2025 was a year of intense headlines: trade tensions, volatility episodes, and extreme narratives. And, as often happens in markets, the script had two acts: first the scare… and then the adaptation.
Beyond the current events, 2025 leaves us very useful lessons to invest more calmly and consistently in 2026.
Below, we highlight four that can help us gain experience as investors.
1) Intra-year declines are frequent… even in years that end well
Volatility is not a system flaw: it is the price to pay to benefit from the positive performance of equities.
As observed in the following chart, the S&P 500 has historically suffered significant intra-year declines, many of them reaching “double digits,” and averaging -14%, yet in most of those years they still ended positive with an average annual return of 10%.
2025 has been a good example of this phenomenon, falling sharply and suddenly during April, down to -15%, to end the year positive at +16% (expressed in dollars, see the currency effect below).
One should not be swayed by short-term volatility and should focus on our objectives.
2) Not even an all-powerful president with an aggressive agenda can ignore the market’s verdict
After the tariff announcement, the market experienced a stress episode that ultimately led to a partial 90-day pause on part of these measures (with exceptions), communicated on April 9, 2025.
But the important point here is not the technical detail of the tariff, but the signal. When, in such an environment, stocks, bonds, and the dollar all tighten, the market is not just “opining”: it is imposing conditions.
And this is perhaps one of the most powerful lessons of the year: even a president with an aggressive agenda and a strong narrative, like Trump, ends up having to recalibrate when the cost of financing rises and confidence cools. Not out of altruism, but out of pure arithmetic: the market sets the price and, with it, the real margin for maneuver.
This links to a second reading for the investor: trying to hit the “exact point” of these episodes is a losing game. Often, the best market days occur very close to the worst. Leaving “to avoid the blow” may also mean missing the rebound, and with it a disproportionate part of long-term returns.
3) Currency risk: a risk to consider
This lesson in 2025 has been especially visible for investors in euros: even if you invest with a “global” approach, a very relevant part of developed equities remains the U.S. (and thus indirect exposure to the dollar).
For an investor whose reference currency is the dollar, this effect is usually relatively minor. However, for an investor whose reference currency is the euro, the impact of exchange rates can be significant, especially over short horizons.
To see this effect, note that the MSCI ACWI (All Country World Index) has about 65% of its weight in the U.S.
And what happened in 2025? For a euro-based investor, the dollar depreciated significantly against the euro: the USD fell -15% in 2025.
In such circumstances, this means that even if U.S. stocks perform well “in dollars,” your return in euros can be reduced if the USD falls (and conversely, it can be amplified if the USD rises): as seen in the chart above, this year there is a -15% difference of ACWI in euros vs. ACWI in dollars.
Therefore, when building a portfolio, it is convenient to:
- Understand that “global diversification” does not eliminate currency risk;
- In bonds, currency hedging is essential;
- In equities, hedging is more debatable: it depends on the horizon and hedging costs.
At inbestMe, generally, we hedge 100% of currency risk in bonds and maintain partial hedging in the equity portion, decreasing as the profile increases. The logic of reducing equity hedging is that over longer horizons, currency risk loses relevance, while in shorter periods, as we have seen this year, it can have very significant effects.
Having this partial hedging in our portfolios has allowed them to perform excellently even in the face of dollar devaluation.
At inbestMe, if an investor wants to capture the performance of indices where the dollar has a dominant weight, they can choose to invest in a dollar-denominated portfolio, consciously assuming the currency risk: either because their expenses or objectives are in that currency or because they desire that exposure. At inbestMe, it is possible to invest in dollars through our dollar ETFs portfolios, historically superior, but returns are expressed in dollars.
4) Gold this year, Bitcoin last year… and the recency bias
We have seen how this year has been the year of the golden metal, but also that not all that glitters is gold.
Last year was Bitcoin’s year, increasingly considered by some as a strategic asset. But this year was also marked by a crypto flash crash that reminds us of its high volatility. Bitcoin ended 2025 slightly negative after reaching all-time highs around $125,000.
We do not know which will be the best asset for 2026.
And we do not believe anyone can guess it.
The fourth lesson is, therefore, psychological: avoid recency bias.
We tend to extrapolate the latest event, especially in assets with strong narratives and high volatility. Do not trust what you have recently experienced.
As seen with gold, for example, just as it has had years like this one that dazzled, it has also had decades without contributing.
At inbestMe, we believe diversification is the best way to build a portfolio, rather than trying to pick the trendy asset.
2026: focus on what you can control
At inbestMe, we avoid making predictions about what will happen each year, and this also applies to 2026. Predicting what will happen in the next 12 months is extraordinarily difficult and usually adds little value to an investment strategy that, by definition, seeks medium- and long-term results rather than a period as short as a year.
What we do know, from experience and historical data, is that the economy and companies tend to adapt. This capacity for innovation, adjustment, and growth has translated, with ups and downs, into a “natural” long-term upward trend in markets (in major stock indices), as shown in the chart above with the MSCI World (developed countries global index).
Seen in perspective, even episodes that seem decisive at the time eventually dilute in the chart. Today, the “scare” of this 2025 year, the tariff war, is still visible, but over time it will likely lose visual weight, as happened with other drops: some remain clearly visible (the global financial crisis or dot-com bubble), while others are more integrated into the series (Brexit or even COVID-19).
2025 left us a lesson: the market can be noisy yet resilient. For the investor, what adds most value is not “being right” every month, but maintaining a process: segmenting objectives, diversifying, contributing periodically, rebalancing, and sustaining discipline.
Looking ahead to 2026, our advice is simple: focus on what you can control. That is what truly helps you invest with confidence in any market environment.
At inbestMe, we will continue helping and supporting you so that this is the case.
