15 January 2026 (pre-recorded 8 January 2026)
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[INTRODUCTION]
Staci West (SW): Welcome back to the Investing on the go podcast and Happy New Year to our listeners. For our first episode of 2026, I’m joined by Juliet and Darius once again to reflect on a year full of surprises and to discuss what investors should be watching next. So good morning and thank you both for joining.
Darius McDermott (DM): Good morning Staci.
[INTERVIEW]
SW: Now let’s start with looking back before we look forward. So if we rewind 12 months, markets have confounded a lot of expectations once again. So what has been the biggest surprise for you last year?
Juliet Schooling Latter (JSL): Well, I guess, you know, it would be the market’s resilience and kind of lack of volatility despite such an unstable global picture. Because 2025 saw a marked rise in geopolitical tension with Trump’s tariffs, wars in Ukraine and Gaza. And, you know, increasing tensions between China and the US. And then you’ve got the rising threat of climate change with wildfires, destroying much of LA, not to mention concerns around AI governance and disruption cybersecurity. I was one of the many who had their shopping curtailed by the M&S website, shut down and economic clouds with persistent inflation, high government debt. So this is a cheery way to start the new year, isn’t it? But yet in 2025, the global sector was up over 11% and Europe was up over 22%.
DM: Yeah, I mean, I think if we do rewind to this time last year, it was just before Donald Trump’s second inauguration, and I’m pretty sure a lot of our commentary was around volatility and, you know, the uttering of the president, whether they be geopolitical or market sensitive, or as we found out, tariff driven would lead to volatility.
And I think if you look back at last year and you can overlook those mad 10 days in April when the Liberation Day announcements came and then the sort of pausing of the tariff and saw a huge rebalance, you’d actually see a basically straight upward.
The other, I think, observation, I think we’ll touch on it later is actually it wasn’t just the US last year Juliet has mentioned Europe, but Asia, emerging markets, China, even the good old FTSE100 had a very, very strong year outperforming the US. So it was really quite a broad spread.
I shouldn’t say this, but I have an annual bet with one of our clients even though it’s his hobby and my day job, he beats me probably eight times out of 10. And I picked Germany on the back of their stimulus announcement, and it was up, whatever, 25% he picked Brazil, which was up like 50%. So even when you win, you sometimes lose.
And you know, we talk a lot about valuations, we talk about inflation, we talk about geopolitical. The one thing I think last year was a really sharp reminder of try not to be too clever. Markets do go down, markets do go up, but over time they go up. Now, if you are close to or needing your capital, then you should have less of an invested. That’s a simple rule. But if you are a long-term investor that regardless of age, you know, you don’t want access to your capital in the next three or five years. Staying invested is the right thing because if you, like a lot of people did, were very nervous, including us, but when the Liberation Day stuff happened and you went into cash and you thought the tariffs were gonna be dreadful and all the rest of it, which was what it looked like, then you would’ve probably been crystallising the fact that you missed out on that massive rebound, not just in April, but then the very strong markets we had over the summer and the end of the year. So staying invested, trying not to be too clever because markets can ignore all the things around them sometimes.
SW: Well, let’s talk about performance then last year, because as you said, it wasn’t this usual US story that we see. We had Latin America, commodities, China, European smaller companies, which I think you mentioned all in the top five for the best performing sectors in 2025. So what is driving this shift away from what has long kind of dominated this US story? Are we seeing this broadening of returns for investors?
DM: I think, sorry, Jules. I mean I just, the only thing I’ll say on that is when you look at a sector as we do regularly, you can normally identify a theme or a trend or in fact an investment style, which has dominated the year before. When you look at the UK sector from 2025, it’s all value funds predominantly because I think the UK largest companies in index is a value index anyway, but all value funds are at the top. But whereas you look at the global sector, you find a mixture of value and tech funds basically, or high growth funds. And that’s sort of unusual. And I think, again, that sort of speaks to this broadening of returns that we saw in 2025.
JSL: Yeah, I mean I think it was, yeah, the broadening away from the US as we’ve talked about with nervousness around the tariffs. So investors sort of started to look around and realise that there were other areas which looked cheaper. And you know, the US had been the focus for so long that, you know, it was just so much more expensive than than elsewhere. But to put it into perspective, you know, if you look over two years, Latin America has actually only done 4% compared with over 30% for the US. And if you look over three years, China is up just under 11% and commodities are up 23% versus the US which is up over 52%. So yes, other areas did better last year, but it is just a marginal shift really.
