January 2026 Newsletter
- bespoke62
- Jan 12
- 5 min read
Three Good Years
Global equity investors have enjoyed a remarkable run. The world’s premier stock market index, the S&P 500, rose 24% in 2023, another 23% in 2024, and 16% in 2025. With long-term average returns in the 8-10% range, three consecutive years of above-average performance is something to be grateful for.
This time last year, we discussed with clients the possibility that downside volatility could return after two strong years. It did. Tariff concerns drove a sharp decline in March and April, testing the resolve of investors worldwide. But markets recovered strongly, and those who stayed the course benefited. We enter 2026 with the same mindset.
Understanding the Current Moment
After three above-average years, many investors are asking whether markets have become “overvalued.” It’s a reasonable question. Unfortunately, it’s one that nobody can answer with certainty.
What we do know is that markets tend to revert toward their long-term averages over time. This isn’t pessimism. It’s simply how markets have always behaved. Extended periods of strong returns are often followed by periods of more modest growth, or temporary declines that bring valuations back in line.
Simply put, a period of below-average returns would be historically normal after the run we’ve enjoyed. But “normal” doesn’t mean “predictable.” We have no way of knowing when such a period might begin, how long it might last, or what might trigger it.
What We Can’t Know
Current market leadership is concentrated in technology and AI companies. Disappointing earnings from these giants could certainly trigger a change in sentiment. But the decline we experienced in early 2025 came from tariff concerns, something few were discussing a year earlier.
The trigger for the next market decline is almost always something different from what investors expect. This is precisely why we prepare rather than predict. Decades of evidence show that trying to time market exits and entries has consistently failed investors.
How to Approach the Year Ahead
Given all this, you might be tempted to make portfolio changes now. To shift to a more “defensive” position in anticipation of a potential decline.
Our advice: resist this urge.
Your portfolio is already designed around your long-term goals and your ability to weather temporary declines. Making changes based on feelings about where markets might head in the short term isn’t planning, it’s speculation.
Instead, ensure you have sufficient cash available for any known short-term expenses. This simple step prevents you from being forced to sell investments at an inopportune time. Beyond that, your long-term investments should remain exactly that: long-term investments.
The irony of good preparation is that it often looks like doing nothing. The financially literate understand this and find peace in it.
Standing Ready with Confidence
Whether 2026 brings continued gains or a temporary setback, your long-term trajectory remains unchanged. Declines, when they come, have always been temporary. The long-term growth of the great companies of the world has been permanent.
Your role is not to predict the future but to remain invested through it. We’ve navigated uncertain periods before. The experience of 2025 reminded us that this approach works.
We remain confident in the wealth-building power of owning shares in the world’s leading businesses. These companies will continue to innovate, adapt, and grow their earnings regardless of what headlines dominate the news cycle.
If you have any concerns about your situation or would like to review your cash position ahead of the new year, please reach out. We’re here to help you approach 2026 with clarity and confidence.
Read
How To Become An Expert At Anything: 5 Scientific Steps To Mastery [7 minutes].
Five scientifically-backed steps that challenge conventional wisdom.
Living for the Eulogy [5 minutes].
What will your legacy be when you’re gone, and are you living for your resume or your eulogy?
26 Useful Concepts for 2026 [7 minutes].
26 Valuable concepts for 2026 that could reshape your perspective.
A Decision a Day [4 minutes].
Making better decisions in a world flooded with information.
The Spiritual Basis for Capitalism [6 minutes].
What if the secret to understanding capitalism lies not in economics, but in the very fabric of faith and human nature?
Rational Optimism
The media is not a friend of the disciplined and patient investor. Ignoring the key determinants of lifetime investor returns, the media focuses on short-term returns, market predictions, and negative news.
We present the following as an antidote to the onslaught of negative news:
The 25 most powerful ideas of the 21st century (so far)
We asked the world’s foremost minds to highlight some of the game-changing scientific breakthroughs shaping our world since the year 2000. To reflect on the progress so far, we asked some of the world’s leading thinkers to spotlight the groundbreaking scientific breakthroughs that have transformed our world since the turn of the millennium.
97 ways the world got better in 2025
Happy New Year! And here it is, our roundup of the many ways the world changed for the better in 2025. We hope it makes you feel warmer about the year behind us — and the year ahead.
1,084 Reasons the World Isn’t Falling Apart
In a Gallup poll from last January, around one-fifth of Americans reported being satisfied with how things are going in the country. Just four percent were very satisfied. It’s not a surprising finding for anyone who goes outside and talks to people.
Visuals
Stock Markets in 2025: Ups, Downs, and Returns Globally
Amid trade shocks and strained geopolitical ties, stock markets in 2025 faced a test of resilience. How long did it take them to recover, and which key moments contributed to market rebounds? In this graphic, we explore the performance of major stock markets and the milestones that fueled ups and downs throughout the year.
Prediction Consensus: What the Experts See Coming in 2026
For the seventh straight year, we’ve sifted through the forecast landscape to bring you the Prediction Consensus, a synthesis of what analysts, thought leaders, and industry experts expect for the year ahead.
All of the World’s Investable Assets in One Visualization
America commands a significant share of global investment assets, with U.S. equities and bonds accounting for 47% of the world portfolio.
This dominance is driven in part by the S&P 500’s strong long-term performance and the outsized influence of major U.S. tech firms. At the same time, the dollar’s status as the world’s reserve currency underpins demand for U.S. fixed income.
This graphic shows the global portfolio of investable assets, based on data from Goldman Sachs Investment Research. Global equities total $127.9 trillion, and the U.S. alone accounts for 64% of global stock market capitalization.
Comments