2026 Halftime Report #200

In this episode Josh and jeremy take a look at the current status of the economic economy, help you to know what steps with your money and investments to take for the near future. 

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Contact Josh Nelson: https://www.keystonefinancial.com
Contact Jeremy Busch: https//www.keystonefinancial.com
Podcast Editor: Tim Leaman/info.primegen@gmail.com

Transcript

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Wiser Financial Advisor – Halftime Report 2026
Hi Everyone, and welcome to the Wiser Financial Advisor Show with Josh Nelson,
where we get real, we get honest, and we get clear about the financial world and your
money. This is Josh Nelson, Certified Financial Planner and founder and CEO of
Keystone Financial Services. Let the financial fun begin!
Jeremy: Welcome everyone to the Keystone mid-year outlook 2026. We’re over halfway
through the year at this point. I am Jeremy Bush, also CFP with Keystone Financial
Services. With me as always is Josh Nelson, and we figured we'd give you a little
change up today where our speakers would be Kevin Bacon and Ethan Hawke. Right?
Just kidding.
Josh: Yeah, you've got us today as usual. We've actually got four financial advisors,
wealth advisors at Keystone now, so we've got more capacity to assist you. Jeremy and
I are the senior financial advisors, both Certified Financial Planners, aka CFPs. Our
other two advisors are CFP candidates working diligently towards that. We’re all highly
educated. The CFP is the gold standard when it comes to the financial industry,
probably the most well-known standard.
Jeremy: It is held to the highest standard, yes, as far as compliance stuff and education
requirements.
Josh: That's true, and it means that we're fiduciary too. That's part of the CFP code of
ethics: if you are a CFP, you don't have the option of taking that fiduciary hat on and off.
You are always a fiduciary, someone obligated to look out for the best interests of the
client. A lot of other designations don't have that. I think what most people are looking
for in an advisor is somebody they can trust. A true fiduciary must legally look out for
your best interests at all times, whether they want to or not. And from a consumer
standpoint, that can be confusing. Sometimes people think, If I'm going to a financial
advisor, of course that means they're looking out for my best interest. But in reality, the
requirements and standards are not the same.
Jeremy: Correct. And today, as always, everything we go over is our opinion. Past
performance does not guarantee future results, but we have some good data to share
with everybody today, so let's hop in here, and talk about financial plans from start to
finish, whatever that looks like. You're gonna have market ups, market downs, crazy
things happening in the world, either politically or economically, that have to tie in. The
purpose of looking at it all is to have a long-term plan that's gonna weather any storm
that comes through it, right?
Josh: Yeah, and for those of you listening to the podcast, you can also go to our
YouTube channel if you want to see the slides along with the audio. For example, we’ve
got a slide that shows a nice straight line, somebody riding their bike towards the

checkered flag. We all know that's not reality, right? We have our plans and then stuff
happens. There are always crazy things happening in the world and in our lives. So it's
important to plan on that instead of having an expectation that everything is going to be
smooth. I was just on an airplane yesterday. It was turbulent landing in Denver. I
expected it to be turbulent in Denver, because it almost always is. It doesn't make it any
more comfortable. It never does. It doesn't matter how many times you fly, it still isn’t
comfortable.
Jeremy: We always talk about how the market moves, no matter what's happening in
the world. We have our chart of fears. All across this chart are major life events. The
chart goes way back to 1900 leading up to the crash of 1929. That's a big blip, a big
bump. Then we see other things, more recent things. We have the global financial crisis
showing up on there. More recently we see Covid, and Liberation Day, the Strait of
Hormuz. The important thing here is that when we look at the data and the trends on a
long-term horizon, it shows us that while you're going through these things in real life,
they seem really bad.
Josh: 9/11 was super scary I think for everybody who was alive then. We’ve got younger
clients too, our kids’ age and so forth. They didn't live through that. But for all of us who
did, you know exactly where you were and exactly how you felt. They actually shut
down the stock market for a few days there. There was so much uncertainty. We had no
idea how bad things were going to get or if there were going to be more attacks. It's not
easy being an investor sometimes.
Jeremy: While you're living through it, things seem really terrible. You wonder, is this
going to upend the bank? But when we look at the chart timeline, most of these things
are small bumps along the way. The market keeps creeping up, like the market tends to
do.
Josh: There's never been a bear market or a correction that wasn't followed by an
upsurge. There's never been a time, not yet anyway, when there was a market
downturn and the market didn’t come back and go higher than it was before.
Jeremy: So looking ahead for the rest of 2026, what we're seeing is stocks tend to be
the leaders in this. The data is pointing towards a 15 to 18% gain in stocks, whereas
bonds are more limited to what they're paying, what their yields are, which are in that 3
to 5% range.
Josh: On the stock side of things, that's an increase from our forecast earlier this year.
Jeremy: Yeah, we were considering 10 to 12% at the beginning of the year, but all of
that has been revised up, largely due to the AI boom that's happening. Those
companies are spending a lot of money.

