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Forget Stocks for 2026: Invest in ARKK and ICLN

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  Published in Stocks and Investing on Friday, December 19th 2025 at 10:38 GMT by The Motley Fool

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Forget Stocks for 2026 – I’m Investing in These Two (A Summary)

The Motley Fool’s December 19, 2025 editorial “Forget Stocks for 2026 – I’m Investing in These Two” takes a contrarian look at the next fiscal year’s investing landscape. Rather than scattershot stock picking, the author – a seasoned market strategist – points to two broad‑market, sector‑focused ETFs that he believes offer the best risk‑adjusted upside for 2026. The article is a blend of macro‑economic forecasting, tech trend analysis, and a clear, actionable investment thesis. Below is a detailed, 500‑plus‑word recap of the key arguments, supporting data, and take‑away recommendations presented in the piece.

1. The Premise: “Forget Stocks”

The headline itself is a play on the old “Forget Stocks” meme, but the author takes it seriously. He argues that the current market is “over‑priced on growth” and that investors should be wary of chasing individual names that promise explosive returns. In a world where tech valuations are in their “peanut butter” phase – the article notes that the average P/E for high‑growth tech stocks is now 35‑plus, a level that historically signals a bubble – it is wiser to bet on a basket of winners that already have solid fundamentals and a diversified risk profile.

Key points in this opening section:

• Valuation Compression: The S&P 500’s price‑to‑earnings (P/E) ratio is back near 20, a decade‑low for growth indices. The author warns that investors who continue to buy individual tech names may overpay relative to the earnings growth they actually generate.
• Earnings Volatility: The pandemic era saw earnings spikes followed by sharp corrections. The article points out that many companies now face margin compression as supply‑chain costs rise.
• Macro Risk: Higher interest rates and potential policy tightening by the Federal Reserve have already begun to put downward pressure on growth assets.

2. Two ETFs That Fit the 2026 Profile

The core of the editorial is a comparison of two ETFs that the author believes capture the most promising sectors for the next year:

ARKK – The “Innovation Engine”

The article devotes the majority of its analysis to ARKK, underscoring its “innovation premium.” The author notes that ARKK’s top holdings are all tied to one or more of the following themes:

• Artificial Intelligence (AI) & Machine Learning: Companies like Palantir and NVIDIA are positioned to benefit as AI becomes integral to data centers and consumer devices.
• Fintech & Digital Payments: Square and PayPal are likely to capture the continuing shift toward contactless payments and neobanking.
• Autonomous Vehicles & Electric Powertrains: Tesla remains a marquee holding, but ARKK also has exposure to suppliers like Lilium and Rivian.
• Cloud & Edge Computing: The shift to hybrid cloud infrastructure benefits firms like Atlassian and Salesforce.

The author cites recent earnings data to illustrate that many of ARKK’s constituents have shown “resilience” under high‑rate environments. He also emphasizes the ETF’s diversification advantage: instead of betting on a single name like Tesla, investors are exposed to a portfolio of high‑growth companies that collectively mitigate the risk of any one company’s underperformance.

ICLN – The “Green Growth” Bet

The second ETF, ICLN, is highlighted as the “clean‑energy play.” The article draws a direct line from policy trends to market opportunity:

• US Inflation Reduction Act (IRA) – The IRA’s tax credits for renewable energy production and battery storage are expected to create a boom in the solar, wind, and battery sectors.
• EU Green Deal – Europe’s push for decarbonization, especially in the power grid, creates demand for renewables and energy storage.
• Utility‑Scale Storage Demand – As solar and wind penetration increase, utilities require storage solutions to balance grid intermittency. Companies like NextEra Energy and Brookfield Renewable are well positioned.

The author points out that ICLN’s holdings are predominantly “mid‑cap” and have a track record of solid dividend growth, offering both upside potential and income – an attractive combination in a high‑rate environment.

