True lifelong financial planning for the serious business of life.
True lifelong financial planning
for the serious business of life.
True lifelong financial planning for the serious business of life.
True lifelong financial planning
for the serious business of life.
Category: Investment management
It’s here again – the time of year when financial commentators pretend to know what is going to happen in the year ahead, and we pretend to believe them. As the tumultuous year that was 2025 fades into history, this well-worn ritual is underway, and pundits are issuing solemn forecasts for 2026 on inflation, geopolitics, and stock markets.
But now there is a new twist: amateurs are jumping into this game too. A new trend in America is the explosion in online prediction markets, including sites such as Kalshi, Coinbase and Robinhood, that let anyone place bets on the future.
The range of bets is bewildering. The long-standing stalwarts of sport, elections and economic data dominate, but bets are also possible on the Oscars, Taylor Swift’s musical career, US President Donald Trump’s political longevity, Covid threats, and tech wars. According to the Financial Times, almost $15 million worth of bets have been made on whether Google’s Gemini AI model will eclipse Elon Musk’s Grok. Gemini has a 95% chance of victory.
When it comes to predictions about the stock market, I am reminded of the story of a young investor who asked JP Morgan what the stock market would do. Morgan gave a three-word answer: “It will fluctuate.” No charts, no forecasts, just a fact.
125 years later, Jamie Dimon, the CEO of the bank that still bears Morgan’s name, told the BBC recently that investors should expect some fluctuations ahead. Different century, same message.
The market always fluctuates. It is what it does. The problem is not volatility; it is how we react to it.
We crave smooth progress, but markets offer something different: probability, emotion, surprise.
Every dip feels like danger. Every surge feels like safety. Successful investing is not about predicting what happens next; it’s about building a portfolio and a financial plan that can survive whatever happens next.
That is what intelligent investing and financial planning mean. Designing around uncertainty, not pretending it does not exist.
Because the market will always fluctuate.
A Kaleidoscopic global economy: resilient, lucky, and fragile
“Knowledge speaks, but wisdom listens.” Jimi Hendrix (November 1942 – September 1970) – American guitarist, singer and songwriter. Arguably the greatest instrumentalist in the history of rock music.
The early months of 2025 were dominated by President Donald Trump’s sweeping trade tariffs, which triggered global market turmoil and kept investors on edge all year long.
But it has also been a profitable year as long as investors have been in the right areas of the market. Huge rises in gold and silver, a record-breaking rally in AI stocks, a gradual fall in the price of oil, and the dollar’s sharp drop against other leading currencies are just some of the trends that have kept investors guessing about what might happen next.
Trump’s “liberation day” tariffs in April sent shockwaves through global stock markets, triggering some of the biggest moves in years. Stocks, currencies, and bonds swung wildly in the days following the announcement as investors tried to gauge the potential fallout from a full-scale global trade war.
The US blue chip S&P 500 index plunged 15% while the VIX, Wall Street’s fear gauge, surged to its highest level since the Covid-19 pandemic, well above its long-term average.
The MSCI All Country World index, which tracks stocks across developed and emerging markets, saw some of its biggest daily swings in decades as Trump unveiled his tariff blitz and then retreated from many of his most aggressive tariffs.
Taco became the new buzzword.
US technology mega-caps’ strong earnings and a growing realisation of the sheer scale of the AI spending boom gave investors some positive news after the tariff-induced turmoil, helping to drive a rebound in stocks and shares.
As money poured into the tech trade, the biggest US companies smashed through market capitalisation milestones with valuations being pushed into trillions of dollars.
It has been years since the US stock market has rested on one central idea, but AI is just that: an all-pervasive trend that will shape the future and that cannot be ignored.
After a sharp rally late last year on hopes of a Trump victory in the presidential election, the dollar has suffered its worst year since 2017. The dollar index had already been heading south since just before Trump’s inauguration in January, with its decline accelerating after his sweeping tariff announcements in April.
While stocks and bonds recovered after the sell-off triggered by “liberation day,” the dollar has continued to grind lower, effectively wiping out the gains in US equities for sterling investors.
But prolonged dollar weakness has been a bonus for emerging markets as it lessens the burden of dollar-denominated debt and, unlike America, emerging market valuations are not expensive relative to their history.
