As we closed the books on 2025, it’s worth reflecting on what the markets taught us last year. For investors, the lessons weren’t necessarily new, but they were certainly reinforced with clarity.
The Pundits Got It Wrong (Again)
Remember at the beginning of 2025 when the Magnificent 7 stocks were all the rage? Did any predict that only two of the seven (Google and NVIDIA) would outperform the S&P 500 17.82% return (using Vanguard S&P 500 ETF or VOO as a proxy) last year? Was anyone expecting International Small Value stocks (Avantis International Small Cap Value Fund/AVDVX – 43.83%) to outperform NVIDIA (38.8%)? The talking heads on financial television assured us they knew exactly where markets were heading. I can’t find the “expert” who did.
The truth is, nobody has a crystal ball. The investors who succeeded in 2025 weren’t the ones who tried to outsmart the market based on someone else’s predictions. They were the ones who stuck to their plan, tuned out the noise, and stayed invested through the inevitable ups and downs.
Diversification Proved Its Worth
While U.S. markets captured plenty of headlines, 2025 reminded us why spreading investments across global markets matters. International stocks (finally) had their moment to shine gaining 35.17% (Vanguard Developed Markets Index Fund/VTMGX) and outpacing their US counterparts. Investors with well-diversified portfolios benefited from this natural ebb and flow, rather than betting everything on a single market or region.
At the end of 2024, the topic I discussed as much as any was whether these foreign stocks should be excluded from client portfolios. We never know who the next market leader will be.
The Timing Trap
Perhaps the most expensive mistake investors made this year was trying to time the market. Those who panicked and sold during the spring volatility later found themselves watching from the sidelines as markets recovered quickly. Those who held cash because valuations were high or they were waiting for the “perfect moment” learned an old lesson: time in the market beats timing the market.
Even experienced investors can’t consistently predict short-term movements. The best strategy remains investing consistently and staying invested for the long term.
What This Means for 2026
As we look ahead, resist the urge to make dramatic portfolio changes based on predictions about the coming year. Instead, ensure your investments align with your goals and timeline. Make sure you’re globally diversified, not overconcentrated in any single investment or region.
And when you hear the next confident prediction about where markets are heading, remember 2025. Staying disciplined, diversified, and invested proved far more valuable than trying to outsmart the market.
The best investors aren’t the ones who make the boldest predictions. They’re the ones who make a sound plan and stick with it, regardless of what the pundits say.
By Shaw Pritchett, President & Financial Advisor
Jackson Thornton Wealth Management
[email protected]
334.240.3679
