How to design the right investment plan … specific action steps to take today … preparing for whatever the market brings this year
But while we toast another good year, new questions loom:
We could go on, but we’ll jump to the bottom line…
We’re heading into a year defined by crosscurrents and critical unknowns.
Now, we’re excited to navigate them with you, but we’re going to hold off on analysis today. Instead, we’re turning to the one thing that will have the ultimate impact on your net worth in 2026…
Your investment plan.
We begin each new year with a version of today’s Digest because it’s far more important than any single piece of analysis. None of us can control what the market throws at us this year. We can only control how we respond – and that’s where a plan is crucial.
So, we’ll pick back up with all the headlines on Monday. Today, let’s get our investment ducks in a row.
Research shows that 43% of people expect to give up on their New Year’s Resolutions this year. In fact, this 43% “quit” rate is expected to kick in by February.
Not too encouraging.
I would guess that results are equally bad – if not worse – when it comes to New Year’s investment resolutions.
A big reason why many investment resolutions are flawed is because they focus on binary goals.
“Did my investments generate enough cash flow to cover the down payment on the new house?”
These are all reasonable goals, but they focus exclusively on the result rather than a process – the “payoff” rather than the “playbook.”
Unfortunately, the truth is that the only thing we can control is the process.
Think about it. Myriad influences will impact your returns in 2026 – far beyond the questions we raised at the top of today’s issue. Here are a few additional potential curveballs:
We have no control over these factors – and yet any one of them could have a massive impact on our portfolio value.
So, let’s forget all the absolute “I will make X%” type resolutions, and instead, focus on what we can control, which is a well-executed process.
With that in mind, here on this first trading day of 2026, let’s turn our attention to making an investment plan.
What follows isn’t “the right way” to accomplish this. A good plan can be created in a million different ways. But the central idea is: “you know what you own, why you own it, and how you’ll handle your positions in response to all sorts of market conditions.”
Even if you’re only moderately successful in creating and implementing a plan this year, that small effort will still put you light-years ahead of most investors who just wing it.
Let’s jump in.
Step 1: Open your calendar and pick a day/time when you’ll be able to dedicate 100% of your focus to your portfolio. Say at least 30-60 minutes.
Step 2: Before you analyze your current portfolio, think about what investments would go into a “perfect” portfolio today, looking forward.
For this step, what you presently own is irrelevant. This is a mental exercise to help you identify a “best of” portfolio based on your investment goals and needs.
As you consider this, ask yourself…
What’s the portfolio’s primary goal? Capital growth? Income? A mix? Why?
Over what timeframe? Is it a defensive orientation, or are you looking to grow aggressively?
Given your answers so far, what asset classes need to be in this portfolio? From which global markets? Which trends do you want represented? In what allocations? What else? What other considerations need to be reflected in this perfect portfolio?
Continue to get more granular…
Within each of your chosen asset classes, or markets, or trends, which stocks and/or other investments do you believe offer you the best exposure?
This process can be as simple or detailed as you want, tailored to your unique situation.
For instance, say you generally outsource your portfolio selection to experts, so you have an assortment of picks from our stable of analysts…
Perhaps some long-term buy-and-hold stocks from Louis Navellier, Eric Fry, and Luke Lango… short- and/or medium-term trades from each of these analysts as well… altcoins from Luke… various commodity plays from Eric and Louis… perhaps opportunistic trades or hedges from Jonathan Rose…
In this situation, you might consider how much weight you want to give each analyst’s picks within the framework of your overall portfolio.
Whatever feels appropriate for your specific financial situation and goals, write it down.
Whether you’re highlighting specific stocks or allocations toward the picks of specific analysts, it can be helpful to detail why you’ve made this choice – which will tie it back to your overall portfolio goal.
For instance, “I will weight 10% of my overall portfolio to small- and medium-cap AI plays from Luke Lango, because it will offer diversification from the mega-cap component of my portfolio, while also giving me exposure to AI.”
Or “With 15% of my portfolio, I will make shorter-term trades following Louis Navellier’s Accelerated Profits system because it will limit my exposure to volatility in 2026 while still enabling me to shoot for double- or triple-digit gains.”
Basically, document the reason for all your choices and how they support your investing goals.
As part of this, be realistic about your desire to swing for the fences.
