2026 Stock Market Forecast: Individual Investors Lean Toward Stability

In December 2025, Kabu no Gakkou conducted a survey among 800 individual investors aged 20 to 70 across Japan, exploring their expectations for the stock market in 2026. Interestingly, a significant portion of respondents expressed a belief that the market will remain stable rather than experience dramatic fluctuations.

The historical saying, "Tatsumi Ushi no Oji Sakari" suggests that the stock market may face declines in years that correspond to the Chinese Zodiac signs of the snake and the horse. After a significant surge in the Nikkei 225 index during the years of the dragon and the snake (2024-2025), many are now speculating about the common pattern of a downward trend in the horse year of 2026. The survey results, however, reveal a more nuanced outlook.

Approximately 46.1% of respondents predicted stability, responding with "sideways" as their outlook for the stock market. Furthermore, those expecting an increase in stock prices outnumbered those anticipating a decline by nearly two to one, with 35.9% favoring a rise compared to 18.1% predicting a drop.

Key Findings from the Survey

1. Majority Expect Stability in 2026: About 369 respondents (46.1%) believe the market will remain stable.
2. Optimism for Nikkei 225 Growth: Among those anticipating a price rise, the most common prediction for the Nikkei 225 index peak in 2026 is 55,000 yen.

Among the 431 respondents who provided specific predictions (excluding those who anticipate stability), a majority foresaw modest increases, with 55,000 yen being the most common prediction among the bullish respondents. This reflects a sentiment that the market may rise, but only moderately, staying within 10% above the current index level of approximately 50,366 yen at the time of the survey.

On the bearish side, the most significant predicted decline was to 45,000 yen, indicating a more concerning outlook from some investors. Unlike the bullish sentiment, which was characterized by relatively small price expectations, the fear of greater decreases emerged in the responses of those predicting downward trends.

Reasoning Behind Predictions

Respondents who predicted stability, growth, or decline provided their reasoning through free-text responses, highlighting a wide range of opinions:

Reasons for Expecting Stability:

- Concerns regarding China's economic impact were common, but many believe the overall effects would be limited to certain sectors. One investor stated, "Even if tensions with China persist, I think the overall impact on the economy will be mitigated."
- Some cited the recent significant gains in stock prices and felt that a plateau was to be expected, with potential future gains likely delaying until 2027.

Reasons for Expecting Growth:

- Optimism was fueled by government policies, with a 63-year-old investor citing the administration's aggressive fiscal policy as a potential driver for increased profits among companies benefiting from a weak yen.
- Moreover, a younger investor expressed hope that the international shift in investment preferences, such as moving away from the U.S. stock market, might lead to an influx of investments in Japanese stocks.

Reasons for Expecting Decline:

- On the other hand, bearish investors often pointed to geopolitical tensions and inadequate economic indicators to justify their fears about a market downturn. A 43-year-old respondent argued, "The economic policies in play appear to be fostering conditions more akin to recession."
- Concerns were also raised about the potential for market adjustments following the rapid increases of 2025.

Conclusion

As we look forward to the start of the 2026 stock market, the predominant expectation from individual investors is one of plateauing prices, alongside a considerable number anticipating growth. The survey results indicate that optimism is prominent among individual investors, with more than double the number of respondents expressing bullish sentiments compared to those predicting declines. The myriad perspectives reinforce the complexity of the stock market environment, necessitating self-determination and individual strategies as critical components of effective investing. Investors are encouraged to develop personal guidelines and frameworks to navigate the changing landscape, ensuring they can make informed decisions amid market uncertainty.

As Kabu no Gakkou continues to support individual investors with insightful analyses and educational resources, we aim to empower them in their investing journeys, facilitating a better understanding of market dynamics and enhancing financial literacy across the board.