All The Risks to Monitor in 2026

Hello everyone and welcome back in this video. I want to talk about all the risks that I'm monitoring for 2026 2025 has been an eventful year. I suspect 2026 will be worse as always you have a lot of uncertainties in this world. And in this video, I will tell you all the things that I'm monitoring all the risks all the things that can go wrong for 2026 because you want to be prepared in a scenario where everything is expensive right now. The stock market is expensive. So you want to be a little bit defensive. You want to have some defensive plays you want to have some hedges and you want to monitor the KPIs. What is really important? What will move the market? Okay. So in this video, I will just list a couple of points. I'm monitoring so you can add them to your basket of tools and I think we can start in case is your first video from this channel. Welcome. My name is Christophe Null. I've been investing in the stock market for almost a decade now and I have achieved a performance of 25% per year because I focus on very simple businesses quality companies at a fair price and I buy and hold for the long term, but it's always good to see how the world is moving. Right? So in this video, I will talk about some specific micro risks and then some macro risks because now as you can see here the S&P 500 is pretty much almost to all-time highs after a huge rebound from 2025. So let me just address this point and then we'll move on to the next one. But as always you have some political risks in the US. If the US administration for some reason they if they want to do something that is bad to the economy and on some new tariffs and I'm some new threatening of South of North Korea as we've seen in 2018, the markets will get a little bit crazy, but it's impossible to forecast what the president will say. So I will just want to start this video with this small point because we cannot prepare for it. Okay, this is the first point if you're worried about what the president will say or potential tariffs in the future. You're wasting your time. Don't think too much about this. It's impossible to have a good timing and a good effect on the stock market for this. Okay, the big problem with this market and the big risk. I would say this is the valuation. Now, if you look at the PE ratio for the S&P 500 for the Nasdaq for the price of free cash flow for any metric you look at we are a little bit expensive, which means if you have any shock in the economy if any worry when it comes to AI or AI bubble or any worries when it comes to profitability markets can have a very good correction of 10 20% easily easily because it doesn't need much to go back down the if the PE ratio of the S&P 500 is at 31. We were at 24 a couple of months ago. The only moment we had such a high valuation was back in the days in 2020. Okay earnings were a little bit depressed for some companies and stocks went down immensely. Anyway, you don't have this level of valuation every year and I can even show you some of the charts from your daily research. They do great job on delivering this chart on a daily basis. And what you can see here from figure one is in purple the Magnificent 7 forward PE ratio. So all the big tech companies that are driving the market. Well, if you look at their valuation, we are at a forward PE ratio of 28. Okay, they are trading at a premium compared to the overall market. It's normal. They are premium companies. But if you look at any metric when it comes to big big caps Magnificent 7 or even the red line the large caps we are rich. If you look at this red line here, the forward PE ratio is 22. The only moment we had such a high valuation for large companies was in 2021 just before market correction. And if you go back in history, it was during the dot-com bubble. So it doesn't sound good. Doesn't sound good at all to be only invested in large cap companies or you have to be worried about certain things. Valuations are stretched in this market. If you can, you can sidestep this by only invested in companies in stocks with a forward PE ratio below 22. Okay, that could be a good arbitrage play. Sometimes I receive comments about how do you see 2026? How will you change your strategy in 2026? Well, that may be a topic for another video by the way, but a good way to hedge your portfolio and to play defensive to be prepared is to never invest in companies with the forward PE ratio above than the market. For some people, right? It depends on the companies. It depends on the earnings growth. If the company you are invested in is growing earnings meaningfully, this rule doesn't work. But on average, yeah, that's pretty good rule for average businesses, I would say. And I can't open this bottle. Anyway, what you can see here as always is more concentration. You have a clear gap between the red and the blue and the green. The blue line, the green line, that's the valuation for mid caps, small caps. What you can see is small caps are cheap. Mid caps are cheap. Large cap are expensive. Magnificent seven companies are expensive and they are expensive for a good reason. It's because expectations are high. Why? Because earnings growth is high. They are growing the most so you deserve a premium. So far so good, which leads me to the second point. The AI bubble. That's also a big risk. What if we have an AI bubble? What if the AI implementation is not working out? By the way, if you want to become a better investor and improve your performance, I have a coaching program. It gives you the exact method