A year ago, President Trump had just won the 2024 US election off the back of his “Agenda 47” plans to put America First, by: cutting regulations, turning the U. S. into a manufacturing superpower, ending inflation, maintaining the U. S. dollar as the world’s reserve currency, and ending the war in Ukraine. Perhaps given the hope of higher U. S. corporate profits due to the Ai boom and reduced regulations, you’d have forecast the S&P 500 outperforming other global markets. And perhaps given Trump’s affinity for crypto you’d have been positive on the outlook for Bitcoin.

Well, a year later, the Ukraine war is still raging and the US has invaded Venezuela, there’s been little change in US inflation (2. 7% v 2. 9%), the US dollar has weakened by 8% vs a basket of global currencies, Bitcoin is down 6% (in a weak US dollar) and stocks outside the US beat the US by nearly 15%, the widest margin since 2009 (MSCI All Country World Index ex USA vs S&P500).

These examples remind us that you can’t forecast the future. It’s why we are value investors who don’t pay too much for “the future” and why we prefer a diversified portfolio rather than a few “conviction” ideas.

We prefer to buy companies when they’re out of favour and the market is pessimistic about the outlook because that’s when you’re not paying for “the future”. If the future turns out to be as bad as feared, it was often already discounted in the price, meaning the downside is limited. But if the future is not as bad as feared or better still, good, the re assessment of this less bad / rosy future can lead to great returns. It’s this asymmetry we seek - low downside, meaningful upside.

It all sounds logical and easy, but that’s in hindsight. Buying European banks back in 2023 when they were selling at 5x earnings and 9% dividend yields seems logical to most people now (after they’ve tripled in value…) But to get the best returns, you had to buy when the fear was greatest and we forget that in 2023 when banks were out of favour and we were buying them, Silicon Valley bank had just failed. Or when they fell ~25% in April 2025, people were worried about the impact of Trump’s tariffs on the European economy. The truth is that investors are social beings who find comfort in the crowd.

Markets don’t adjust overnight and despite the unexpected underperformance of U. S. equities in 2025, most portfolios still “find comfort” in large cap US equities. In contrast and as demonstrated by our regional weightings, we “find comfort” (value) in mid cap companies, mostly outside the US and away from the crowd.

For reasons explained above, we offer no forecasts for 2026 but rather commit to doing what we do best - investing yours and our savings in a diverse portfolio of decent businesses, at great valuations.