A novel and thought-provoking argument has been put forward regarding why the U.S. stock market may deliver a lackluster performance this year. The co-founder of Boston-based investment firm GMO, a long-time skeptic of U.S. equities for over a decade, has so far been incorrect in his bearish stance. However, he maintains a significant following on Wall Street. Although his predictions for the internet bubble burst and the bear markets during the global financial crisis were premature, his forecasts ultimately proved accurate. Most equity analysts currently disagree with his pessimistic outlook but express concern about the potential cost of ignoring his rationale. His latest bearish argument suggests the U.S. stock market could face pressure this year due to an overheated IPO market. Speaking at a recent GMO outlook event for 2026, he stated, "My prediction is that the IPO market in 2026 will see a level of fervor we haven't witnessed in some time. I suspect at least two of the major private giants—OpenAI, Anthropic, SpaceX—will go public, potentially putting strain on the U.S. market later this year. Following an IPO, initial market reactions might be positive, but over the longer term, as more shareholders gain the ability to liquidate their holdings, it will present challenges for the U.S. market." The extent of the challenge posed by such IPO activity is quantified by GMO's calculations. Historically, for every 1% increase in total stock market capitalization resulting from IPOs, the subsequent 12-month market return has decreased by 7.5%. Given the current total U.S. stock market capitalization of approximately $50 trillion, a 1% increase would require an IPO from a company valued at a minimum of $500 billion. Based on recent private market valuations, the mentioned AI companies are approaching or exceeding this threshold. However, there is no guarantee that any of these IPOs will occur this year. The current environment for public listings has become less favorable, with technology stocks falling out of favor in recent weeks and AI companies facing renewed scrutiny. A clinical professor of marketing at New York University's Stern School of Business recently commented on a podcast titled "Big Tech's AI Vibe Shift," suggesting that "OpenAI's IPO might be pulled," implying it may not proceed. If these mega-cap IPOs do not materialize, it would invalidate this specific bearish prediction and could even be viewed as a positive development for the market. Even in that scenario, the prominent bear would not turn bullish, as he holds a lengthy list of other reasons for his deeply pessimistic long-term outlook for U.S. equities. The irony remains that an argument from a staunch bear could ultimately carry bullish implications.