A Look Back at 2025
From rapid policy shifts on Liberation Day to the return to rate cuts by the U.S. Federal Reserve and renewed hopes for peace in Europe and the Middle East, 2025 was anything but static.
Our 2025 themes, Fragility, Durability and the Age of Alpha proved highly relevant. The near-bear market in April exposed market fragility and fixed income provided ballast when trends turned negative. Bonds delivered their strongest performance in the last few years as prices adjusted to evolving macro conditions. Marketable alternatives also stood out, with some exceeding long-term equity return expectations while often taking less risk than broad equity markets. As we recast our 2026 capital market assumptions you will generally see more modest return forecasts given the increase in valuations.
2026 Key Themes
Looking ahead to 2026, we anticipate a year shaped by subtle but meaningful shifts. Our themes serve as a playbook for navigating these changes. Current allocations provide a strong foundation, and most portfolios may require only modest adjustments.
AI Playbook dives into the nuance of managing a narrow and exuberant market. We address the seemingly more frequent question: “Is AI a bubble?” and evaluate the asymmetry of potential outcomes. Is it worse to be underweight AI if it rallies or overweight if it falters? History, math and experience suggest it is better to leave some upside on the table than risk being caught in a severe downdraft.
Navigating Valuation explores how to manage markets that appear richly valued and identify where green shoots of opportunity may exist. We also assess the role of alternatives in mitigating uncertainty without wholesale portfolio changes.
Finally, Noise Resistance reviews economic and external factors influencing markets. While the existential weight of AI and elevated valuations present challenges, many indicators point to growth and additional stimulus ahead.
Listen and subscribe to our Wealthy Behavior podcast to stay up-to-date on the latest market, economic and investment news that affects your wealth. If you like what you hear, please leave our show a review on Apple Podcasts or Spotify so we can reach more people like you!
