Seven Grey Swans, One Investment Strategy

Let’s see.

Clean desk.

Clear mind.

Renewed purpose.

One of the benefits of viewing life, as we do in the West, by a linear calendar, is the opportunity to take stock at least once a year. The opportunity gives us a chance to “remobilize our axioms” as William F. Buckley might remind us to do.

On Saturday, we woke to find one of our forecasts for 2026 had already come true – for the second year in a row.

Briefly, you may recall, our #1 forecast for 2025 was that an increase in political violence would accompany Trump’s second term in office.

On New Year’s Eve 2024, not six hours after we published the forecast, a homegrown terrorist drove his truck into the crowd assembled for New Year’s Eve on Bourbon Street.

This year, we awoke the day after New Year’s Day to discover our 2026 Forecast #4:  A Covert Resource War in South America had already begun. It wasn’t exactly covert, either.

Instead, because of events over the weekend, the indicted Venezuelan “President” Nicolas Maduro and his wife Cilia are being arraigned today in court in New York City.

There’s a lot to unpack with the legality of the operation and how it ties into Trump’s grand realignment strategy.

Mostly, in the context of how it’s going to impact your money, which is, as a point of fact, one of the axioms we wish to remobilize this year.

We’ll have plenty of time to do just that in 2026, building on the resource stocks we’ve shared in our research reports in 2025, and some of the resource-related options trade made in the Grey Swan Trading Fraternity.

Today, we aim to clarify our forecasts and their implications for our investment strategy.

First, a minor housekeeping item: We’ve received a large volume of reader mail in the weeks since the holidays began. Most are related to specific questions about the Grey Swan Model Portfolio and the Library of Special Reports. We’ve read them all. And will be addressing the question directly as the new year grinds into gear.

Among the “to-do” items on our list is “launch the Grey Swan community forum.” That will be the place to address your questions and allow members to discuss ideas among themselves. We do not yet have a launch date. But… it’s high on our list of priorities for January. We’ll be in touch as soon as we have a confirmed launch date.

That said, one repeat question we also received as we were counting down our 2026 forecasts was: “Did you make a forecast for 2025? And if so, how’d you do?”

The simple answer:

We did issue 2025 forecasts.

How’d we do? Reasonably well, we might say without boasting. Before our 2026 Forecasts began, we reviewed 2025 in two essays. The first was titled “2025: The Lens We Used” and “Seven Grey Swans, One Year Later.” They are posted free on the Grey Swan site, and you can be your own judge.

The entire process of reviewing forecasts and then issuing new ones has made us more intensely focused on our purpose. We’re not actually trying to “predict the future” to parody the disdain with which so many lazy media pundits would dismiss our approach.

Rather, we’re examining trends in the news cycle and trying to separate the wheat from the chaff. What signals are coming through stronger than the nauseating cacophony of  Washington and Wall Street, amplified by legacy and social media alike?

There are years when markets feel confusing because they are volatile. And there are years when they feel confused because the old explanations no longer work.

We expect 2026 to belong to the second category.

The seven Grey Swan forecasts we published over the past week and a half are not seven separate surprises waiting to ambush investors.

There are seven ways of describing a system adjusting under pressure: financial pressure, political pressure, technological pressure, and time pressure.

Most investors will experience this year as a contradiction. Markets are making new highs while voters grow angrier. Governments are promising stability while bond yields refuse to cooperate.

Artificial intelligence is advancing at breakneck speed while institutions still operate on paper calendars and quarterly meetings. Headlines shouting ‘crisis’ one week and ‘calm’ the next.

That confusion is not accidental. It’s structural.

The advantage of seeing 2026 through the Grey Swan lens is that it shifts attention away from narratives and toward mechanics—the parts of the system that must function regardless of ideology, elections, or speeches.

What must be funded.

What must be secured.

What must be rebuilt.

And what the market is already admitting through price.

