The Morning Filter 5 Core Stocks to Buy and Hold in 2026
Jan 5, 2026
This week, Dave Sekera, Morningstar's Chief U.S. Market Strategist, shares insights on the market's wild ride in 2025 and what lies ahead in 2026. He discusses a 50% fair value increase for Micron Technology, the competitive edge of Novo Nordisk over Eli Lilly in the obesity market, and reviews earnings from Darden Restaurants and FedEx. Dave also reveals his top five core stocks to hold, including Microsoft and Palo Alto Networks, emphasizing their strong moats and sound financials.
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Long-Term Allocation Discipline
- Take a long-term approach and set target allocations between equities and fixed income before trading market noise.
- Reallocate into equities during meaningful sell-offs and take profits as markets recover to maintain target weights.
Index Design Masks Mega-Cap Gains
- Index construction can hide the true performance of mega-cap winners because constrained indexes cap individual stock weights.
- Unconstrained, market-cap-weighted indexes fully reflect giant winners like NVIDIA, skewing broad-market returns.
Prepare For Higher 2026 Volatility
- 2026 may be more volatile than 2025 because AI valuations are high and execution matters.
- Be ready to reallocate into equities on sell-offs and underweight if stocks run too far above fair value.
