Is 2025 the Next 1926? The 'Roaring Twenties' Market Forecast That Keeps Proving Itself

Read the original forecast from February: https://ceobloc.com/blog/is-2025-the-next-1926-a-historic-bull-market-forecast

As we cross into the second half of 2025, the stock market is increasingly validating a forecast that seemed bold at the start of the year: we are living through the modern equivalent of the "Roaring 1920s." Since January, every major economic and market development has mirrored the dynamics of the mid-1920s with remarkable precision.

Now, just as predicted, the spring shakeout has resolved into a powerful rally. US equities are surging and productivity-driven sectors like tech and industrials are gaining momentum. Despite geopolitical noise and tariff-related volatility, a historical bull is accelerating.

According to our model, the summer months of June, July and August are expected to post consecutive gains, and this is just the beginning of the vertical move that is coming.

Reaffirming the 1926 Blueprints

The historical parallels between the 1920s and the 2020s are remarkably striking. The roaring bull market of the 1920s began in the aftermath of the global Spanish flu pandemic that resolved in 1921—mirroring the COVID-19 pandemic and recovery in 2020. Additionally, just as it was then, the world today is undergoing a powerful surge in technological innovation, energy production, and navigating a similar political landscape.

In February, I published an analysis suggesting that 2025 would resemble 1926: a year marked by short-term volatility followed by the launch of one of the most historic bull markets in financial history. The parallels were, and remain, extraordinary: rising productivity, renewed fiscal discipline, growing domestic energy production, and a world increasingly dependent on US innovation and stability.

What happened next?

The textbook correction hit in March and April, sparked by renewed concerns about fiscal tightening and international trade tensions, particularly the unexpected reintroduction of targeted tariffs by the US and its trading partners. Though I had forecasted a 10-11% correction in the spring, the selloff was exacerbated by the surprise jump in tariffs, which extended the losses to ~20%.

Nonetheless, the forecast proved to be correct in predicting a spring selloff, followed by an aggressive rally. Since mid-April, the S&P 500 and Nasdaq have steadily marched higher.

Another discrepancy that we saw between the February forecast and today was the performance of small-cap stocks and related activity in interest rates. Because of the back and forth between Trump and Powell, Powell has delayed the imminent rate cuts. Part of what is delaying them is the market’s misunderstanding of where inflation currently stands.

Though mainstream economists are still expecting elevated inflation, because of tariffs, in reality inflation is quite clearly falling. It is my contention that for the last several months, both the rate of change in the inflation rate and the rate of the rate of change has been seriously negative. Once the market and the central bank realize this, Jerome Powell will be forced to proceed with rate cuts and small-caps along with the broader market will make major bull run, just like in 1926.

Though US fixed income rates have been hovering between 4-5%, our model indicates that they will again fall back down towards 1.25-1.5% within this three-year cycle.

What Comes Next: Following the 1926 Path

If 2025 continues to track 1926, the next phase is a period of sustained gains. Historical analogs show that after a choppy Q1, the remainder of 1926 produced steady monthly increases, particularly in the broader market. Small and mid-cap names outperformed the blue chips. That same pattern appears to be playing out again this year.

Expect summer to be especially strong. Based on the 1926 Dow and S&P 90 data, months like June, July, and August posted consecutive gains, even as economic sentiment remained cautious. This was the calm before the vertical move of 1927–1929. Today’s market shows similar signs: improving breadth, declining volatility, and renewed capital flows into U.S. equities and credit.

Catalysts Driving the Current Bull Market

Several structural tailwinds continue to drive this market higher, echoing the prosperity drivers of the Roaring Twenties:

• Energy Independence: U.S. energy production is booming. Oil and natural gas exports are at record highs. Domestic energy costs remain well below global averages, creating a competitive advantage across the economy.
• AI, Robotics, and Quantum Leap: Technological productivity is accelerating faster than any period in modern history. AI adoption is reshaping every sector—from logistics and finance to health care. Companies like Eli Lilly, Nvidia, and Broadcom are becoming infrastructure plays for a new industrial era.
• Capital Discipline: Federal deficit reduction efforts—through spending restraint and targeted tariffs—are cooling inflation and stabilizing long-term interest rates. The 20-year Treasury yield, once spiking above 5%, has now fallen toward 4%, removing a major headwind for equities.
• Global Divergence: As China and Europe struggle with sluggish growth, debt burdens, and demographic stagnation, the U.S. is pulling away as the world’s economic engine. This mirrors the post-WWI global shift that left America in a dominant financial and technological position.

Investment Positioning for 2H 2025

The message from history is clear: volatility is not a warning, it’s the prelude.

Investors should view any short-term dislocation as an opportunity to add exposure. Small and mid-cap equities, industrial automation names, AI infrastructure, and domestic energy producers remain well-positioned. Bond markets may offer tactical trades, but the lasting returns will come from equities.

While the path may not be linear, the direction is clear. We are now well into the 1926 phase of the cycle, a setup that historically produced 200–300% gains over the following three years.

A Century Apart, But Nearly Identical

History may not repeat, but in 2025, it’s rhyming with extraordinary fidelity.

The same economic patterns that lifted America out of the post-WWI haze are now lifting it out of the post-pandemic reset. What made the 1920s historic wasn’t just a recovery, it was transformation. We are witnessing that again today. Those who recognize it and act accordingly, stand to benefit from what may be one of the most powerful bull markets of the 21st century.

As I’ve said before: this isn’t just a rally. It’s a revolution in capital, energy, and innovation. Just like 1926.