2025 in the Rearview and Why 2026 Could Be Even Wilder

2025 reminded us of something important.

Discipline still works and agility is no longer optional.

Markets moved fast and often without warning. Tariffs disrupted trade. Geopolitical risk stayed elevated. AI spending reshaped market leadership. Fiscal policy continued to shift. Nearly every major lever in the global economy was pulled at some point.

For investors who stayed invested, diversified, and committed to their plan, 2025 ended well. But it was not easy. And 2026 is shaping up to demand even more focus and flexibility.

2025 Was a True Comeback Year

Early in the year, markets sold off sharply after major tariff shocks. It marked the largest trade disruption since the 1930s. Confidence was tested, and many investors questioned whether the recovery could hold.

By year end, the results told a very different story:

• The S&P 500 finished up 17.9 percent

• Global markets outperformed the U.S. for the first time in 20 years

• Emerging markets led returns, with Korea up over 100 percent

• Commodities surged, led by precious metals

• Silver gained 149 percent

• The U.S. dollar weakened, boosting international equity returns

Market leadership shifted. U.S. only portfolios no longer dominated. Diversification mattered again in a meaningful way.

AI Drove Returns and Introduced New Risk

AI was the dominant investment story of 2025.

Spending poured into infrastructure tied to artificial intelligence, including semiconductors, cloud computing, data centers, utilities, and energy. While early leaders delivered strong returns, market leadership narrowed to only a few true beneficiaries.

At the same time, risks started to surface:

• Capital spending ratios continued to rise

• Energy demand increased faster than expected

• Credit markets absorbed growing AI-related borrowing

• Questions emerged about the long-term return on these investments

The key issue is straightforward. Are these investments building lasting productivity, or are we pulling future returns forward? That answer will matter a great deal in 2026.

Key Risks As We Enter 2026

Several risks deserve close attention going forward.

Valuations remain elevated

• Forward price to earnings ratios are high

• The Shiller CAPE remains elevated

• Earnings growth will need to be strong and broad to support current prices

Labor markets are softening

• Unemployment remains low

• Hiring has slowed across many sectors outside technology

• Consumer spending could face pressure as momentum cools

Trade and tariff policy remains uncertain

• Ongoing legal challenges around tariff authority

• Unclear direction for future trade relationships

• Continued geopolitical tension tied to supply chains

These risks do not signal an inevitable downturn. They do signal a smaller margin for error.

What We Are Watching for 2026

Our outlook for 2026 is grounded, not extreme.

• Earnings leadership may broaden beyond technology

• Industrials, healthcare, and financials are positioned to contribute more

• The bull market may continue, with S&P 500 forecasts between 7,500 and 8,100

• Volatility is likely due to tighter valuation support

• Interest rates could move modestly lower if inflation continues to cool and labor data softens

• The One Big Beautiful Bill may become a major theme through:

  • Tax refunds

  • Infrastructure credits

  • Front-loaded stimulus that could reintroduce inflation risk later

Guidance for Business Owners and High Earners

This environment rewards planning, not prediction.

Here are the conversations worth having now:

• Diversify equity exposure

• Review tax strategies early

  • New legislation creates planning windows

  • A potential TCJA sunset in 2026 raises the stakes

• Preserve liquidity to maintain flexibility

• Think globally across equities, currencies, commodities, and geopolitical exposure

• Make sure your plan can adapt rather than react

2025 tested patience. 2026 will test discipline and adaptability.

If your goals are clear, your risk is intentional, and your plan is built to adjust, this environment can still offer meaningful upside.

The work is not reacting to headlines. The work is maintaining a plan that supports your long-term vision, even when markets get noisy.

If you want to explore how these themes apply directly to your situation, the next step is simple. Review the plan, stress test the assumptions, and make sure it still fits where you are headed.

That is how progress stays intentional.

If you want to get a head start on 2026, now is the time to act.

This is the window to review your plan, pressure test your assumptions, and make sure your strategy still fits your goals before the year gets busy.

If you would like help thinking through next steps, you can book a call with me. We will look at where you are today, talk through what matters most to you, and make sure your plan is built to adapt, not just react.

Clarity early in the year creates better decisions all year long.