| DAILY ISSUE Wall Street Is Finally Catching Up to My Warning VIEW IN BROWSER Hello, Reader. As the business author Peter Drucker observed, “The only thing we know about the future is that it will be different.” Looking back at the past 12 months proves this to be true. Different, unexpected, unprecedented… you can take your pick of adjectives. With all that’s happened this year – the ongoing trade war, the longest government shutdown in U.S. history, and the AI boom’s continued remarkable (and expensive) advancements – it could be easy to assume many market predictions made at the start of this year would be completely worthless by now. However, one forecast I made this year has continued to be proven right. As I wrote to my Fry’s Investment Report members, I expected “the richly valued Mag 7 stocks to lose some of their luster.” My reasoning was pretty straightforward: Valuations were getting stretched, and the cost of staying ahead in AI was, and still is, getting expensive. And my prediction was echoed this week. Wall Street veteran Ed Yardeni announced on Monday that he’s officially going underweight on the Magnificent Seven: Amazon.com Inc. (AMZN), Apple Inc. (AAPL), Alphabet Inc. (GOOGL), Meta Platforms Inc. ( META), Microsoft Corp. (MSFT), Nvidia Corp. ( NVDA), and Tesla Inc. (TSLA). According to Yardeni, the Mag 7 companies face unique, aggressive competition, and he expects the 493 other companies in the S&P to become more valuable. What’s more, the HSBC's 2026 predictions of a Mag 7 slowdown and improved earnings growth for the rest of the S&P companies back up what I’ve been repeating… Valuations among the most popular investments are now bordering on the unsustainable. Following my forecast's success, I’d like to take a look at how some of my other predictions held up, especially as certain trends look like they’ll continue in 2026. Then, I’ll share how you can get a jump on playing my predictions. Let’s jump in… Unpacking My 2025 Predictions 1. Corporate Profit Margins Will Soar I expected companies to squeeze more profit out of their operations this year, which is exactly what happened. The S&P 500 reported a 12.9% earnings growth in the first quarter of 2025 and 12% in the second quarter. Then in the third quarter, 81% of companies in the index went on to beat earnings expectations – a big jump from the 73% average in 2013. As for 2026, Yardeni also mentioned that he believes “that S&P 500 companies’ collective earnings per share will increase from $268 this year to $310 next year.” This is one prediction that could continue to pan out. 2. The Pharma Sector Will Outperform the S&P 500 While this one didn’t start to go as planned, the pharma sector has rebounded in the latter half of 2025, proving my prediction right The pharma industry, as measured by the iShares U.S. Pharmaceuticals ETF (IHE), spent most of the year down or even through late September. But now it’s up 28% year-to-date, compared to a 17.6% rise in the S&P. We can thank recent advancements in the sector for late-year shift toward bigger gains. Consider Fry’s Investment Report holding Bristol-Myers Squibb Co. (BMY)’s announcement that it would continue its Phase 3 study of Cobenfy’s use as a therapy for Alzheimer’s disease. The trial was initially paused due to irregularities at certain study sites, and it was restarted after consultation and agreement with the U.S. Food and Drug Administration. News like this has us excited about our healthcare holdings in Fry’s Investment Report. 3. Select Foreign Markets Will Outperform the S&P 500 This one is turning out to be true. For the third time in the past 10 years, it looks like the S&P 500 will end the year broadly underperforming the foreign markets. Currently, the S&P 500 ranks 41 out of the top 60 stock indexes in the world. And the iShares MSCI ex-U.S. ETF (ACWX) – a fund that invests in stocks from countries outside the United States – is up 30% since the start of the year. So, I’m holding onto my strongest foreign stocks, including one that’s currently up 80% in eight months… Investing Amid Chaos I’m talking about one of my international stock recommendations in the Fry’s Investment Report portfolio. It is a global performance luxury and lifestyle brand. It manufactures its products outside of the U.S., but possesses a competitive advantage in the U.S. against all the similar brands paying massive tariffs on the products they manufacture in China or Southeast Asia and export to the U.S. You can learn how to access more details about this stock by clicking here. The dollar has stabilized this year, but the low valuations and the broad growth we’re seeing overseas should keep pushing foreign stocks higher, which I expect to continue as we move into 2026. At Fry’s Investment Report, we’re prepared for the different, the same, and everything in between that the future will bring. In fact, I’m releasing my final Fry’s Investment Report monthly issue of the year in just a few days. You can click here to join us before it’s released – and ensure that you are well prepared for the year ahead. Regards, | 
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