Josh: Exactly. And so the rest of our conversation today is unpacking this as far as why
we're predicting somewhere between 15 to 18 percent based on all the experts and
data and everything.
Jeremy: We'll look at what economy and policy is doing. To start out: hiring is picking up.
When we're talking about health of the economy, employment is always a figure in that.
When we look at the past five quarters annualized, real GDP is about 1.9%. So we're a
little down from where we were, but largely with hiring, AI is helping. That's spread out
across quite a few companies, and kind of a surprise.
Josh: A few years ago there were all these doom and gloom predictions of, oh my gosh,
AI is going to replace all the jobs. Maybe they still will someday, but we still have jobs.
The reality is that there are more jobs now and we're not seeing mass layoffs.
Jeremy: It's nice and widespread, for the most part. Then again, big tech is hitting the
gas. Looking at the major players in this, your Microsoft, your Alphabet, Amazon, Meta,
Oracle, these numbers were revised up as well. What they were expected to be
spending on this for 2026 and 27, from the beginning of the year is quite a bit higher for
the remainder of the year. They're really jumping on this. I hear a lot of fears of a
bubble in AI. What we see here is that the money all these companies are spending on
AI is not debt driven. It's coming from profits and earnings that these companies have
already earned. They're not necessarily leveraging anything or going into debt to
finance all of this. It is pretty strictly coming from profits and earnings.
Josh: Yep. By and large earnings are driving it. That's a big difference from the late 90s.
Those of you who remember the tech bubble and so forth, back then, a lot of companies
were not profitable and never were profitable. They disappeared. The key right now is
earnings.
Jeremy: And then of course, when we were looking at S&P estimates, these have also
been bumped up, but we see three main sectors pushing it at this point. We have
technology, energy, and materials. A lot of that comes with the AI push, building data
centers, et cetera.
Josh: What this doesn't mean is we don't think you should try to time things. In other
words, we don't think you'd just pick those three sectors and leave out industrials and
consumer spending and so forth. A good, diversified portfolio is going to be spread
across all sectors, but that doesn't mean you just set it and forget it. The responsible
way of investing means actively taking a look at opportunities. doing responsible
rebalancing. That's certainly what we do when we're looking at client portfolios.
Jeremy: Yeah, stay diversified. And of course, when we talk about AI, the reality is not
all rainbows and butterflies. We see AI directly impacting inflation numbers because of
supply and demand. When we're talking about that material sector, a lot of these

