Where have all the bears gone? Advisors weigh in on market optimism

Despite mounting geopolitical uncertainty, persistent inflation pressures, and a volatile policy environment, bearish sentiment has all but vanished from U.S. equity markets in 2026. Financial advisors and wealth managers say the combination of AI-driven momentum, fear of missing out, and a historic concentration of equity ownership among the wealthiest Americans has effectively sidelined the bears — and some are warning that the absence of skeptics could make the next correction sharper than expected.

The opportunity cost of sitting out

Pete Alliegro, chief investment officer at Sagient, says long-term secular trends have always favored bulls, but the AI revolution has amplified that bias to an unprecedented degree.

"With the wealthiest 10% of Americans now owning over 90% of equities and the bottom 50% owning about 1%, there is some truth to that," Alliegro said. "A large part of the population can be feeling economic hardship without it having much, if any, effect on the stock market."

In Alliegro's view, the opportunity cost of being out of the market is simply too high for most investors to stomach. He argues the market has become partially insulated from standard consumer recessions due to this wealth concentration — though he stresses it remains exposed to systemic liquidity shocks, such as the COVID-19 crisis in 2020 and the financial system failures of 2008.

As for whether bearish sentiment is headed for permanent extinction, Alliegro is measured: bears still exist, he says, but they are not winning the argument right now. He points to the bond market as a counterweight worth watching.

"The bond market has always been more skeptical, more focused on risk, and less willing to assume a rosy future than the stock market," Alliegro said. "It's always important to pay attention to the bond market to help keep everything in perspective."

Short sellers face structural headwinds

Ian Curtiss, chief wealth strategist and wealth manager at Coldstream Wealth Management in the Pacific Northwest, believes the structural barriers to short selling have made bearish conviction increasingly rare — and costly.

"For short sellers, it's not enough to simply identify mispricing in the market," Curtiss said. "You have to correctly time your trades, have deep enough pockets to remain patient in the face of irrational behavior, or some combination of the two."

Curtiss points to data from Moody's Analytics indicating that the top 10% of earners now account for nearly half of all consumer spending — a historic high. That dynamic has insulated corporate earnings from broader economic weakness, but Curtiss views it as procyclical rather than structural.

He also flags valuation risk: consensus earnings growth expectations of 14 to 16% for 2026 leave little room for disappointment, and with the top 10 stocks representing roughly 40% of S&P 500 value, a stumble among mega-cap names would reverberate disproportionately across the index.

"The same concentration of wealth that has sustained earnings growth makes the system more brittle than it appears," Curtiss said. "A meaningful equity correction wouldn't produce a gradual spending pullback. It would be swift, and the rest of the economy would feel it quickly."

Curtiss adds that the SpaceX IPO's dramatic post-listing trajectory reflects sentiment more than fundamentals — and raises a structural concern: without short sellers acting as a counterbalance, any future selloff may lack the stabilizing force of shorts covering their positions.

"Like prior episodes of market euphoria, that momentum cannot persist indefinitely," Curtiss said. "The irony is that a dearth of short sellers could actually make for a more abrupt drop when sentiment turns."

AI euphoria and the inevitable mean reversion

Mark Rawlings, founder and managing partner at Preservation Capital Private Wealth Management — affiliated with Prospera Financial Services in the U.S. — sees AI as the defining narrative driving market behavior in 2026.

"We are seeing consistent, almost daily, investment opportunities stemming from the AI thesis," Rawlings said. "Despite the perceived uncertainties in the economy, equity markets continue to rise to new all-time highs."

Rawlings acknowledges the economy and markets have become temporarily delinked, but he draws on historical precedent to frame his outlook. Markets revert to the mean over time, he argues, which leads him to one conclusion: a correction is inevitable; it is a matter of when, not if.

The SpaceX IPO, in his reading, is a symptom of broader AI exuberance — a major contributor to the technology-fueled optimism currently inflating valuations across the market.

"The bears have not been rendered extinct; they are just hibernating," Rawlings said.

For financial advisors navigating this environment, the consensus from these practitioners points to a familiar discipline: watch the bond market, stress-test portfolios for concentration risk, and resist the pull of FOMO-driven allocation. The wealth management lessons from prior market cycles remain as relevant as ever, even when the bulls appear to have won.

As InvestmentNews has reported on market concentration trends, the structural imbalances underpinning today's rally deserve scrutiny from advisors building long-term client portfolios. And for those monitoring macro risk, the growing debate over AI-driven valuations continues to evolve rapidly.