Every December I review my portfolio. What do I own, and should I still own it? How did the portfolio perform, and am I beating the market more often than not? And are there any stocks or sectors I am missing out on that I need to do some digging into?
I’ll be doing this again over the next few weeks. This year has been unlike any I’ve experienced before.
First, the Satrix Resi ETF* has more than doubled over the year, and I am pretty sure I have never seen anything like that from an equity ETF before. But the wild run higher is much more than just precious metal stocks and the associated ETFs. With a 40% return in 2025, the Top40 has had its best year in decades, and US indices, while having lower numbers, are also well above their long-term average annual returns.
The Magnificent 7 had a decent year, but so far only Nvidia* and Alphabet have actually beaten the index as the rally broadened out. This is best illustrated by the equal-weight S&P 500 ETF also being just off record highs, as is the S&P 500 ex-Mag7 ETF (basically the S&P 493).
And all of this happened in what was as calamitous a year as imaginable (outside of an outright collapse or pandemic).
Imagine if you’d dozed off in early January and only woken now. On checking your portfolio and the excellent returns, you’d think it had been a nice and simple year with no material events and certainly no noise or extensive volatility.
This is what markets do; every so often they collapse
Yet way back in April the “liberation day” tariffs had sent the markets spiralling down. The Top40 was off almost 10%, the S&P 500 almost 20%, and the Nasdaq was more than 20% down.
For many the gut response would have been to panic, and I know some investors who sold some or a lot of their investments and went into cash. The idea was that they’d buy back again when the crash was over and they’d profit handsomely. Except they’ve been left stranded on the side of the market with their pile of cash.
This is, to my mind, the key lesson of 2025. Generally, the right response for a long-term investor to economic, market or political noise is to do nothing. Yes, you may see increased volatility and panic, and markets may collapse. This is what markets do; every so often they collapse. But in every case a broad, diverse market has recovered, and usually within a couple of years.
An exception here is news related to an individual stock. When things are really bad (as they were when the Steinhoff news broke), exiting as quickly as possible is most often the correct response.
But as a rule for investors, less is more. Let time and compounding do the heavy lifting.
*The writer holds Satrix Resi and Nvidia
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.