Investors often find themselves at a crossroads when markets reach new all-time highs. The instinctive fear is that what goes up must come down, and many people hesitate, worrying that entering the market at such moments is a recipe for disappointment. However, history tells a different story, one that is both reassuring and useful for those willing to look beyond the headlines. Over the past 6 months or so, the news headlines have gotten to many investors, and we’ve had many conversations regarding where the market is currently and where we think it will go over the next year. We like to base our future perspective on facts, data, and experience, not on headlines and noise.

As an example of one of those facts, since 1989, data shows that investing after the market hits new highs has actually been a winning strategy. Over the following year, returns have averaged 13.5%, compared to 11.8% during other periods. This outperformance persists over longer horizons: three-year returns are 44% after new highs, versus 39% otherwise; five-year returns are 82% versus 74%.¹ Far from being a warning sign, new highs have historically marked the start of even stronger performance. The lesson is that fear of all-time highs is often misplaced, and sitting on the sidelines can mean missing out on meaningful growth. I’ve often reminded people during conversations that if the headline of a market crash was so obvious, the crash would have already happened. The market is a forward-looking indicator not a backward one.

I’ve also had a lot of comments and questions on commodities recently as gold and silver surged to all-time highs. An unusual occurrence in a strong market. While investors may have some gold exposure, overall gold has never been an asset class we have put a lot of capital toward. This is nothing against anyone who likes to hold physical gold, It’s more of an investment philosophy. This perspective is reinforced when we consider the long-term performance of different asset classes. Using gold for example, it has been a classic safe haven that many investors turn to in uncertain times. From 1980 through the end of 2019, gold returned 197%, or 2.8% per year. In contrast, the S&P 500 surged by an amazing 8,242%, an annualized return of 11.7%. Even more telling, is that annual inflation averaged 3.1% over this period, meaning gold actually lost purchasing power. The S&P 500, by contrast, not only outpaced inflation, but did so by a wide margin. The worst 40-year stretch for the S&P 500 still delivered an annualized 8.5%, matching gold’s best run since 1970.² Of course, gold’s appeal isn’t just about returns. It is valued for its role as a form of insurance, its low correlation with other assets, and its volatility, which can present rebalancing opportunities. In times of rapid government spending and borrowing, it’s understandable why some investors may turn to holding gold. But the reality remains that gold has endured three “lost decades” out of the last four. Diversification is important, but it doesn’t mean owning every possible asset, especially when some, like gold, require a strong stomach for extended periods of underperformance. The current run-up in both commodities feels to me as more of a “fear of missing out” trade, which in my experience can end poorly. I’m not taking away from the commodity argument, as I’ve read many, but I can’t get behind a move of this magnitude, especially in silver in the last 2 months. Suddenly the world woke up and realized you need physical silver to support AI growth, which was known long ago. I feel like some move was likely warranted, but when it gets as parabolic as I see right now, generally some form of unwind happens. You have to be careful of this because as things unwind off leverage, it can get really bad, really quickly. This is not an argument against gold or silver per se, it’s just a cautionary comment.

The current stock market environment adds another layer to our thesis. Today, the S&P 500 is more concentrated than ever, with the top ten stocks making up over 23% of the index at the time of writing. History teaches us that when concentration is this high, the less-popular stocks (or the bottom 490) have outperformed the top ten 88% of the time over the next five years.³ This is a reminder that the best opportunities are not always where the spotlight shines brightest. Diversification within the index, and a willingness to look beyond the biggest names, can be a powerful advantage and is something we spend each and every day looking for to add to our portfolios.

After the 20% pullback due to the “tariff tantrum” in April we’ve seen some really strong markets. It was only in November when we saw some market weakness which correlated with some of the headlines. My thought is that move was driven by fear rather than fundamentals. Investors tend to anchor to news that confirms their worries, but beneath the surface, businesses remain strong. Many companies are performing exceptionally well, with supply struggling to keep up with demand, strong cash flows, and lowering labour costs due to new innovations. The main bottleneck lies with those at the base of the supply chain. Companies that build factories and provide the raw capacity for growth are saying the need for expansion is undeniable. For example, Microsoft’s CFO now spends hours each week simply deciding how to allocate scarce chips, a clear sign that supply cannot keep up with demand. Sometimes investing requires some experience and feel. When market drawdowns happen and nothing fundamentally has changed, you have to be willing to stay put or be a buyer, and after 20 years of experiencing these we can get a good sense of when a draw down is overdone. April was certainly an example of this.

I wanted to also touch on technology and the comparisons to the internet bubble of the late 1990s. I feel these are way off the mark. Back then, infrastructure was built that went largely unused. Today, the challenge is the opposite: demand is so strong that we can’t build fast enough. We’re in a capital expenditure (CAPEX) cycle, not a speculative bubble. If anything, business conditions have improved over the past few months, reinforcing the resilience of the underlying economy. The companies many speak about as a bubble are hugely profitable versus companies of the 90’s that had almost no earnings. That doesn’t mean we don’t see opportunities for profit taking as growth slows, it just simply means we don’t see the argument to drawing a late 90’s, early 2000’s comparison.

The broader lesson for clients is to remain disciplined. Avoiding the fear of missing out (FOMO) is not always easy, especially when others are chasing hot assets. But successful investing is about being comfortable with your choices, understanding why you own what you do, and accepting that you won’t always hold the year’s top performer. Sometimes, the wisest course is to let others chase short-term gains while you stick to a strategy that is built for the long haul. I’ve seen strategies as of late cross my desk with full high-risk exposure concentrated to a sector. Great when it’s great, but when it’s not, look out below. This is not the way we invest, nor will it ever be. We prefer to take the paved road and provide some consistency to your wealth building.

I’d be remiss if I wrote an update without mentioning politics south of the border or within our borders for that matter. Instead of getting into a long, drawn-out opinionated commentary, I’ll say this instead. Markets can follow political uncertainty, manipulation, and policy over the shorter term. Headlines feed off this and news outlets survive on it. Over the longer term there is very little evidence that suggests political decisions, parties or powers, no matter how hasty, will have a significant long-term impact on broader businesses within the indexes. Remember, businesses are profit seeking so they react, they pivot, and they find ways to be successful. You must separate politics and the stock market when you’re an investor. They may be intertwined but they aren’t near as correlated as many like to think. I would be happy to take anyone to task on this as I think understanding this point is crucial to long term success. In my view, this insight has provided significant value to our clients and will continue to benefit you well into the future.

In summary, the story told by the charts and data we review, and not the headlines, is one of optimism, resilience, and the value of discipline. It’s not to say we won’t see some bumps along the way, this is completely normal and not cause for fear. All-time highs are not a signal to run for the exits. Diversification, a focus on fundamentals, and the courage to look beyond the headlines and stay invested are the keys to long-term investment success.

Looking forward to a prosperous 2026. As a closing note, I did write every word of this update, as I do for others, and will be one of the few things you receive in your inbox today that isn’t AI generated.

¹ JP Morgan Guide to the Markets

² Bloomberg Finance LP

³ Fidelity Investments