companies are trying to do what's called AI build-outs for this stuff, but the materials are
not in high supply. The demand is there and those two factors of supply and demand,
economics 101, when you combine them, is driving that inflationary factor. This is
different from the 90s when there was a bubble and what we saw was prices collapsing
because there was an overcapacity and an oversupply. We're not at that point now.
Could that eventually change if materials get blasted up? Absolutely it could. Something
to always keep an eye on. But currently the data does not support that idea.
Josh: And when it comes to inflation, some inflation is not terrible. You don't want
deflation. That would be the economy going backwards. It’s a disincentive for people to
spend money. Some inflation is good but right now our inflation is higher than what the
Fed would prefer. That's something that's will have to be contended with, but one factor
with inflation definitely is AI. It's a positive and somewhat negative as well.
Jeremy: Another thing the data is telling us about inflation is it's broadened out, so it's
not a few specific items like eggs or toilet paper. A lot of things play into this. Obviously
the Strait of Hormuz has had an impact on this, mainly for transportation and fertilizer
costs. When you put those two things in, it affects every cost of your goods getting to
the store.
Josh: It’s like a tax on everything.
Jeremy: Including growing food or anything like that. It’s impacting everything. So the
idea here is that this probably isn't going away anytime soon.
Josh: No, and it's a real effect. It seems like every day we're hearing that things are
flaring up and the Strait of Hormuz is closed and oil is spiking again. And the next day,
oh no, they're going to be talking again, and oil prices have plummeted. So yeah, I
agree it's going to be a broken record. We're going to be contending with this for a
while.
Jeremy: But like we had mentioned at the beginning of this, hiring is picking back up.
Unemployment is still very low at 4.3%. The key number here is what they call prime
age employment, anybody aged 25 to 54. That's your biggest working sector. That
demographic is holding pretty steady at about 80.8%. Oddly enough, that number is
higher than it was during the expansions of the 2000s and the 2010s.
Josh: One interesting fact is that up until the late 90s, early 2000s, the experts
considered full employment to be 5%, (full employment meaning that pretty much
everybody who wanted a job had a job, maybe not the one you want, but it's a job). If
you were under 5%, that meant you were at full employment. We've been under that
pretty steadily, except for during Covid, when there was a spike in unemployment. Since
then, unemployment has stayed really low and that's super important. We're going to
talk about consumers later, but I’ll just say here that consumer spending is what drives

the economy. 70% of the economy is just us spending money on stuff. And people are
spending. I mean, you go to the airport, you go to a concert, go to a show, anything.
People are out there spending money.
Jeremy: Yeah, the consumer is hanging in there. Really, when we look at the data here,
we always look at two kind of factors: nominal GDP and real GDP. What is the
difference between them? I’m going to admit we looked this up so we could put this in
simple terms for you. Real GDP looks at what the price of something was a year ago
and then inflation adjusts that price, usually down, depending on where inflation is. Real
GDP says, This is what the price would have been compared to a year ago. Nominal
looks at what today's price is. Nominal is what's driving the market right now, because
that is the price companies are getting now for their goods. That affects margin and
profits and things of that nature. So the nominal spending is up by quite a bit, no small
margin.
Josh: Yep. People are spending money. Something we pay a lot of attention to is, do
people have jobs? If they have jobs, they have money and are they spending it?
Jeremy: Activity is still very strong. Like you said, 70% of the US economy is people just
spending money. We don't see that going anywhere. The data doesn't suggest any
recession factors.
Josh: No, odds are pretty low, knock on wood. Obviously, there could always be shock
events. For example, after 9/11, people got really scared and stopped spending money
for a while. Same thing with the pandemic, same thing with the global financial crisis.
That's probably the biggest one in our lifetimes, when everybody got scared at one time
and stopped spending money.
Jeremy: Another thing we hear a lot about is comparing today's inflation with the
hyperinflation of the 1970s. Yes, there are some correlations, and so when we looked at
this originally at the beginning of the year, we were expecting one to two cuts from the
Fed on interest rates. At this point, that's pretty much off the table. Instead, they're
talking about maybe a small bump.
Josh: Yeah, some surprise last week that they didn't raise rates. That still could be
coming. I think it’s fairly likely unless we get some good surprises with inflation dropping.
Jeremy: That is definitely something to keep an eye on. The biggest factor with that is
the market could probably handle a small bump up as it goes along. What really screws
things up is when the Fed slams on the brakes after Covid and things of that nature.
Josh: Yeah, you look at Covid, and lots of bizarre things happened during that time as
far as supply chains and so forth. There was a massive slowdown. Everybody stopped
spending money and then trillions of dollars from the government came plowing back

