent article focused specifically on old-school blue chips, I argued that we could be approaching a meaningful rotation away from speculative growth and technology stocks and back toward defensive, established businesses with reliable cash flows, reasonable valuations, and, in many cases, attractive dividends. Boring shit, right? That’s how it goes sometimes…
My thinking was that as investors begin to reassess risk, particularly if the AI trade continues to unwind, capital could increasingly seek refuge in the types of boring, dependable businesses that have spent much of the last several years being overlooked.
And we’re already beginning to see some evidence of that.
Across several recent articles, I highlighted individual names that I believed could hold up relatively well in a more difficult market environment. Over the last couple of weeks, a number of those stocks have already begun materially outperforming the broader market as selling pressure has intensified elsewhere.
While a couple of weeks certainly doesn’t establish a lasting trend, the early relative strength is consistent with the broader rotation I’ve been anticipating heading into the new year.
I think it’s worth revisiting some of those names and sectors individually and considering what their recent price action might be telling us about where capital is beginning to move.
