Nobody knows exactly what’s next for the markets.
Here are four clear scenarios—from a mild rally to a full-blown crash—plus where I’m leaning and how to prepare
Hey everyone—I’m Tyler Mendez.
I’m a 26‑year‑old finance major working in corporate finance at a Fortune 100 company. I’ve spent way too many late nights staring at charts so you don’t have to. If the stock market ever felt like it speaks Mandarin, this one’s for you. Let’s break down four big scenarios for the S&P 500—no Wall Street mumbo-jumbo, just straight talk.
🌪️ High Uncertainty
No crystal ball here. Over the next 6–12 months, trade talks could go great… or totally off the rails. Your job: plan for every outcome.
👍 Best‑Case Scenario: S&P 500 Has Already Bottomed (4,800–5,000)
What happens?
- U.S. & China de‑escalate the trade war.
- Tariffs settle at 10–25% across the board.
Why it matters:
- Shelter costs (rent) make up 40% of the Consumer Price Index (CPI = inflation). These won’t spike from the targeted or flat import tariffs.
- In this scenario, tariffs aren’t inflationary… which, I feel obliged to mention, seems optimistic. Surely the impending 145–245% duties on Chinese imports won’t impact prices… right? 😉
- Energy prices stay low
- Labor shortages keep unemployment under 5%
Outcome:
The S&P 500 grinds around 4,800–5,000. But expect continued volatility—that means prices bouncing around. Even in a Goldilocks scenario, the road won’t be smooth. But 5,500 or higher is still in play here assuming favorable trade deals are struck across the board soon (within 90 days)
⚡ Mid‑Case Scenario: AI Bubble Tumble (S&P 4,000)
What happens?
- Gen‑AI “capex” (aka spending on data centers and chips) dries up
Why it matters:
- Tech mega-caps like NVIDIA pull back
- That drags the NASDAQ down—and the broader market (S&P 500) with it
Outcome:
A mild 2022-style recession. The S&P slides to around 4,000 in the coming months.
💥 Credit‑Event Scenario: Housing Bubble Bursts (S&P 3,000)
What happens?
- Unemployment ticks above 6%.
- Homeowners with locked‑in low rates sell into a weak market out of desperation.
Why it matters:
- Mortgage rates spike.
- Credit spreads widen.
- Banks get nervous.
Outcome:
The S&P dips to ~3,000. Housing + AI cracks start feeding on each other.
😱 Worst‑Case Scenario: Trade War & Dollar Crisis (≤ 2,000)
What happens?
- New, tit‑for‑tat tariffs between the U.S. and China.
- Capital flees U.S. Treasuries, leaving us with an EXPENSIVE $9,000,000,000,000 in national debt to refinance here shortly.
- The dollar’s reserve‑status is questioned & fled to “safer” reserve currencies like the Swiss Franc.
Why it matters:
- A supply shock ignites inflation.
- The Fed hikes the interest rate into a recession to desperately curb stagflation (recession + inflation) at the same time.
- Both AI and housing bubbles pop hard.
Outcome:
The S&P 500 crashes to or even slightly below 2,000 along with home valuations in an economic crisis not seen since the Great Depression of 1929.
🔮 My Take: Leaning on 4,000
I’m optimistic the trade war cools off. But I think the AI capex slowdown is already here. That puts my base case at 4,000.
🔄 Final Thoughts
Stay nimble. If signs of housing stress emerge early, weekly jobless claims rise above 300,000, or there’s a sharp drop in the U.S. dollar—be ready to pivot your portfolio.
Want to know what I’m doing in real time? Feel free to reach out at tylermendez01@gmail.com. I’m happy to share my current outlook or how I adjust when the data shifts.
👉 Remember: there’s always a way to grow your money—regardless of market conditions. The key is figuring out what makes sense for you. Everyone’s financial journey is different, and your strategy should reflect that. With that being said I believe over the long run this isn’t the worst time to buy. I personally think you should HOLD and save to get cash heavy. In doing so you will be best suited to fully capitalize on the tech stock fire sale once the S&P 500 truly bottoms out around 4,000 in the coming weeks to months.
💬 Your Turn
🚀 Team 5,000 support and incoming all-time highs?
Or are we staring down the barrel of a full-blown crash to the 2,000–3,000 territory?
Sound off below—what’s your base case?