I've used to generate 25% per year for almost a decade. More on that at the end of the video. So far we are seeing some traction in this market. Okay, so far we are seeing AI being implemented everywhere for almost all businesses when it comes to logistics or manpower or just reducing the amount of headcount to be more efficient or revenue acceleration or efficiency, productivity. So far so good for AI. What if something changes and it's six months? It's no longer the case. This is something I will monitor for 2026. The AI implementation for many companies. We just learned about the earnings report of Micron, ticker symbol MU and we learned that AI was making them for the coding part 30% more productive. You're 30% more efficient because of AI. That's huge. We are seeing some other companies, some companies that have in my portfolio, MSCI, Adobe, embracing AI that is re-accelerating the revenue and the amount of products they deliver. So we start to see some traction inside companies. Companies are using AI to one, re-accelerate revenue. Two, reduce costs. So far so good, but six, nine months ago, we didn't see this. So it's very recent. What if it's just a few quarters and then you go back down? What if it's not real? What if all your productivity gains are temporary and after one year you say, you know, no, let's stop AI. Let's reduce the AI a little bit because it's not that good. It's possible. Anything can happen. Maybe AI is a logarithmic and at the beginning you have a stellar gains and then the incremental gain is no longer useful. Maybe it's possible. Nobody knows actually, but the big companies, the magnificent seven companies are betting on this because the capex, the capital expenditures are growing and growing and growing. If you look at the capital expenditure for Amazon, Alphabet, Metaplatforms, Microsoft, only four of them, they have tripled their capex in the past five years and they are betting every dollar they have in free cash flow to have more capex, more data centers, more facility, more LLMs, more implementation of AI everywhere. And this is a cost. This is a cost. I can show you. What can I show you? Metaplatforms. I can show you Metaplatforms that is known for being efficient capital light. Well, as years go by Metaplatforms has gone from a cash heavy business to now a net debt business. Now they have more debt than cash. And also when it comes to their free cash flow and operating cash flow, look at the difference. I can show you this in blue and in yellow, the operating cash flow and the free cash flow. You will see that there is a gap that is widening. The blue line is moving away from the yellow line. The only difference between operating cash flow and free cash flow, that's the capex. So the company is doing more and more capex as a percentage of operating cash flow and I can show you what I mean by showing you this beautiful chart on Fiscal AI. You can go to Fiscal AI. You can go to Metaplatforms, financials, ratios, capital efficiency. What is it? Capital efficiency. You scroll down, you scroll down capex to operating cash flow and this is what you have. This is what you have. Okay, let me go back in time. You can see that 10 years ago you had 24, which means 24% of the operating cash flows went into the capex. And over the past 10 years, we went from 20, 30 to now 60. If you look at more granularity, here is what you have. You have capex ramp up for Metaplatforms. We are seeing a very high level that we had back in the days. I mean for this peak in 2022, you have to adjust it because it's fake, because free cash flow went down and operating cash flows went down because net income decelerated. Anyway, you have to adjust it. It's not because the numerator was high, it's because of the denominator that was low. Anyway, I don't believe this chart is real. This big ramp up here is fake, which means if this one is fake, which means we are at the highest capex to operating cash flow level for the past 10 years. This ratio of efficiency and asset light of the business model went from 24 to 54, 58. It has doubled. What will happen in 2026? Well, Metaplatforms, Google, Amazon, they all increased their guidance for capex. So you can expect this ratio to continue. And the only one thing to remember to monitor when you have this big capex ramp up is, is this capex re-accelerating your revenue? This is the only thing you have to monitor. If you have to leave this video with one thing, it's the AI bubble. Check this, check the capex. And if a company does a lot of capex, check if the revenue is re-accelerating. If the company has a lot of capex and the revenue is not re-accelerating, red flag. If for Metaplatforms, they are ramping up capex, but the revenue is re-accelerating, this is fine. If you look at the latest quarterly data for Metaplatforms, the revenue is re-accelerating. Look at this. We, oh, this is the ratio. Capex operating cash flow in blue, revenue growth rate in orange. Look at this. We re-accelerated from 20% growth rate in revenue to now 26%. So one, more buybacks, two, more revenue. It is working. Will it work in 2026? Well, this is something I will monitor and I will do the same exercise for Metaplatforms, but also all the other tech companies that are embracing AI, AI monetization a little bit everywhere. And also because I'm a shareholder of Metaplatforms, I can go into more details, meaning what is their implementation of AI, the number of ads, the efficiency of ads, what is the cost of AI, everything that is related to AI monetization. I will