into the system to incentivize people, and jobs came back. Then you had a supply
problem because supply chains all got interrupted and shut down. You don't just start
that back up, so lots of crazy stuff happened in 2020, 2021 that caused an inflation
problem. Different economists have different opinions, but the Fed probably waited too
long to start tightening up, so they slammed on the brakes in 2022 and we had a big
spike in inflation. Some of you might remember your portfolio went down about 20% that
year. Didn't feel good, right? Then things came back. We're hoping we're not repeating
that scenario. That's one of the risks if the Fed is too loose and then inflation takes off
and there ends up being a knee jerk thing to stop an uncomfortable ride.
Jeremy: Yeah. But on the bright side, the data also tells us that stocks are the place to
be. If there's one thing out there that handles inflation well, it is typically stocks and
equities.
Josh: Stocks or real estate are the two in our time. Maybe there'll be something else.
Maybe Bitcoin becomes something in the future. But as far as something following
patterns over the last couple hundred years, it’s being an owner and participating in
capitalism. You've got stocks, real estate, you own something that can outpace inflation
from a return standpoint. You don’t get that anyplace else consistently. The fixed
income, even gold, commodities, things like that, can sometimes match inflation.
Sometimes they are a good diversifier, but stocks and real estate typically are going to
be your best inflation hedges.
Jeremy: And again, that carries as long as the Fed doesn't wait too long and then have
to slam on the brakes by jumping rates up quite a bit really fast. Right now what we're
seeing is momentum running pretty high. Stocks sit near the top of historical range. As
of the time of this recording, yesterday the Dow and the S&P hit new highs. Maybe we
need to do these reports more often, because it seems like every time we do one, I
know that I don't know.
With overall equities, that AI factor seems to be the thing driving a lot of this stuff. Big
companies, your Google, your Amazon, Nvidia, Microsoft, have two major factors
involved with their earnings. They have the business they're doing, and they have
private investments, private companies that they're purchasing, and those get revalued
from time to time. Now, when we look at this, it’s a fairly good sign. Some of these
companies, Alphabet, Amazon, have half, maybe a little more of their overall net income
coming from private companies, even if we're just looking at quarter one. Those private
companies are doing well, so they're getting revalued up. The other half of that is strictly
coming from profits. So on that nominal price, they're getting good margins, making a
profit, whereas in companies like Nvidia and Microsoft, their private amount is only in
the 20, 25, 27% range. When we're talking about this, we're talking anywhere from 35 to

60 plus billion dollars just in quarter one. Those two companies have massive profits
happening, shown in Q1 data.
Josh: We'll see what happens as we go into this fall too, because market conditions
appear to be good right now. You might find more of these private companies end up
going public. Probably one that's been in the headlines more than anything is SpaceX.
We were getting lots of questions about that. The stock price hasn't done great so far,
but many of these big companies like Google owned a pretty good chunk of SpaceX
stock, so it was privately held before. They've been holding it on the books for years and
years, and then just recently that went public. Whether you like it or not, it could be that
you own some SpaceX or one of those companies. Maybe you don't, but the reality is
when you own some of these big companies, poster child Berkshire Hathaway, it's
almost like a mutual fund. When buying it, you own pieces of all kinds of different
businesses and companies. Often, that is what you're getting exposure to when you
own stock in big companies like this.
Jeremy: Going back to earnings from the beginning of the year up to now, the S&P
overall, does point higher, largely because earnings and profits are feeding all this,
which is what you want. You don’t want speculation on, “I think this one company will do
really well.”
Josh: Definitely, you don't want to do that. Earnings are the only thing that's real, right?
Earnings and cash as far as what a company is actually worth over time. Not only
current earnings, but projected earnings are extremely important. That's what we're
seeing—very strong and accelerating forward earnings.
Jeremy: When we talk about earnings, a lot of that is the margins. The margin is the
amount of profit they're getting off their product, whatever they're selling, and margins
are climbing.
Josh: Yeah, they're controlling costs. Sometimes, if revenues accelerate, they might not
have to spend more money to get to that point. They can choose to go ahead and
deploy that money, like in capital expenditures. That's a choice. If you have earnings, if
you've got cash, you can take that and do different things with it. You can pay down
debt, you can do capital expenditures. So that's different. The earnings are there.
Jeremy: But as always, volatility comes with the territory. It's the toll we pay to invest.
Josh: Back to our slide at the beginning, that’s the craziness of life, the craziness of the
economy and the world, which isn’t going away.
Jeremy: With that, a couple key items to remember. Technically we didn't hit a 10%
correction in the first quarter of the year as predicted. It was 9.7 or something around
there, so pretty close. Those happen about once a year. Something like a bear market

