Investing Insights Where to Invest in 2026 After This Year’s Market Volatility
Dec 19, 2025
In this insightful discussion, Dan Lefkovitz, a strategist at Morningstar Indexes, navigates the turbulent waters of 2025's market volatility. He reveals surprising market shifts driven by factors such as tariffs and tech developments. Investors flocked to bonds and low-volatility stocks for safety. Highlights include the emergence of momentum as the leading investment factor and predictions for 2026, emphasizing AI exposure and a shift towards small-cap and value stocks. Dan concludes with key strategies to guide investors into the new year.
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Leadership Shifted Rapidly In 2025
- Market leadership shifted dramatically in 2025 from expected 'Trump trades' to different winners and losers.
- Dan Lefkovitz highlights how early 2025 rallies reversed as trade-policy risks and other catalysts repriced markets.
Big Daily Swings Defined The Year
- 2025 was more volatile than 2023–24 but milder than 2022, with extreme daily swings including two 5% losses and a 9% rebound.
- Dan emphasizes the year's bumpy ride despite ending with large cumulative gains for U.S. stocks.
Volatility Had Many Root Causes
- Multiple catalysts drove volatility: tariffs, AI concerns, stretched valuations, Fed moves, and fiscal events like the government shutdown.
- Dan says stretched valuations prime markets for disappointment when negative catalysts hit.