After a solid year for equities in 2025, recent action in commodities suggests the market may be considering a “run it hot” scenario that could devalue the dollar and produce further gains in 2026. Of course there are no guarantees and with stakes this high, we believe a tactical approach remains the best way to extract and preserve value.

As outside forces created step-changes in fundamentals that yanked markets in every direction, 2025 served as a good reminder that shielding portfolios from only the truly harmful equity drawdowns delivers a much better cost–benefit tradeoff than hedging every dip. With an evolving set of factors that may combine in positive or negative ways, investment flexibility remains key for 2026.

Shaking off a mid-month wobble, stock markets worldwide staged another broad rally in October as tentative peace in the Middle East, a rumored China trade deal and the second rate cut of 2025 lifted spirits.

Between decent growth, tame inflation and increasing liquidity, stocks have suddenly found themselves in a sweet spot that few had predicted just a few months ago.

While the rally since 2022 has been supported by rising earnings, equities have now become reliant on the prospects of a single technology to a degree rivaling the “dot com” era. With concentration and valuation at record levels, the stage is being set for future volatility.