SW: So how do you think that investors then today looking forward, given what you’ve said about more longer timeframes than just obviously a single calendar year, should they be looking at US equities in their portfolio as we stand today looking forward?
JSL: You know, I’m hopeful that this sort of broadening out of returns continues. You know, there was a time when investors weren’t in love with the US. I mean obviously I’m not old enough to remember back that far, but Darius was talking about it. So I looked up some numbers. And from January 2000 to 2020 China was up over 530%, UK smaller companies, European smaller companies, and Latin America all up over 380%. And the US was up just 179%. So that may shock people who’ve just, you know, really just seen the US sort of going up.
You obviously can’t ignore US equities and they may well continue to outperform, but I’m nervous about valuations there. And I was just actually looking at a clip from CNBC where they were talking about the fact that all the analysts in the US are predicting strong returns from equities this year. And that just rings alarm bells with me. We’ve also got midterm elections and they tend to impact markets and cause greater volatility. So the jury’s out really, I mean, investors could rotate some of their tech profits into more unloved US sectors, you know, such as healthcare perhaps.
DM: Yeah, I mean US valuations were expensive at the start of 2025 and they’re even more expensive at the start of 2026. The point that Juliet makes about analyst expectations for returns in the US demand one thing, and that is strong company earnings. When you are priced on a PE of 50 and you’re expected to earn say 30 cents per share and you earn 35, great, but if you only earn 28, it’s only a minor miss, but it’s a profit downgrade and when you are on a very high PE, markets can react quite strongly against you.
But I mean the US there’s no getting away from it. The US market is expensive. And I think a narrative that came from the Liberation Day announcement and that broadening of returns in 2025 where the people were just starting to think, do I have to put all my investments in the US? Which if you’ve done that in the last 10 years, Juliet observed some 20 year numbers. But actually in the 2010s, the US was the best market and not so good in the 2020 in the 2000s.
People are talking again about emerging markets, very out of favour area generally. Nobody’s really been investing in them, but if the dollar under the current regime continues to weaken, that’s generally good for emerging markets. So I think there’s that broadening of thought. Nobody I think in their right mind would say settled your US equities. I mean it could be absolutely the right thing to do, but you’d be well brave and potentially stupid. But it’s what do I do with this year’s or next year’s I am I still allocating in that same way as lots of people have done just buying US index. And you know, I think people do need to to consider other geographical areas maybe for new money as much as switching out of US equities with in existing portfolios. But if you looked on it, if you were a valuation based investor, you would definitely be reducing your US health holdings.
SW: I interestingly enough, got a kind of email from this morning from Aviva that said about, you know, diversification for the year ahead could be dollar underweights and gold. So we’ll come to gold in a second, but I wanna stick with the dollar story, but also emerging markets, as you mentioned coming back on people’s radar alongside China, which I know we have talked about in previous episodes. We’ve talked about China in great detail, but it does seem China and emerging markets more generally are coming back on people’s radar for a number of reasons. Are they simply valuation points, some of which you’ve talked about already, or is it more structural things like their role in the AI story or supply chains? What has really brought that focus back in more recently?
DM: Well, for developed market investors, I think the dollar is a key issue. And loath it or hate it, emerging markets, a big part of the emerging market story is China. If you’re very negative on China, you may want less exposure. What we saw was quite a big rerating in China last year, and it is definitely no longer as cheap as it was. So I would, you know, I’d say the easy money has been made in China, but that doesn’t mean you can’t make strong returns.
And I think the China of 2000 to 2010 was that massive urbanisation, which was very good for commodities globally. And then you sort of moved to a more middle class type economy, specifically in the cities, but then they had a property boom, which actually has been a property bust and has really dented I think the confidence of the Chinese. We saw that, you know, everyone expected China to boom when they reopened from COVID didn’t happen because the Chinese didn’t spend, you know, they sat on their money.
