Portfolio Lessons for Long Term Investors from 2025

Key Insights from 2025

• Diversification was rewarded: Gold led the market, non-US equities outperformed the S&P 500, and broad commodities (excluding energy) performed well.
• Expected leaders faltered: Bitcoin cooled, the US dollar weakened, and energy lagged despite broader commodity strength.
• The main takeaway is about portfolio design: 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 adaptable portfolios. Key performance highlights include:

• Gold: +65% (standout performer)
• Emerging Market Equities: +31%
• Developed Markets ex-US: +28%
• S&P 500: +16%
• Broad Commodities ex-Energy: +22%
• Energy Commodities: -14%
• US Dollar: -9%
• Bitcoin: -6%

Lessons for Long-Term Investors

1. Last Year’s Winner is Not Next Year’s Plan: The performance of assets can change; strategies should not rely solely on past winners.
2. Global Diversification was Rewarded: A US-heavy portfolio may not be sufficient; exposure to emerging and developed markets outside the US is crucial.
3. Diversifiers Performed Well: Assets like gold and broad commodities can provide returns when equities falter, highlighting the importance of having multiple sources of return.
4. Currency Moves Matter: The US dollar's decline impacted returns significantly; investors should be aware of their currency exposure.
5. Commodities are Not One Trade: Different commodities behave differently; understanding the underlying factors is essential for effective investment.

Conclusion

2025 reinforced that long-term investing is about building resilient portfolios capable of adapting to market changes. The performance of assets can vary, and maintaining a diversified approach is key to navigating market rotations.