After a brief hiatus (courtesy of a historic Southern ice storm), Adam and Will return to find an index-level market that looks deceptively calm—roughly flat since their last episode—while significant damage has been done beneath the surface to individual stocks. The disconnect between index stability and individual-stock carnage is the central thread of the episode.

The first major topic is AI capital expenditure. Most of the Mag 7 have committed to spending at a scale that would have seemed absurd just a few years ago, and the market, which once rewarded this enthusiasm, has begun to question it as free cash flow risks turning negative within a few years if spending continues at its current pace. The notable exception is Apple, which has largely preserved its free cash flow and financial engineering by not scaling its own AI infrastructure—instead positioning itself as a passive beneficiary of AI-driven hardware upgrade cycles as older devices become too underpowered to run next-generation software.

Software companies have been the most punished segment, with the market essentially pricing in near-zero terminal value for many names a decade out, despite those same companies still showing solid guidance in the near term. The AI disruption narrative has swept indiscriminately through software, insurance, and financial services, producing days where a significant slice of S&P 500 stocks fell sharply while the index itself stayed within striking distance of all-time highs. The hosts note that the damage at the individual stock level has been dramatically worse than what the indices suggest—the average constituent in growth-oriented indices has seen drawdowns many times deeper than the headline numbers.

A discussion of retail trading platforms—using Robinhood as a proxy—puts the individual investor experience in stark context: the average Robinhood trader has seen only modest gains over the past several years before taxes, a period in which simply indexing would have produced dramatically better results. The hosts draw a parallel to horse racing: people are generous in recounting their winners and silent about everything else. Incoming tax refund season may temporarily reflate the most speculative corners of the market, but the hosts are skeptical this represents durable demand.

The conversation ends on a more somber note around the K-shaped economy. Job growth has been concentrated in narrow sectors, consumer sentiment remains poor, healthcare costs are crushing small businesses, and AI is beginning to erode entry-level employment. The hosts express genuine concern that a large segment of the population—still financially scarred from COVID—is being further squeezed while capital markets continue to reward those who already have assets. Whether and how that tension resolves is left as an open and uncomfortable question.

Learn more about Formidable Asset Management, Will Brown, and Adam Eagleston by visiting www.formidableam.com.

We look at the eventful start to 2026 and try to put some context around potential market impacts. Geopolitically, we saw the renewed vigor of the Monroe Doctrine in full force with U.S. action against Venezuela's Nicolas Maduro. Whether stemming the flow of drugs or increasing the supply of oil was the primary factor is undetermined, though decades of underinvestment in infrastructure make any meaningful near-term effect on oil supply unlikely; lower oil prices have been one of the few things keeping inflation in check. We also discuss saber rattling as it relates to Greenland, whose strategic location has perhaps been underappreciated, and Iran, where citizen protests are increasingly being met by violence.

Affordability has been top of mind for the electorate, and the Administration, and we have seen presidential social media posts on housing and credit card interest rates. Though executive power has increased, barring institutions from buying single-family homes and capping credit card interest at 10% seems to have little likelihood of actually being implemented. However, housing affordability is a huge problem; according to Apollo:

• 54 million households can only afford a house priced less than $200k
• Another 40 million need prices between $200k and $400k
• With around 133 million households total in the U.S, and the median home price over $400k, the American dream of home ownership is simply out of reach for most

One mechanism viewed as a way to improve affordability is lower interest rates, though compelling the Fed to reduce rates by having the DoJ go after the current Fed chair may not have the desired effect. We discuss Chair Powell's stern response to the charges and the importance of maintaining Fed independence.

Finally, we recap a strong 2025 for equities (at least some of them), and look at the statistics showing just how few stocks outperformed the S&P 500 (fewer than one in five). This was the third year in a row where active managers had the deck stacked against them. For 2026, expectations are universally bullish. We look at the math behind higher equity prices in terms of multiples and earnings, and why a broader market, which started to take shape in December, might help investors but not necessarily matter for the index.

Learn more about Formidable Asset Management, Will Brown, and Adam Eagleston by visiting www.formidableam.com.

We take a detour into the Dickensian in evaluating the state of the economy. First, the recent inflation print, which showed a significant decline in the level of price increases, was a fiction worthy of Dickens, with the majority of the data simply made up as a result of the government shutdown. Setting that aside, since 2021, wage growth has not kept pace with inflation for food, shelter, and services, though we can count our blessings that at least alcohol prices have not increased as much…

Challenges face the Fed chair (both current and yet to come), and managing a deteriorating labor market and persistently higher prices presents a conundrum. The Fed is simply not getting what it wants at present in terms of rate cuts translating to a lower yield on the 10-year Treasury, and with deficits soaring in spite of a growing economy, some tough choices will have to be made.

However, stocks have proven remarkably resilient, and predictions from most Wall Street firms argue for a continued move higher supported by AI, solid growth, fiscal stimulus from tax policy, and further rate cuts. However, the math is a little challenging; to cite one example:

• The S&P reaches over 7,700 by this time next year (around 13% above where we are now)
• Earnings grow around 9% (this seems achievable, and maybe even a little conservative)
• Multiples expand to 26x earnings (this would be at peak dot com levels)

We think you might get this level of earnings growth (or better), but that multiple seems a little rambunctious. Even if we do get there, expect some market shenanigans on the way, as history shows mid-term election years tend to see large drawdowns; think back no further than 2022. The average midterm drawdown is around 18%, though the range is very wide.

Will brings it home with a reading from a speech given by Scrooge's nephew Fred so we end on a positive note celebrating the season.

Learn more about Formidable Asset Management, Will Brown, and Adam Eagleston by visiting www.formidableam.com.