Most of us harbor a fantasy of throwing a few bucks at, say, a penny stock, and watching it explode in value. Three months later, we’re driving that new Porsche, or taking the European vacation, or putting the kids into the elite private school …
So, let’s honor this fantasy in a responsible way.
Pick a percentage of your investable assets you’re willing to gamble with. The amount should be no greater than what you could completely lose without having it affect your sleep. Whether that’s 0.05%, 1%, or 15%, be honest with yourself.
It often helps to turn your chosen percentage into an actual dollar amount based on your portfolio size. Then, imagine burning that cash.
Are you still comfortable? If so, great. If not, lower your gambling percentage until you are.
Step 3: Now, it’s time to review your existing portfolio.
Line up your current portfolio next to this “perfect” portfolio you just created.
Note any discrepancies.
Is there a stock in your existing portfolio you wouldn’t include today with new money?
It gets the axe.
Do you have 95% of your stocks in U.S.-centered companies when you want it to be just 65%? You need to do some trimming.
Is there zero exposure to small-cap AI plays in your current portfolio and yet this is an investment theme you want to own? Time to buy.
“But wait!” you say. “It’s not that easy. I have major capital gains in some of my current stocks that I’d otherwise sell” (or you have some other reason to avoid making a portfolio change).
Okay, there are always complications. But if so, at least identify when and how you’re going to make the necessary change – regardless.
Consider why…
Allowing an underperforming investment to stay in your portfolio year-in-year-out to avoid paying a capital gain carries a huge opportunity cost. Yes, you’ll suffer the short-term pain of a tax-hit from a capital gain, but consider the negative possibilities…
What if that investment suffers a big earnings disappointment? What if it nosedives and your unrealized paper loss is far greater than the actual loss that you’d have suffered had you just sold it and paid taxes?
On the other hand, even if it doesn’t perform poorly, but just trades sideways, consider the opportunity cost you’re suffering compared to being in a much stronger investment. Even a money market fund at 3.75% would be a better use for your capital than a stock that goes nowhere (or down).
So, if you have a reason why you don’t want to sell a legacy holding, okay. But at least be intellectually honest with yourself about why you won’t sell, recognizing the opportunity cost.
And remember, you don’t have to sell an underperforming legacy holding all at once. Perhaps you’d stomach it better if you sold it in chunks, offsetting some of those gains with some dogs in your portfolio that turned into losses.
Be creative about how you might address the problem. Just don’t let a toxic investment drag down your portfolio without being intentional about it.
Step 4: For each holding in your portfolio, categorize it as either a low-conviction and high-conviction hold.
A high-conviction stock is a holding that you believe is a multi-year (or multi-decade) portfolio cornerstone. You believe its long-term merit makes its current valuation irrelevant. You have no qualms about holding it here in 2026, even if it’s overvalued by historical standards.
You recognize that such a stock will lose value in a bear market, but you’re fine with that. You can imagine this holding imploding, say, 40%, and you would still hold without batting an eye.
A low-conviction stock is anything that doesn’t fit this description.
After sorting your stocks (and intended stock purchases) along this binary, forget your high-conviction stocks. Delete them from whatever app you use to monitor the market. After all, their price movements are irrelevant. You don’t want to be tempted to sell them if you see a major decline and your emotions tempt you to act rashly.
But for your low-conviction stocks, a different approach is mandatory. Decide how big of a position size you’ll use, and what trailing stop loss percentage you’ll apply to the position.
This is a critical step for preserving your capital. It prevents small, reasonable losses (which all investors endure) from snowballing into massive portfolio-busting losses.
As to incorporating a stop-loss system, you can do it yourself, but I’d point you toward our corporate partner, TradeSmith. They’re one of the leading quant shops in the investment industry.
Unlike how most investors use trailing stops (a blanket “20%” lower), TradeSmith’s trailing stop system factors in the specific volatility of any given stock/ETF to help investors answer a crucial question…
When you’re in a pullback, how do you know whether it’s just normal volatility to ride through, versus a “this time is different” drawdown to avoid immediately?
It can be as detailed as you want. But in general, it’s going to have the following features:
Your investment plan obviously can be far more granular, but if you do just this, you’ll be miles ahead of 99% of other investors.
I hope 2026 is fantastic for you and your family. And one way to make it “financially” fantastic is by creating your own investment plan – today.
We don’t know what this year will bring, but we do know that a little planning today will prepare you to ride through whatever comes our way.
