The New Normal
With the new year upon us, I thought I would quickly reflect on 2025 and look forward to what 2026 may bring us. but please don’t ask me what I think Trump will do this year; I left my crystal ball at home.
If you spent the better part of 2025 waiting for the "Big One", that market crash the pundits promise every Tuesday, congratulations, you’ve officially survived another year of being wrong! It turns out the stock market in 2025 had the survival instincts of a cockroach and the attention span of a goldfish. Despite a bumpy first quarter that saw the S&P 500 flirt with a stomach wrenching market decline of almost 19%, the strength of the U.S. consumer and the continued adoption of AI drove markets to new highs.
A quote by the famous investor Peter Lynch perhaps sums things up best:
"More money is lost in anticipation of (market) correction than in corrections themselves"
The year did have its issues however:
- Tariffs: Trade uncertainty spiked inflation fears and made consumer goods significantly more expensive, particularly in the U.S.
- The Federal reserve interest rate fiasco: Jerome Powell being constantly berated by Trump on his conservative and measured interest rate policy.
- Venezuela, Greenland, Iran, Canada: 51st, 52nd, 53rd, 54th states???
So, where do we go from here? As we enter 2026, the sentiment is a curious mix of "all-time high" anxiety and quiet optimism. Historically, when the Fed enters a cutting cycle without a recession, the following year tends to be positive, which is reflected by Wall Street’s forecast for the year
"Waiting for Clarity" however is for Amateurs. If you wait for the news to be "good" before you invest, you’re essentially waiting for the sale to end before you go shopping. Investing is the only business where people run out of the store when things go on a 20% discount. Remember, a market correction of 10% is perfectly normal. It’s the market’s way of making sure you’re still paying attention. If your portfolio looks like a crime scene for a week or two, don't panic. Just close the app, go for a walk, and remember if you’re well-diversified, own high-quality companies, and don't take financial advice from teenagers on TikTok, you’ll be just fine. Stick to the plan, stay diversified, and remember that while the players change, the game of capitalism remains the same.
For those of you who are still skeptical, and are waiting for the big correction, maybe a few sage words from Warren Buffet should be taken to heart. “Cash is the worst asset you can have. It pays virtually nothing and is certain to depreciate in value over time due to inflation.”
Here’s to a wonderful, profitable, and healthy 2026 everyone!
Phil Knight, M.Sc., CIM ,FCSI
Senior Portfolio Manager and Wealth Advisor
Phil Knight Wealth Management