Now I think, you know, moving on from that manufacturing view of China, China’s actually broadening out its global leader in EV batteries and EV cars. They’re actually a global leader in a lot of healthcare areas. And then there is that middle class sort of emerging market story where Chinese are actually having their own brands now for that period of the 2010s was quite good for Europe because Europe’s premium brands were wanted by high end Chinese consumers. Whether that was Ferrari’s, Porsches, or as we like to talk with Juliet handbags, now they are you know, they’re having their own higher end brands. So I think very difficult to totally overlook the second biggest economy in the world, but it’s not as cheap as it was.
And I think if we are trying to get the magic wand out or the crystal ball, you know, China was an area that we talked about last year as being cheap. I don’t think you can say it’s cheap now, but it’s also not expensive and relative to anything or relative to the US anything still looks reasonable value even though versus their long-term averages. There is very little obvious standout areas of cheapness. I still think emerging markets are, are a very strong bet, not just for 2026, but maybe for the next five to 10 years. And it would be remiss of us not to remember our, mention our old friend UK smaller companies, in fact, smaller companies maybe generally as one part of the market that is still cheap, certainly in the UK and often globally.
JSL: Well, I’d probably agree with Darius barring the handbag comment of course. But yeah, I mean it was largely about about valuation. But also, you know, these areas benefit from the weaker dollar which looks set to remain this year. And Asia’s developed a strong AI ecosystem, so it’s also benefiting from the sort of tech mega trend. And governments are largely less indebted than developed market economies. And a number of countries are also pushing ahead with shareholder friendly corporate reforms. So yes, I feel quite positive on emerging markets this year.
SW: And the other thing that I mentioned, I said we’d come back to is gold. So gold has been a standout story for last year. It can divide opinions, let’s say. But let’s maybe briefly start with what is the story that’s happened? Why has it kind of taken off and we’ve seen the kind of all time highs rising success of gold, but also commodities. But then also more specifically, is it still doing its kind of job as a diversifier or does it now have a different role in a portfolio because of what’s happened this past year?
JSL: Well gold, gold was up about 64% last year. So definitely a strong performer for those who held it. And you know, there are several factors at play. It’s is generally yes, a safe haven asset in times of uncertainty and inflation, which we saw last year. But also central banks such as China, Russia, and India have been buying sort of reducing their dependence on the US dollar. So also as interest rates come down gold which doesn’t pay a dividend, so it becomes more attractive. And it is a factor of basic supply and demand. When demand for gold is strong supply can’t simply be ramped up immediately. I think it still remains as a diversifier, but I’m not convinced that we’ll see the same returns this year given its current strength.
DM: Yeah, I mean, as you both know, I like to prepare in great depth for these podcasts, but I scribbled down three things and Juliet’s just nicked all my answers. [JSL: Sorry about that.] Basic supply and demand, I mean, the Chinese central bank is buying gold and they don’t care about the price. And when somebody doesn’t care about the price of of something they want it, it tends to push that price up.
People clever than me. And we are again lucky in our jobs to see people whose special is gold and precious metals. And what I think some of them might argue is what you’re seeing actually is it’s a debasement of fiat currencies and fiat currencies are the dollar, sterling, euro, et cetera. And the, you know, whether it’s gold has gone up in the against the dollar or actually the dollar has come down against gold is where it starts to get quite technical.
The other thing which would be slightly remiss me not to mention is our old friend silver. Now silver actually is an industrial metal. It has usage, you need it in solar, you need it in batteries, you need it all sorts of thing. And supply and demand is totally out kilter here, right? So there is more industrial demand for silver than there is silver. And Juliet’s already alluded to you don’t just turn another mine on overnight and go and dig for it. Also, silver tends to be a byproduct of other mining often gold or whatever, but you don’t just turn a silver miner on that’s like a five year minimum sort of runway. And silver had a massive spike in price, particularly in December. And again, there are some technical things going on, but actually silver outperform gold last year. And the thing that Juliet mentioned, she mentioned the gold price but didn’t mention the performance of gold equities.
