Stock Market Review: First Half of 2026

The first half of the year was a bit of a wild ride. Up, down and all around.

Yet hard to complain with where things ended given the +39.33% gain for the Zen Investor portfolio year to date far surpassing all relevant benchmarks.

I thought it would be good to review the first half of the year and perhaps use some of those lessons learned to keep us on the right side of the action as we come down the home stretch in 2026.

Market Commentary

Here is the most spot-on recap of the first half of 2026. It can be broken down into 3 distinct phases.

Phase 1 = Year Begins > All is Well with the World

Phase 2 = Iran War > Inflation Fears > Nasty Correction

Phase 3 = We don’t have the stomach for Iran War > Peace in the Air > Inflation Fears Recede > Bull Market Makes New Highs > All is Well with the World...Again

Investors are tired with the “Boy Who Cried Wolf” aspect of the Iran conflict. Meaning the on again...off again nature of the peace deal.

Almost no one doubts the US wants out of this war. That is why stocks rallied on Monday even after new rounds of warfare AFTER the peace “outline” had been signed. Meaning there may be bumps on the road to peace...but we are on that road.  

Putting all the ups and downs aside we are still very much in a bull market because as recent inflation fears fade away then we get back to focus on solid economic growth (+2.5% Q2 estimate)...above average corporate earnings growth (10-14% expected)...reasonable valuations overall...and ample discounts available in small and mid caps.

If you want a wild card, it’s the Fed under new management with Kevin Warsh. I for one assumed he made a blood pledge to the Trump administration that he was going to lower rates at the first available opportunity.

Then comes Warsh’s first press conference and he came across VERY hawkish with much greater likelihood of higher rates ahead. Right now, expectations call for about 2 quarter point rate hikes between now and end of 2026.

Honestly...I don’t think we are going to get even 1.

IF the Fed is data dependent, as they say they are, then they have to appreciate that inflation should be greatly receding as oil is back to pre-Iran war levels. Thus, why put any more undue pressure on the system by raising rates which could harm economic growth (and full employment which is part of their initiative).

To be clear 1 or 2 rate hikes is not a big deal. And really wouldn’t change the economy that greatly. It just might put a temporary damper on the bullishness of the market.

Think of it more like pausing the bullish advance...not a real detour.

We will worry about that IF and WHEN the time comes.

For now, it’s a bull market til proven otherwise. That is the phrase that continues to pay.

Then as for the types of stocks that should outperform...that should be the kind that are always the most appealing.

Growth stocks trading at reasonable valuations.

Yes, there are times that people like growth REGARDLESS of valuations. But that is always a dangerous game of Jenga.

Fun as the tower grows taller...scary as it collapses.

I believe we have done quite well with the Zen Ratings at our back to find that healthy growth at reasonable valuations. And will continue to press that advantage into the 2nd half of the year.

What To Do Next?

Discover my Zen Investor portfolio that relies upon my greater than 40 years of investing experience. 

During that time I have learned vital lessons from 7 bear markets…8 bull markets and just about everything else the “Mr. Market” can throw at us. 

I use this knowledge to create a detailed investment plan. Then lean into our proven Zen Ratings quant model to select the best stocks given their proven outperformance. 

In total the Zen Investor portfolio now has 20 top stocks that are hand picked for today’s unique market landscape. 

And as shared above it is doing very well in 2026 as our portfolio is up +39.33% YTD far surpassing the benchmarks.  

Plus 2 new stocks were added this week that both have stellar upside potential. 

If you are curious to learn more, and want to see my current top 20 stocks, then please click the link below to get started now. 

Discover the Zen Investor & Top 20 Stocks >

Wishing you a world of investment success!

Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)

Editor of the Zen Investor

Want to get in touch? Email us at news@wallstreetzen.com.