For this month’s commentary, I am compelled to write about the growing disconnect between equity markets and the broader geopolitical backdrop. Over the past several years, stock prices have continued to advance despite political polarization, trade tensions, and an increasingly fragmented global landscape. Naturally, this divergence has felt unsettling.
Tariffs, for example, are not an abstract concept. They have a direct and measurable impact on consumer prices, supply chains, and corporate margins. We understand this intellectually, and many feel it practically, but the financial markets do not always reflect these economic pressures in real time. Information is absorbed unevenly, with liquidity, earnings momentum and capital flows often taking precedence over broader structural concerns.
The disparity between what we observe in the world and what we see reflected in asset prices can be deeply confusing. A recent example lies in the past few days, with the reported “capture” and transfer of Nicolás Maduro and his wife, to New York, and subsequent U.S. seizure of two Venezuelan oil tankers. What has been difficult to reconcile is how little reaction followed. No panic, no meaningful repricing of risk, no sustained move in the price of crude. If this is not a signal as to how desensitized investors have become, I don’t know what is.
Our innate sense of cause and effect has been deeply challenged, especially over the past 12 months. It’s therefore completely reasonable to be frustrated, but big moves resulting from this confusion is not an investment strategy.
Historically, capital markets have always had the capacity to look past visible stress for longer than seems reasonable, just as they can react abruptly after periods of apparent calm.
When lived experience and price behaviour diverges, the urge to force a narrative that the market will soon “catch up” is very strong. If history is any judge, we must be cautious here. Markets are not arbiters of fairness or foresight. They are mechanisms for pricing risk over time, often imperfectly and often late.
What this environment reinforces is not the need for dramatic action, but for discipline. My client portfolios are constructed with the expectation that periods of uncertainty, contradiction and discomfort will occur. Balance and diversification are not theoretical concepts; they’re practical tools designed to absorb shocks without requiring constant intervention. Therefore over time, the performance has spoken for itself.
Here's to another successful investing year in 2026!
Libby
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