This won’t help my US visa application any time soon. However, it is possible to be on the right side of history and seek investment opportunity too. History may record that 2025 was a dark year of barbarity in Gaza, criminal meat-grinder slaughter in Ukraine, trade tariff chaos, war crimes in Venezuelan waters and full strategic capture of US national security policy by the Kremlin. And, yet I’m hopeful. I will leave it to more mainstream outlets to review 2025. Instead, I’d like to take a look at a number of 2026 investment themes – new and old and not AI – which are developing in potentially unexpected ways. Many, in a good way. Let’s take a look at the data and start to dream….
Global Trade: Dare we return to Brexit. Anybody see the UK paying over €600m to re-join the EU’s Erasmus student exchange programme? Don’t worry. We are not going to re-visit Brexit but we are going to cite this as an example of slow-moving sanity repairing self-inflicted harm. Similarly, the “America First” tariff policies in Washington are now beginning to reveal some awkward truths. The mighty US dollar has slipped by 9-10% against other major currencies, US equities (+15%) have underperformed global equities (+29%) and the US manufacturing sector has been losing jobs for 7 months consecutively. Oh, and China, the original bipartisan focus of US trading ire, has just seen its trade surplus exceed $1 trillion for the first time in history. So much winning. What are the chances of US trade policy moving away from tariffs? Well, the polling for US mid-term elections in 2026 is looking pretty bleak for incumbent Republicans. And, the spectacular Vanity Fair quotes (more of them later) from Trump chief-of-staff, Susan Wiles, are prompting Washington insider speculation of a policy re-set or ‘cry for help’ from within the White House. To be clear, nobody sane thinks Wiles (in 11 recorded interviews with Vanity Fair) was unaware of the likely end result. Bank on that. So…..
Financials: If you’ve been dazzled by AI you might have missed the massive performance of financial stocks this year. Financials in the US (+20%) have outperformed technology (+18%) but check out UK banks being tortured by a chaotic Labour government. The FTSE All-Share Banks index is up just the 56%!! In Europe the Euro Stoxx Banks index has clocked a 76% increase in value year-to-date. Meanwhile, Europe’s fintech banking star, Revolut, has completed its second funding round since August. The latest round was eye-catching for the $75 billion valuation achieved (vs $48 billion in August) and the backing of Nvidia’s venture capital arm. That’s a 56% increase in value in just a few months. More importantly, healthy performance in banks and financials usually reflects overall confidence in the global economic cycle despite the dark headlines. Bluntly, banks feel the fear first. It’s not there. In fact, the latest Bank of America investment survey shows investor sentiment at its strongest since 2021. And, that confidence might be showing up in strange places…
Europe: There appears to be a growing view that Europe has been shocked into taking responsibility for its destiny on the geopolitical stage. The loss of the US as a reliable ally – outlined in the recently published National Security Strategy 2025 – means Europe must back its own. All the way. It was striking to read recently that in Europe, over the past 50 years, just 14 companies started from scratch ended up with valuations over $10 billion. In the US that number is 241! German defence company, Rheinmetall AG, at €70 billion is now worth more than BMW, VW or Mercedes. Its value has appreciated 15x since the outbreak of the war in Ukraine. Unsurprisingly, Franco-German defence company, KNDS, is eying a €25 billion IPO in Amsterdam in 2026. Furthermore, conditions of ‘war’ have historically driven innovation. So, when the head of the UK’s MI6 intelligence services and its chief of defence staff both warn in the same week of the need “to be ready to fight”, we should expect a massive step up in investment in Europe across the board, to strengthen not just defence but energy grids, communications, technology, supply chains etc. Europe’s prompt for action might be scary but there might be a surprise further east….
Geopolitics: Europe is still reeling from the stunning geopolitical alignment of Russia and the US sealed with the Kremlin’s approval of Washington’s National Security Strategy “as largely consistent with our vision”. Read that twice, watch the party of Ronald Reagan spin in its grave (yep it’s dead) and remember those famous Russo-proverbial words borrowed by Reagan…. “trust, but verify”. Then think about who is really driving the Ukraine peace talks. In recent weeks we have seen oil hit 5 year lows, the Russian economy battle rampant inflation, the Russian central bank selling its gold reserves and Europe moving to seize ‘indefinitely’ $200 billion of Moscow’s foreign reserve assets. If I were to offer a contrarian view on current peace talks, or even dream, I’d say Russia and Putin has more problems than we think. Furthermore, the unseemly haste of Trump’s agents, Witkoff and Kushner, to rush Ukraine into a Russian-written deal has a ‘frantic’ feel about it. Just a thought, or dream. Of course, these are not the only deals which could light up 2026 in an unexpected way….
Private Exits: The IPO pipeline of 2026 could break all sorts of records. Databricks has just completed a $3 billion Series L funding at a $134 billion valuation – yep that’s an “L”. We hear it so often now, but the private market really needs some big exits. OpenAI could be up for a $500 billion IPO. ByteDance ($480 billion) and Anthropic AI ($180 billion) are also on the blocks, as is Stripe with a $100 billion promise. I’m loath to mention the biggest of the lot, SpaceX, which is targeting a whopping $1.5 trillion 2026 valuation and thus pushing its owner Elon Musk in to trillionaire territory. Unless……
Electric Vehicles: Ford might be grabbing the headlines this week with a monumental $19 billion walk away write-down of its electric vehicle (EV) projects. And, people worry about AI infrastructure over-spend? As China continues to accelerate away from the EV pack in its global dominance of the EV manufacturing ecosystem, whither Elon Musk’s Tesla? First, one can’t miss the opportunity to re-print Trump chief of staff Susan Wiles’s marvellous Vanity Fair assessment of Musk this week among others in this “only the best” Trump inner circle/cabinet. The New York Times summary is best:
Trump’s White House Chief of Staff Susie Wiles describes Trump as an “alcoholic’s personality”, JD Vance as a “conspiracy theorist for a decade” and Elon Musk as “an avowed ketamine user” and an “odd, odd duck” in an interview with Vanity Fair
Hmmm. An odd, odd duck. Tesla might just be reaping the DOGE or DUCK whisperer whirlwind. Tesla currently is valued at $1.5 trillion with a price/earnings valuation of 327x. Yep, 327x – I might raid the ketamine jar too. You’d expect Tesla to be growing, right? Well, the ducks are lining up. November sales for Tesla were the lowest seen since 2022. The brand destruction by Musk’s dive in to right wing politics has been epic. In Europe not a single country achieved sales of more than 750 units, except France. If it walks like a duck, tweets like a duck…….we can only dream.
Old Economy: Surprisingly, 5 of the “Magnificent 7” tech stocks have under-performed the AI-giddy market this year. In fact, the original perceived AI ‘loser’, Google, has been the stellar performer, up 56% year to date. Now, it might be worth taking another look at other ‘losers’. Defence and banking stocks are already back in vogue, but in ‘war-like’ conditions the basics become critical too. So, it’s possibly no great surprise that the Basic Materials sector in the US has clocked the best sector performance by far, up 33%. As the race to electrify the global economy accelerates, critical minerals, precious metals and mining stocks stand to benefit from urgency, security and scarcity. Gold is up 65% year-to-date, silver has more than doubled and platinum is up 117%. Keep an eye on Mr Copper too with a 34% uplift in 2025.
Plenty to think about above, and possibly dream too. What a year! I’ve a feeling I won’t be short of writing material in 2026.
That’s nearly it folks for 2025. Thanks for reading and the words of encouragement along the way.