Fear has been a significant driver of investor behaviour this year – fear of tariffs, fear of mounting US debt, fear of an economic downturn, and fear of war. Gold has tapped into all these anxieties, and its staggering bull market has continued, fuelled by one further fear: the fear of missing out.
Buyers of all types, central banks, asset managers, retail investors, and bruised crypto investors, have piled in.
Gold might be regarded as the ultimate safe haven, but the precious metal can also be a speculator’s nightmare and can suffer from years of going nowhere. Anyone who invested in 1979 is only just beginning to see a profit in real terms.
Even wars in Eastern Europe and the Middle East, sanctions against large oil-producing nations, and the absence of any economic shocks have not been able to stop the oil price from falling by more than 25% in 2025.
This has helped put a lid on inflation, but the oil price slide saw investors shun oil company shares. If the oil price starts to rise again, that could challenge this rejection of oil firms’ shares and the narrative that inflation will remain modest.
Uncertainty defined the global economic landscape throughout 2025, with headlines and equity markets sending conflicting signals.
Warnings of recession, global slowdowns in growth and deteriorating consumer and business confidence have been widely discussed, but equity markets, particularly in the US, continue to reach new highs. Market volatility has cooled thanks to recent inflation data and talk of falling interest rates. Fears of tariffs derailing markets have abated, and Asia and emerging market equities have shown strength supported by a weaker dollar. The optimism is underpinned by solid company earnings and the ongoing enthusiasm around AI.
Anyone searching for a simple overarching narrative to net out all the contradictions will be disappointed. And if they find one, they ought to be sceptical. Forecasting is hard enough in periods of stability, let alone when the leader of the world’s largest economy wields unpredictability as a policy tool and when faith in the transformative power of an innovative technology drives trillions of dollars of investment. In such times, it is best to accept ambiguity and view the global economy and stock markets as they truly are – kaleidoscopic, resilient, lucky, and fragile all at once.
Diversification has been the key to managing risk and generating a decent return in 2025 and is likely to remain a dominant theme for 2026.
“A large oak tree is just a little nut that refuses to give up.” David McGee – Christian speaker and author who overcame childhood challenges of being born deaf and having speech impediments to become a vocal leader with a global outreach.
Nature had wild fluctuations long before stock markets were invented.
As the autumn weather arrived in October, there seemed to be an exceptionally large number of acorns in the woods this year. It turns out that 2025 was a “mast” year, a year when oak trees drop a larger number of acorns than usual.
According to the Woodland Trust’s Nature’s Calendar, these years happen every three to five years. The last mast years were 2020 and 2022.
Scientists suggest that the reasons for this are partly due to weather fluctuations, but this is also evolution’s way of preserving the oak tree. By varying the quantity of acorns, the oak trees can keep predators like squirrels in check in the scarce years and then overwhelm them in the mast years. That way, more acorns can survive to germinate and grow into mighty oaks.
It is not clear how, or if, the oak trees communicate to determine the acorn crops. And so, as with stock market fluctuations, it is hard to predict what the next year will bring.
But nature reminds us that abundance follows resilience. Just as oak trees burst into a mast year after seasons of quiet growth, stock markets, too, reward those who believe in the long game. Patience today becomes prosperity tomorrow.
With these thoughts, we send you our best wishes for the year ahead, and we thank you for your continued support in these difficult and challenging times. We look forward to updating you regularly throughout 2026.
Please click here to access the Clarion Investment Diary for December, which gives full details and investment performance statistics of the Clarion Portfolio Funds.
Keith W Thompson
Clarion Group Chairman
December 2025
Any investment performance figures referred to relate to past performance which is not a reliable indicator of future results and should not be the sole factor of consideration when selecting a product or strategy. The value of investments, and the income arising from them, can go down as well as up and is not guaranteed, which means that you may not get back what you invested. Unless indicated otherwise, performance figures are stated in British Pounds. Where performance figures are stated in other currencies, changes in exchange rates may also cause an investment to fluctuate in value.
The content of this article does not constitute financial advice, and you may wish to seek professional advice based on your individual circumstances before making any financial decisions.
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