It's 2026 and life is still messy

Welcome to 2026! I hope you all had a lovely end of the year. As has become tradition, and since there are again quite a few new readers who have joined in 2025, I would like to introduce you all to the purpose of these posts.

First, the general structure. I post five days a week, but only a mad or extremely bored person would read all of them. So here is a quick guide to the weekly structure: On Mondays, I write about all things ESG and sustainability. Tuesday to Thursday, I write about serious economics and finance stuff, but on Friday, all bets are off. Friday posts are about the quirky and fun side of economics, and I ask you not to take the Friday posts too seriously. They aren’t meant to be taken seriously.

Most importantly, though, be aware that in my serious posts, Mondays to Thursdays, I will not write about the market moves of the day or anything like that. My posts are an opportunity to take a step back and think about markets and economics more fundamentally.

If you are interested in what I think about current markets and where to invest, I am sorry, but you have to subscribe to my research at Panmure Libeerum. Barring that, you can get a glimpse of my views on current investment issues via my regular column in Reuters. Here is an example of a recent one with a bit of an outlook for 2026.

And when I do that – and this is the raison d’être of these missives – I will not do this based on what some theory or model says about the world. I will almost always rely on experimental results because, as an investment practitioner, I am interested in the world as it is, not as it should be.

This is important because sometimes readers feel irritated by my posts, and in my experience, it is almost always because I have written something that is in contradiction to preconceived notions about how the world should work or what people have learned at university.

Let me be clear, I think most of the things I learned while studying towards my degree in economics are either wrong or worthless for practitioners. You may not think this is true, but what I do in these posts is show you empirical data that form my view of the world. We can then discuss whether the empirical results are wrong or incomplete, and I encourage all my readers to write and challenge me. But I will almost never discuss things that are based on the argument that “(ceteris paribus) if you do X, then Y should happen”, or along the lines of “the model/theory developed by Nobel-winning economist Z says that…”

Do you know why I don’t bother with such discussions?

Because while I studied economics and finance, I first trained as a physicist and mathematician. And in physics (and the hard sciences in general), you build your models and theories to fit the data. In economics, all too often, empirical data that contradict a theory are dismissed or ignored.

So, to give you an idea of what you can expect when you read these missives in the future, here are some interesting posts from 2025:

• My most-read series of posts in 2025 turned out to be where I waxed philosophical in a series titled… checks notes… philosophical economics. I wrote about how status anxiety fuels the populist backlash against the establishment and puts politicians into power who use bad economics to provide simple solutions to complex problems. I wrote about why libertarianism is a dangerous ideology from an economic perspective, and why taxes aren’t such a bad thing as many seem to think. But what got by far the most readers was my rant against our modern-day robber barons.

• A study that I found absolutely fascinating was done by Elm Partners. They gave traders the newspaper headlines for the next day and asked them to trade on this information. Equipped with perfect foresight, one would expect these traders to make tons of money, yet half of them still managed to lose money, and about one in six went bankrupt. The average profit was indistinguishable from random coin tosses.

• While the above post shows that short-term trading is tough, Ed McQuarrie emphasised that long-term investing is equally difficult, though for different reasons. Analysing factor returns for value and small-cap stocks, he showed that even if your investment horizon is several decades long, you can still expect to underperform if you are unlucky.

• A little bit outside the core of economics and finance, I found the results of a study on how ChatGPT and other generative AI systems change how our brains work quite scary. I wrote about it in two parts: Part 1 and Part 2.

• Finally, after all these discussions of things that can go wrong or simply aren’t as theories and textbooks would make you believe they are, here are a couple of examples of my Friday posts. First, I am obsessed with what makes us happy (hint: it isn’t the same in every culture). And as I wrote in 2025, getting older may have many downsides physically, but it does make us more content, and thus happier. Second, I often write on a Friday about sports and entertainment (note that they are not the same; sports is serious) and what economic analysis can tell us about that. Here is a fun example from last year. But longtime readers know that every four years, I make forecasts about who will win the FIFA World Cup based on an econometric model. I have been doing this three times now, and what started as a project to show how stupid economists’ forecasts are, turned out to be spot on in winning the forecasting of the winner three times in a row. Of course, I will make another prediction in 2026, but given the enormous interest I got for my 2022 World Cup predictions and how often I have been asked in 2025 already when my 2026 forecast will be published, I think it is increasingly becoming a study in how people fall for forecasters who have no skill but are exceedingly lucky.

As I said in the title of this post: life is messy. Financial markets and the economy do not know what your theory says. They do not react to one variable in the same way and with the same strength. This is why I love being an investor and why I love studying the economy. They are social systems where billions of people interact with each other, and each individual has different information, incentives, biases, and moods. This means there are second-round, third-round, and fourth-round effects that are hard to guess from a simple model that says “(ceteris paribus) if you do X, then Y should happen”.

If you, like me, are curious about how the world works instead of being comfortable in your knowledge that a theory or model tells you how the world should work, then keep on reading and exploring the world in all its facets and surprises with me. I promise it is going to be a fun journey.