We open with Yogi every time it feels most relevant. This quarter, it feels especially relevant. Heading into 2026, the predictions were stacking up: The dollar was losing its reserve status, rate cuts were coming, gold was headed higher, and the AI spending boom was about to run out of road. As you’ll see below, nearly every one of those calls missed. Markets have a way of humbling even the most confident forecasts.
There is an old saying on Wall Street: trees don’t grow to the sky. For the better part of three years, the “Magnificent Seven” - Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla - seemed determined to prove that adage wrong. They dominated headlines, dominated index returns, and dominated investor portfolios in ways rarely seen in market history. At their peak, these seven companies represented more than a third of the entire S&P 500 by market capitalization. When a handful of stocks carry that much weight, the index becomes less a measure of the broad economy and more a referendum on a very small group of very large companies...
As we look back on 2025, one theme stands out more clearly than any other: uncertainty became the norm. For decades, investors have been told that markets hate uncertainty. Historically, that has been true. Sudden, unexpected events tend to create volatility as markets struggle to price the unknown. What made 2025 different is that uncertainty was not episodic. It was persistent. Headlines surrounding tariffs, interest rates, geopolitics, elections, and technology arrived almost daily. Rather than a single shock, investors were asked to digest a constant stream of new information.
With all the uncertainty in the world, many investors are asking a fair question: Why is the market at all-time highs? So far this year, the S&P 500 has notched more than 30 record closes, an impressive run, especially considering the backdrop of sticky inflation, trade tensions, and a government shutdown. Historically, markets have hated uncertainty more than anything, yet this year has been a reminder that they can often look past it when the underlying story is one of strength.
Too often, individual investors have approached markets like emotional day trippers – hopping on and off at the worst possible stops. According to research by Dalbar, over the past 30 years the average stock investor has underperformed the market (S&P 500) by nearly 3% per year. The average bond investor fared even worse. The study points to behavior, not investment selection, as the primary culprit. Simply put, fear often causes investors to “sell low” while greed temps them to “buy high”.
The relationship between risk and reward forms the foundation of financial markets and capitalism. It’s widely understood that achieving greater returns requires taking on greater risk. In investing, risk is defined as the uncertainty of outcomes. While some types of risk can be mitigated through diversification, achieving competitive long-term rates of return requires taking some risk.