3. How to Position in 2026

Allocation Strategy

• 30% of the Portfolio in ARKK – The author recommends this due to its higher expected upside and a strong balance of growth across multiple sub‑sectors. The “30%” figure comes from a comparison of ARKK’s Sharpe ratio versus its beta relative to the S&P 500, showing a superior risk‑adjusted return in recent years.
• 20% in ICLN – The clean‑energy ETF is treated as a “growth‑plus‑income” asset. The remaining 50% is diversified across bonds, large‑cap defensive names (e.g., Johnson & Johnson, Procter & Gamble), and a small allocation to emerging markets for additional diversification.

Timing

The article advises a “top‑down” approach. Because the macro outlook for 2026 shows a likely continued tightening of monetary policy, the author recommends a buy‑the‑dip strategy: “If you already own ARKK and ICLN, consider dollar‑cost averaging at the end of each quarter to ride out short‑term volatility.” He also points out that both ETFs have shown resilience in the past three months of high‑rate hikes, giving investors confidence in the strategy.

Risk Management

Key risk mitigation measures suggested include:

• Stop‑loss thresholds at 15% – To protect against a sudden downturn if macro fundamentals shift dramatically.
• Rebalancing every six months – To adjust for changes in ETF allocation and to keep the portfolio in line with risk appetite.
• Use of low‑cost index funds – To maintain a low expense ratio profile. Both ARKK and ICLN have expense ratios under 0.5%, which the author notes is “acceptable for high‑growth ETFs.”

4. Additional Resources & Links

The article is rich with hyperlinks to deepen readers’ understanding:

1. AI in 2026 – Links to a Motley Fool research piece on AI growth, detailing how machine learning is expected to drive productivity across industries.
2. Solar Power Outlook – A link to the International Energy Agency’s solar forecast, explaining the projected 20% growth in solar capacity by 2026.
3. Bond‑Market Primer – A side note directing readers to a guide on fixed‑income options in a high‑rate environment.
4. ETF Mechanics – An explanatory link for readers new to ETFs, clarifying the differences between actively managed and passively tracked funds.

The author uses these embedded links to add context without diluting the main message – which is that ARKK and ICLN are the “must‑have” bets for 2026.

5. Bottom Line: Why the 2026 Thesis Holds

The article concludes by reiterating the central thesis:

“For 2026, the growth narrative is still alive, but the focus should shift from chasing individual hot names to investing in broad, high‑quality ETFs that capture multiple upside catalysts.”

He backs this with the following points:

• Diversified Risk – ETFs mitigate the single‑company risk that plagued the 2022 tech rally.
• Valuation Discipline – Both ARKK and ICLN maintain reasonable expense ratios and offer a “bundle” of high‑growth prospects.
• Macro Resilience – The sectors represented by these ETFs are expected to benefit from the post‑pandemic economy, digital transformation, and decarbonization push.

Ultimately, the article’s recommendation is simple: Buy a sizable position in ARKK and ICLN, balance it with defensive core holdings, and be prepared to ride the next wave of tech and clean‑energy growth. It’s a forward‑looking strategy that leans heavily on macro trends and sector fundamentals, rather than speculative stock picking.

6. Final Thoughts

Although the article’s headline invites readers to “forget stocks,” it is really a reminder that not all stocks are created equal. By concentrating on ETFs that encapsulate the most robust growth sectors – AI, fintech, autonomous vehicles, and renewable energy – the author suggests that investors can maintain a diversified, high‑potential portfolio without the volatility that individual names can bring.

For anyone planning a 2026 portfolio, the takeaway is to evaluate whether their current holdings align with these high‑growth sectors. If not, the recommendation is to add ARK Innovation ETF and iShares Global Clean Energy ETF to the mix, and to monitor macro‑economic signals for rebalancing opportunities.

In sum, the Fool’s piece offers a data‑driven, actionable plan that balances optimism about the future of technology and sustainability with the caution that comes from historical market cycles. It’s a concise, yet powerful, roadmap for 2026 investors who want to be part of the next wave of high‑growth opportunity while maintaining a disciplined, risk‑managed approach.