Most of the gold funds were up well over a hundred percent last year, and those that have some silver are potentially even more so. The supply and demand is still strong for both commodities. The central bank buying particularly of gold, which is a bigger market, but silver’s a tiny market. And if that squeeze continues on the supply and demand side, we can, even though silver was up an awful lot last year, we have the opinion that it could still continue to be a very strong returner, particularly that equities, which even though again they had a good year, have actually lagged the rise in the silver priced small wealth or health warning. It’s volatile. It does go down as well as up. I certainly wouldn’t be sticking all my portfolio, but I just think in this climate having a bit of gold and particularly silver you know, there’s been a lot of geopolitical activity at the start of the year with US involvement in Venezuela. Donald Trump on the 7th or 8th of January is already setting a number of things, which could be deemed quite seriously politically on the geopolitical side. Respect to Greenland and other South American territories. I’m quite happy holding my gold even though it was up a lot last year in in that type of market.
SW: Well, as you said, the gold funds did particularly well, those that get our newsletter, we’ll know that the top four elite rated funds were all gold funds with Ninety One Global Gold up something like 160%. So they certainly were nothing to scoff at. But beyond gold, silver commodities, are we just seeing in this wider case for real assets in general to be used as this diversifier protecting part of a portfolio with so much volatility, geopolitics a lot going on is it just a wider case for these real assets to be held and looked at again?
JSL: Well, yeah, and real assets has always offered a some degree of protection when inflation is rife and uncertainty abounds. So currently with stock markets looking expensive, I think a bit of protection in your portfolio is no bad thing. And they have largely been overlooked, you know, they’ve been sort of less sexy than AI stocks, so yes, they will provide a bit of ballast in your portfolio if we do see a pullback this year.
DM: Yeah, I mean real assets is quite a broad church. I mean, we focused on the precious metals end, but it’s also real estate infrastructure, you know, these are real assets, and as Juliet said, tend to be the sort of assets you want when there is inflation, there is still inflation in the system, but most people saying, I fully subscribe to this, think inflation is going to come down materially in 2026. I know we’re gonna talk a little bit about AI. I think AI could be quite deflationary in the median term as technology and the internet and iPhones were. You know, Uber was a deflationary force for taxi fairs. New technology comes out, you know, you used to have to pay 50, 60 quid for a black cab to go almost anywhere in London. You can do that journey for 25 pounds now.
And that’s, you know, so AI – I think – will be a deflationary force for the years ahead. So yeah, I think commodities which we we have touched on, I think you sort of almost need to look at them as an individual commodity. You know, the rare earth commodities which are needed for the electrification of the world are fairly heavily dominated by China and other commodities are not. So there will be individual supply demand characteristics to each type of commodity, and I think we’re broadly quite positive on commodities full stop for the year ahead.
SW: Well, let’s talk about AI then, because as you said, we’ve got to come to it eventually, so might as well just get it done with, it’s such a popular story and the CapEx has been enormous as we’ve seen and heard, but how big is the risk that these earnings don’t live up to their expectations and what does that mean potentially for investors and markets should that happen? What should we expect with this AI story? Is it still full steam ahead?
JSL: Well, I think AI is such a difficult call to make, isn’t it? On the one hand, it has the capacity to provide enormous boost to productivity and growth, as you say, Darius. But, you know as Staci alluded to, the CapEx being spent is eye watering. And you know, there’s analogies have been made with dotcom bubble, but today stock prices for the AI leaders are generally supported by solid earnings growth. So that is slightly different. And the companies making these aggressive AI related investments can support their massive capital spending far better than those sort of small tech stocks oof the late 1990s.
But valuations are high and these sort of long bull markets where you’ve got some rapid innovation do often sort of stall along the way. And it does come down to confidence again, as long as investors believe that the outcome justifies the cost, they’re gonna continue to do well. But any sort of setbacks you know, I think could cause a significant pullback in share prices. Obviously if the tech bubble burst, it’s gonna take other sectors with it too. But yeah, more lowly valued sectors and regions should stand up better.
DM: Yeah, I mean there’s a number of things. The CapEx that Juliet’s mentioned, being eye watering is mostly coming from cash reserves and earnings by these companies, not all of it. As our investment dinner we were joined by Dr. Ian Mortimer, who’s one of the fund managers at Guinness Global Equity Income and Guinness Global Innovators. And he said, you know, when you have a bubble, yes, you have this exuberance, you have high valuations, but you also have a lot of debt and there isn’t a lot of debt in those hyperscalers. If I haven’t prepared for these podcasts, I’d remember the names, but something I read yesterday, three of them, Mag 7 are now in the value index in America. So it’s not, again, a bit like the commodities, it’s not one brush fits all, but I think it was Amazon and Meta, you know, they don’t enter some of these sort of value index, so you sort of have to look at them differently.