happens once about every 3 to 3 1/2 years. Smaller things like a 1% dip we get about
seven per year. That's just a normal crazy day in the market.
Josh: Yeah, it's statistically just part of the game. If you're going to get on an airplane,
you're going to get turbulence. What's predictable that hasn't happened yet? That is an
important thing to ask yourself if you're a stock investor. If you’re flying into Denver, t's
predictable that you're going to get turbulence. All right. Just expect it. Enjoy it. Probably
not, but expect that it's going to be there. Where upset comes in is when things don't
match your expectations, right? So it's important to recognize that part of being an
investor is staying in long enough.
Really, time is such a huge factor. That’s not to say that the noise of politics and
craziness and wars don't matter. They matter. But from an investment standpoint, if
you've got time, those things tend to even themselves out. And most of the time, we
don't even remember them. If you go back to some of the years, we could list off a
bunch of stuff that at the time seemed significant, like the Greek debt crisis. I mean,
think back to 2011, the European debt crisis caused a lot of volatility in the markets. My
gosh, all these southern European countries were very debt-laden and still are. People
thought they were going to sink all of Europe because the European banks hold all that
debt and it was going to cause this massive financial crisis. That didn't materialize. Most
of you, as I'm describing this, are thinking, what? I don't remember that. But at the time,
it was considered significant.
Jeremy: Here, the bulls are still missing. And so one of our favorite data sets is the
American Association of Individual Investors, (AAII).
Josh: I hope none of you are members of the AAII. If you are, I'd like to talk to you
because I'm going to do the opposite of whatever you think. Ethically, they're not very
successful with their picks.
Jeremy: Yeah, I'm not going to make anybody do the math on this, but we're looking at
about 40 years worth of data. I counted it up, and 33 of those 40 years, (about 82% of
the time), the AAII was way off with what they expected versus what happened in the
market. So, if you just do the opposite of it, you're more than likely going to come out on
top.
Josh: The AAII is largely people who are self-directing their own investments. Some of
you probably do that on your own and do a great job. Maybe you're very disciplined, but
statistically the average investor left to their own devices does the opposite of what they
should. That’s because it feels good to buy when things are high and the market is
going up. A lot of the gains have already happened by the time these people get bullish.
So, they end up buying high and selling low when things feel bad. You really don't want
to do that. You want to buy low and sell high. That's the first rule of investing.

Jeremy: And to go with this, what the data is saying for the current year, is that bulls are
near zero right now. At the midpoint of this year, S&P 500 was up about 10.8%. That
wasn't just the Magnificent Seven or anything like that. If we look at the S&P 500, over
490 of the companies in the S&P 500 had double digit gains for the year.
Josh: Yeah, we're no longer talking about a handful of companies.
Jeremy: It’s pretty widespread. And being a midterm election year, we'd be remiss to not
at least talk about that. In a midterm election year, usually the average down point in the
market during the year is about 17.5. But what we see is the very next year, the market
gain from when that happens is up about 31.7%. That's no small margin. So, despite the
fact that markets have hit a new high within the last day or so, the data is showing us
that value is still out there, especially when we're comparing 2025 to 2026. A lot is
coming from these companies making good earnings, so there is additional value to be
had going forward.
Josh: Exactly. I know we've been talking about that earnings value over and over,
especially because earnings have been so attractive relative to where we thought they
would be. There's a good case that even some of your big tech companies are better
value than they would have been six months to a year ago. But we want to diversify
beyond that, right? Not just large cap US stocks, but international, small cap, mid cap.
We want to make sure we've got exposure to all of these areas.
Jeremy: It’s important to have a little bit of everything. Now the other thing about this, is
that people keep asking us, what about this bull market? How long does it have to go?
The data shows that the average bull market returns about 260% over its lifetime.
Josh: Yeah, it's true.
Jeremy: Currently in this one, we're at about 101% roughly. So that tells us there's room
to grow. Your average bull market lasts about 5 1/2 years. We can go back in time to
some of our bigger events where there was a 12-year bull market or an 11-year bull
market after 9/11. Not that you would ever want to try to time the market.
Josh: If anything, the moral of the story is the people that are able to hang in the longest
are the ones that make the most money in the market, not people who try to get the
timing.
Jeremy: Absolutely. The market tends to reward patience. So, when we're talking about
bonds, like we mentioned near the beginning of this podcast, it's the yield of the bonds
that are going to be doing a lot of payment. Not a lot of movement in returns per se, but
the interest that they're paying.
Josh: Think about why bonds are in your portfolio to begin with. They're the least
exciting investment, cash and bonds. They're not very good inflation hedges. They tend