That doesn’t make 2026 easy. But it makes it legible.

And legible is investable. Let’s start where the pressure is deepest.

 Grey Swan #7: A Global Debt Crisis Will Reprice Democracy

Public finance enters 2026 with arithmetic that no longer flatters politicians.

In 2025, long-dated Japanese government bond yields began rising sharply, forcing the Bank of Japan into increasingly visible interventions. Bloomberg described the moment politely, noting that Japan’s bond market had “re-entered the realm of price discovery.” The Financial Times was less delicate, warning that the era of cost-free deficit finance was ending faster than policymakers expected.

Germany crossed its own psychological threshold last year, embedding defense spending, energy subsidies, and social transfers into multiyear budgets funded by permanent borrowing. The Wall Street Journal observed that Berlin was now financing a welfare state “built for a different era” with debt markets that no longer share the same assumptions.

In the United States, the Congressional Budget Office confirmed what investors already sensed: federal interest costs are on track to rival—and then exceed—defense spending. Washington continues to issue debt at yields that assume growth outcomes it does not control.

This is the Grey Swan beneath all the others.

In Empire of Debt, we argued that empires rarely fall because they run out of money. They falter when promises compound faster than credibility. By 2026, bond markets begin enforcing that truth quietly, auction by auction.

Democracies are uniquely exposed here. Benefits are politically sacred. Taxes are politically toxic. Inflation erodes trust. Each option narrows legitimacy. Bond markets don’t negotiate.

As yields rise simultaneously across Japan, Europe, and the U.S., the signal is unmistakable. Fiscal choices are shrinking. Politics follows.

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 Grey Swan #6: China Will Annex Taiwan—Without a Shot Fired

In 2025, coverage of Taiwan shifted subtly but decisively. Less focus on invasion scenarios. More attention to trade flows, insurance pricing, capital hedging, and semiconductor contracts.

The Financial Times described Beijing’s approach as “persistent pressure paired with selective incentives.” Bloomberg labeled it “economic encirclement with diplomatic off-ramps.” Reuters reported that Taiwanese manufacturers were expanding mainland capacity to hedge geopolitical risk.

Those are not war preparations. They are balance-sheet decisions.

China’s long game matures in 2026 through incentives, dependencies, and timing. Semiconductor demand anchors the relationship. Trade access softens resistance. Corporate risk management becomes habit. Elections elsewhere consume attention.

In Empire of Debt, we warned that fiscal strain at home weakens resolve abroad. The U.S. retains immense military capacity, but debt service competes with defense spending, and political bandwidth narrows under electoral pressure.

Markets will understand this transition long before diplomats do. Shipping insurance adjusts. Capital reallocates. The absence of panic will be the signal.

 Grey Swan #5: Europe Fractures Under War, Debt, and Bureaucracy

Europe will not collapse in 2026. But the conviction of its constituent parts wanes substantially.

Ukraine war financing continues. NATO commitments rise. Energy costs remain politically sensitive. Immigration strains municipal budgets. Brussels responds with more rules.

In 2025, the Financial Times reported that Europe’s defense spending resembled “permanent wartime budgeting without wartime economic mobilization.” Bloomberg tracked widening spreads between core and peripheral sovereign bonds. The Wall Street Journal noted Germany’s growing difficulty balancing industrial subsidies with fiscal restraint.

Nationalist parties gain ground not by promising miracles, but by promising fewer mandates and lower costs. The euro survives. Policy coherence erodes.

In “Financial Reckoning Day,” we described how prolonged deficit finance hardens distributional conflicts. Europe now lives inside that dynamic.

Markets adapt faster than institutions. And way faster than legislation or bureaucracy.

 Grey Swan #4: America’s Covert Resource War in South America

In 2025, U.S. foreign policy reporting increasingly emphasized lithium deals, copper concessions, refinery upgrades, port access, and quiet security cooperation across Latin America.

