Lessons from 2025 That Will Guide Our Investment Decisions in 2026

No investor would deny that 2025 has been a “lively” year. Tariffs, interest-rate cuts, and questions about a potential artificial-intelligence “bubble” have dominated headlines in recent months. Even so, 2025 will also be remembered as a year of transition and adjustment.

After several years marked by high inflation, aggressive rate hikes, and significant geopolitical volatility, 2025 brought early signs of stabilization: inflation began to ease across most advanced economies, central banks embarked on a gradual path of rate cuts, and markets started to respond with greater rationality—although they remain highly sensitive to new developments.

One of the most contentious issues this year has been tariff policy. The United States raised duties on strategic Chinese products, particularly those linked to the technology and energy sectors. This heightened global uncertainty and prompted targeted retaliatory measures from Beijing. This trade tension rippled through equity markets, especially in Asia and in companies with substantial international exposure.

2025 has also been the year of artificial intelligence. AI has begun to integrate across industrial, healthcare, and financial sectors, creating new investment opportunities. Companies able to deploy AI to improve efficiency and operating margins have attracted significant investor interest. At the same time, concerns emerged around potential overvaluation in parts of the sector—fueling fears of a possible “bubble.”

Equities: lessons from 2025 for 2026

In 2025, equities delivered historically strong returns, particularly in Europe. For example, Spain’s IBEX 35 rose by almost 44% year-to-date, well above the performance of markets such as the United States. We highlighted this exceptional moment for the Spanish market in a previous article. As we explained there, this outperformance was driven by the heavy weight of the banking sector in the index (Santander, BBVA, CaixaBank, and others) and by the sharp increase in defense spending, both of which lifted valuations in those sectors.

At the global level, trade tensions and geopolitical conflicts (the war in Ukraine, tariff truces and rhetoric) created uncertainty but also attracted flows to more “affordable” markets such as Europe.

Potential takeaways for 2026

One of the clearest lessons from 2025—one that may be especially relevant in 2026—is that investing exclusively in the large U.S. tech companies may leave opportunities on the table. Geographic and sector diversification could be essential in the year ahead.

In this context, investing in line with the pace of the economy, selecting companies with strong management, and taking advantage of the upward trend in equity markets in recent years.

Fixed income: lessons from 2025 for 2026

In 2025, fixed income mirrored the global moderation in inflation. With inflation close to 2% in Europe and around 3% in the United States toward year-end, central banks began to cut interest rates after several years of significant tightening. This spurred some demand for bonds. We explained in this article how investors can make use of the yield curve.

In Europe, the gap between short- and long-term bond yields is minimal. In this context, taking on significant duration risk (buying very long-dated bonds) provides only limited additional compensation: the term premium is small, and investors may be vulnerable if the curve shifts unexpectedly.

Potential takeaways for 2026

In fixed income, it may be advisable to favor short- and medium-term bonds (reduced duration). High-quality corporate bonds or credit funds may offer better risk-adjusted returns than long-term sovereign debt.
Ultimately, avoid excessive duration exposure and diversify across issuers (government, corporate, and inflation-linked bonds) to help mitigate surprises.

What did 2025 teach us?

● Macroeconomics matters. Inflation, interest rates, and growth remain the key drivers of markets.
● Geographic and sector diversification can make a difference. European assets outperformed while the United States delivered more moderate results.
● Timing within the cycle is crucial. A flexible investment approach—adjusting the portfolio to each phase—improves outcomes.
● Technology and AI are structural forces reshaping markets, but they require selective analysis to avoid bubbles.