to just produce income stability most of the time, right? Sometimes, like in the year 2022
when the Fed had to stomp on the brakes, we saw bonds go down in value quite a bit
price-wise. But this year, as long as the Fed doesn't have to get too crazy with
increasing interest rates, we think you're just going to get the yield in that 3 to 5% range.
Jeremy: And keep diversified even amongst your bonds.
Josh: There's a lot of different risks and you need to understand the risks, not just in
stocks, but also in bonds.
Jeremy: Yep. And then being a midterm election year, the general idea is that we could
throw a bunch of different charts at you that all say basically the same thing. Overall, the
market doesn't care who's sitting in that chair.
Josh: If you think about the market, it's consumers, it's spending money, it's CEOs of big
companies making business decisions. Obviously, politics matters to them from the
standpoint that they need to know the environment they're operating within is going to
operate a certain way. Policy does matter. So it's not to throw it completely out the
window, but for a long-term investor, who's in office doesn't really matter all that much.
You can look at plenty of examples, both blue and red or somewhere in between as far
as government operating, it’s still just fine from a market perspective.
Jeremy: Yeah, the market does not pick sides. The data also supports the idea that
markets do like gridlock when it comes to the political system.
Josh: And we've got a few months until the midterm elections. Prognosticators are
saying we’ll end up in some type of a gridlock situation. Maybe you don't like that
personally, whether you're left or right, either way. But as an investor, you should cheer
that on.
Jeremy: This goes back quite a few years, showing that your general returns are
somewhere around 17% when we have a gridlocked political system.
Josh: With this Congress, more than likely, we're going to end up again somewhere
close to where we've been operating, in a very polarized environment where things
swing back and forth left and right. More than likely, that's where we're going to end up
after November. Either way, regardless of what the outcomes are, if you're a business
leader, if you're a consumer, everybody is still going to move on and figure out the new
environment they're operating within. So even if the outcome isn't what you want it to
be, that doesn't necessarily mean it's a bad thing from an investment standpoint.
Jeremy: The market just does not pick sides when it comes down to it.
Thank you from all of our team here at Keystone. We're up to 12 individuals now, all
here ready to serve you and take care of your needs. Like Josh mentioned, we’ve got

Jen and Michael who will be sitting for their CFPs this fall. We continue to expand,
thanks to our clients.
Josh: It's certainly been fun along the way. Keystone started in 2010 and many of you I
worked with for a number of years before that. It's been fun to be able to build out a
team and not just do this alone. I think we're able to be a better fiduciary for you
because of it, because you're not relying on one person for one set of ideas. You've got
a whole team to look out for your best interests. We are a fiduciary and that's not true of
all firms. It's important to think about who you want to be able to trust, who you can rely
on, especially when things are tough, whether that be in your life or from a market
perspective.
Jeremy: If you have any questions or concerns, or if you want us to look at your
personal situation, you can always find us at www.keystonefinancial.com . You can e-
mail josh at josh@keystonefinancial.com . You can e-mail Jeremy,
jeremy@keystonefinancial.com or use the phone. Our number is 970-744-5408. We are
ready to take your questions.
Josh: If you have any follow-up questions, not only from existing clients, but also if
you're considering Keystone or if you've got a friend considering Keystone, it's an easy
way to introduce somebody by e-mail or let us know if they're willing for us to reach out
to them. We can certainly do that. Sometimes there are opportunities like passing on
the podcast or webinars. We’ve found that the podcast is a good way for people to get
to know us a little if they're not quite ready to come in for a financial consultation. So
thank you so much. We appreciate your support and friendship. We hope you have a
wonderful week. Take care.
We love feedback and we'd love it if you would pass it on to me directly at
josh@keystonefinancial.com . Also, please stay plugged in with us, get updates on
episodes and help us promote the podcast by rating us five stars and subscribing to us
at Apple Podcasts, Spotify or your favorite podcast service.

The opinions voiced in the Wiser Financial Advisor show with host Josh Nelson are for
general information only and are not intended to provide specific advice or
recommendations for any individual. To determine what may be appropriate for you,
consult with your attorney, accountant, financial or tax advisor prior to investing.
Investment advisory services offered through Keystone Financial Services, an SEC
registered investment advisor.