check this and for all my companies in my portfolio, I will monitor everything when it comes to AI implementation because the Capex is a big risk right now. If these tech companies are betting heavily on AI because it's the future and it's possible, right? Maybe AI is very early and will completely revolutionize the world. If we are early, you want them to be smart. You want to avoid mistakes and you want to see all the moves. I will monitor what is happening with Google, Amazon, Metaplatforms, Microsoft, even Apple to some extent with minimal AI investments. Anyway, all these big tech companies that are fueling Nvidia, etc, etc, Oracle, all these things. Okay, that's pretty important. Now, another risk I will monitor in 2025 is where is the bottleneck for AI? Is data compute the bottleneck for AI? Is energy the bottleneck for AI? Is inflation the bottleneck? Is manpower the bottleneck? Technology the bottleneck? China the bottleneck? My guess is energy is the big bottleneck. So I will monitor what all energy companies are saying if you have some deals with energy companies and potential data centers, etc, etc, etc, because if you need more data centers, you need much more electricity. Some companies in the US are drought. Some cities are complaining because electricity bills are going up. I'm European. So I know this quite well how it works. People will keep complaining and the world will continue to move on. So as you have more data centers, you need more water, you need more electricity, prices will go up for everybody, for all the individuals, people will complain and maybe you will have some crazy energy deals happening and all the energy companies, it can be Talent Energy, Vistra Energy, Energy Energy, all these companies Constellation Energy. Maybe they will benefit the most out of this AI bubble, out of this AI growth in the future because if energy is the bottleneck, they will have immense demand, immense demand. You can look at Constellation Energy. They just signed a deal with Meta Platforms, Constellation Energy, They just signed a multi-year contract with Meta Platforms, by the way, immense backlog, immense demand, immense growth expected in the future. And I am not touching this investment for the moment, but I am monitoring what they do, what they say, because I think that's the future. That's incredibly important to understand energy when it comes to data centers. By the way, if you want to learn more about energy and data centers, I highly recommend you read what Horizon Kinetics is saying publicly. It's a fund. They are invested in some energy place like this, Horizon Kinetics. They have quarterly letters. You can just read them. They have a lot of research when it comes to energy. Okay, and the last risk I will monitor for 2025, that's inflation and interest rates. Of course, I don't expect anything. I don't have a crystal ball. I don't know where the inflation will be and where interest rates will be. My guess is you will have a little bit of stagflation if growth doesn't pick up. So you expect inflation rate of what? 3%, 3, 4% and I want to have a portfolio with companies with pricing power so they can offset this inflation of 3% with price increases of 3% or more. You can look at Moody's. You can look at MSCI. You can look at Apple. They are increasing their prices every couple of years. Sometimes every year more than the inflation rate. Okay, so that could be a good take away for you in watching this video. In a world with inflation and sustained high inflation, you want to be invested in companies with pricing power. Okay, and something else to monitor interest rates. Well, everybody's monitoring them because if that is cheap people will take on more debt and some companies I have in my portfolio will take on more debt to do more leverage buybacks. So yeah, of course, I will monitor this but from a distance. Nobody knows where interest will be. Maybe there will be a shock in the economy. So interest rates will drop. Maybe you will have a ramp up in inflation. So interest rates will go up anything is possible. You have a new Fed member. I'm not enjoying this kind of conversation. So we have I don't have a crystal ball. Nobody knows just invest with the best tools you have and doing guesswork will not help you. I'm seeing too many people spending too much time on looking at macro and the Fed and your new Fed president who would it be? What will they do? What will be the impact of the US administration on the Fed president the QE the QT all these things at the end of the day if you only focus on companies that are growing profitable growing 20% per year doing buybacks with a lot of efficiency. This is how you outperform the market. So these were all the risks. I'm monitoring for 2026. If you like this content and you want to go deeper. I have a coaching program in this program. You will learn the strategy I use to outperform the market. You will learn how to find winning opportunities. You will learn how to properly value stocks when to buy when to sell so that you can build a strong portfolio with great companies. Additionally inside the program. You will have access to an exclusive community of like-minded investors and you will also have access to my personalized guidance to reach your investing goals. Click the first link in the description to get more information. You will get a video a short video that explains how everything works completely for free. No need for your email address. Just click the first link in the description and I'll see you on the other side.