Portfolio Lessons for Long Term Investors from 2025

Key Insights

• Diversification was rewarded in 2025, with gold leading the way, non-US equities outperforming the S&P 500, and broad commodities (excluding energy) performing well.
• Expected leaders like Bitcoin cooled, the US dollar weakened, and energy lagged despite broader commodity strength.
• The main takeaway emphasizes the importance of portfolio design over mere forecasting: rebalance with discipline, diversify across different return drivers, and conduct “what if” checks into 2026.

2025 Market Overview

2025 demonstrated that market leadership can shift rapidly, necessitating preparedness in portfolio management. Key performance highlights include:

• Gold: +65% - the standout asset of the year.
• Emerging Market Equities: +31% and Developed Markets ex-US: +28% outperformed the S&P 500, which gained +16%.
• Commodities: BCOM ex-Energy rose +22%, while BCOM Energy fell -14%.
• US Dollar: -9% decline.
• Bitcoin: -6% decline.

Lessons for Long-Term Investors

1. Last Year’s Winner is Not Next Year’s Plan: The performance of assets can change drastically; strategies should not be built solely on past winners.
2. Global Diversification was Rewarded: A US-heavy investment approach may not be sufficient; broadening exposure can mitigate risks associated with regional dependence.
3. Diversifiers Performed Well: Assets like gold and broad commodities can provide returns during uncertain macroeconomic conditions, highlighting the importance of having multiple sources of return.
4. Currency Moves Matter: The decline of the US dollar can significantly impact returns, emphasizing the need for investors to understand their currency exposure.
5. Commodities are Not One Trade: The divergence within commodities illustrates that different factors drive various commodity groups, necessitating careful consideration of what is owned.

Conclusion

2025 served as a reminder that successful long-term investing is about building resilient portfolios capable of adapting to changing market leadership. The year highlighted that:

• Gold's success does not guarantee future performance.
• Non-US outperformance does not signify the end of the US market's attractiveness.
• Bitcoin's cooling does not render crypto irrelevant.

Ultimately, markets rotate, narratives evolve, and maintaining discipline often proves more effective than attempting to predict future trends.