But, you know, NVIDIA was $90 during Liberation Day and it’s $180 now, but the chips that they’re producing are wanted by everybody. So if we wake up and you find out, you know, headline Meta refuses to spend its $80 billion on CapEx this year, then I think we’re looking at a different world. But whilst they are continuing to spend these vast sums of money in the race to get AI and generative AI and singularity and all these lovely technical words to be the first one there, the other thing I think we talk about CapEx is basically am I getting a return on my investment for all these pounds dollars primarily that are being spent? And nobody was really talking about that much till last year. You know, they knew the CapEx really ramped up in 2024, but now people are saying all of this money, is it going to lead to return investment? I’m very much on the jury is out.
I mean, it’s huge, like hundreds of billions being spread, just enough to build a lot of infrastructure. And I think if, as Juliet touched on, if there is any wobble in the US stock market around the hyperscalers or the Mag 7, it may well be the forgotten areas, things like quality investing, those companies with pricing power, Juliet’s already touched on healthcare, consumer discretionary, all the things that tend to outperform certainly difficult markets, but have been very much left behind. And there are a number of funds that Elite Rated and not Elite Rated funds have really struggled in the last few years because that’s their style. It was great style for the 10 years into 2010s, but it hasn’t been at all in the last three, four years quality style of investing. And you’ve got growth, quality and value really has not been the place to be.
And you know, it’s done. I think, you know, we hold some in the funds that we manage and they’ve been sort of the worst performers, if you like, certainly in absolute returns, but we’ve continued to hold them for that balance a of style. But if there is to be a choppier road ahead, we would expect that style to be a style that sort of backs us up. And we, you know, healthcare is something we bought last year and continue to see attractive because it just didn’t enjoy the returns that the rest of the market did.
SW: Now this is a Outlook adjacent podcast but I’ve taken it easy on you and I’m not going to finish with asking you to pick a sector for the year ahead, but I’m going to finish with something slightly different. So as we look ahead, what is one thing that you think that investors should be doing more of? And then on the kind of opposite side, what is something that they should be doing a little bit less of in the year ahead? So Jules, why don’t you start, what do you think?
JSL: So one thing to do more of, well, I think more diversification for all the reasons that we’ve outlined previously, really I think you need to make sure that you are quite well diversified. So I think that’s important. And one thing to avoid I think don’t buy last year’s top performers. You could, you know, you could be buying into areas that are expensive and may well not do as well going forward. And if we see a mar market pull back above all, as my father used to quote to me, if you can keep your head when all about you are losing theirs I’m not entirely sure that Kipling was referring to investing, but I think it works for all areas of life.
DM: Yeah, I sort of echo pretty much most of those sentiments, but would add that the last decade has been dominated by the US equity market, but again, a very narrow number of stocks have driven the vast majority of performance. They get bigger and bigger.
At the start of 2025, the Mag 7 was 37% of the S&P. So you think you’re buying 500 companies, well actually your but nearly 40% of your portfolio had seven stocks. So Juliet’s point on diversification, I absolutely agree, and I think we are in a different world, sort of that globalisation, which was coined in the sort of the naughties is actually reversing. There is a definite Cold War of some description between the US and China, and that should lead to a different economic and investment outlook. So I do, you know, it’s not a prediction, but investors have looked and rightly so at the US as the only place to be. And that has been the right call. I think I would look further east, Asia and emerging markets for potentially the next decade. And even frontier markets, you know, sort of the new emerging markets, places like Vietnam, Bangladesh, you know, I’m not saying go a hundred percent of your portfolio into these areas, of course, but often overlooked. So that would be my message is don’t overlook some of the, you know, revisit some of the overlooked markets.
SW: And on that note, we will finish our first podcast of the year. So thank you both for taking part.
DM: Thank you. Lovely to talk to you, Juliet and Staci, it’s been a lot of fun as always.
SW: And for more insights and information of the funds that we’ve talked about and various topics, regions, et cetera, please do visit fundcalibre.com and whilst you’re there, don’t forget to subscribe to the Investing on the go podcast.