The Financial Times described a U.S. pivot that was “transactional, geographically compressed, and resource-oriented.” Bloomberg went further, calling it a “hemispheric retrenchment.”

It was going to be the “Monroe Doctrine” and “Manifest Destiny” without speeches. That is, until Secretary of State Marco Rubio spent the weekend explaining the government’s arrest of Nicolas and Cilia Maduro.

Debt limits global policing. Resource security replaces ideology. Energy, food, minerals, and logistics take precedence over abstract guarantees.

Markets will treat this not as war, but as reallocation. Commodities reprice. Infrastructure attracts capital. Shipping insurance adjusts.

When borrowing capacity tightens, proximity matters.

 Grey Swan #3: The Midterms Deliver a Socialist Majority in the House

By late 2025, financial media openly acknowledged the disconnect between record asset prices and voter dissatisfaction. Bloomberg tracked persistent economic pessimism among under-40 voters despite substantial employment. The Wall Street Journal noted that younger voters increasingly separate markets from morality.

Affordability dominates politics in 2026. Housing, healthcare, tuition, and insurance costs collide with asset booms that benefit a narrow slice of households.

Committee power matters. Hearings matter. Draft language matters.

Markets reprice proposals before votes occur.

In Demise of the Dollar, we described how capital behaves when legitimacy becomes negotiable.

In New York, the new mayor spent the weekend trying to ward off the “frigidity of individualism” and welcome voters to the “warmth of collectivism.”

Like you, we wouldn’t have believed it would happen in our lifetimes. And we suspect a gentleman like Javier Milei might have a choice word or two about the “warmth” of collectivism. More on this later, too.

 Grey Swan #2: The Crack-Up Boom Reaches Terminal Velocity

2025 laid the groundwork. Rate cuts resumed. Quantitative tightening ended quietly. Financial conditions loosened even as rhetoric stayed hawkish.

Bloomberg noted that markets were behaving as if intervention was assumed. The Wall Street Journal observed that liquidity conditions contradicted policy language.

In Financial Reckoning Day, we identified this phase during the dot-com bubble as the moment when facilitating the boom becomes policy.

AI stocks dominate. ETFs proliferate. Participation widens. Precious metals rise. Bitcoin trades as a confidence barometer.

Velocity does the work. The fuse is yet unknown. The timing will collide with midterms and debt service. Volatility we expect will return with enthusiasm.

 Grey Swan #1: The Age of Intelligence Becomes Infrastructure

In 2025, the Financial Times reported that AI investment increasingly resembled earlier general-purpose technology booms—heavy on infrastructure, light on immediate productivity measurement.

By 2026, artificial intelligence will move from impressive to indispensable.

Data centers, power generation, advanced chips, cooling systems, networks, and settlement rails define the opportunity set.

“Network states” will gain traction this year as a governing platform in the real world.

Tokenized assets and faster clearing spread because machines require speed.

Years ago, in “Demise of the Dollar,” we argued that reserve currencies survive by upgrading their plumbing before confidence breaks. Intelligence accelerates that upgrade. This forecast, too, will coincide with the political cycle.

 Seven Signals, One Investment Strategy

Seen together, the Grey Swans describe one environment.

Debt narrows choices.

Politics amplifies distribution fights.

Markets accelerate outcomes.

Technology rewires incentives.

The benefit of seeing it this way is simple. You stop chasing headlines and start tracking mechanics. You follow spending instead of slogans. You own what the system cannot do without. You keep liquidity when others are fully committed. You let volatility work for you.

The election year 2026 won’t reward certainty. It will reward you for maintaining clarity.

~Addison

P.S. To kick things off this week in Grey Swan Live!, we’ll be joined by Matt Smith, author with Doug Casey of their seminal work The Preparation. More details on Matt and our conversation tomorrow.

If you have requests for new guests you’d like to see join us for Grey Swan Live!, or have any questions for our guests, send them here.