Planning, Not Predicting: A Guide for the Year Ahead…

We’re now well past the halfway point of our 2026 annual review season, and as always, it’s an intense but rewarding stretch for us at Engage. The Q1 meeting rhythm has become something clients genuinely value — a chance to look back at the previous year with clarity and then look ahead with purpose as the tax-year boundary approaches.

I often joke that reviews feel a lot smoother when markets have been kind. There’s truth in that. Strong numbers have a way of easing anxieties, and the last few years have certainly delivered. Global equity investors have enjoyed an exceptional run: the S&P 500 climbed 24% in 2023, followed by 23% in 2024, and another 16% in 2025. When long‑term averages sit closer to 8–10%, three years of outsized returns is something to appreciate.

Last year, we spoke openly with clients about the possibility of volatility reappearing after two strong years - and that’s exactly what happened. Tariff headlines sparked a sharp pullback in March and April, and the news cycle amplified every twist and turn. Yet markets rebounded decisively, rewarding those who stayed invested. That experience has shaped the message we’ve carried into 2026.

Taking Stock of Where We Are Now

After such a strong run, it’s natural for investors to wonder whether markets have become “too expensive.” It’s a fair question, but not one anyone can answer with precision.

What history does show is that markets tend to drift back toward their long‑term averages. That’s not a pessimistic view, it’s simply how markets behave over time. Periods of exceptional performance are often followed by stretches of more muted returns or short‑term declines that reset valuations.

So, while a phase of below‑average returns would be entirely normal after the last three years, “normal” doesn’t translate into “timed.” We can’t know when such a phase might begin, how long it might last, or what might set it off.

What Remains Unknowable

Much of today’s market strength is concentrated in technology and AI‑driven businesses. A disappointing earnings season from these leaders could easily shift sentiment. But remember: the wobble in early 2025 wasn’t caused by tech earnings at all, it came from tariff concerns that barely featured in conversations the year before.

Market downturns rarely originate from the risks investors spend the most time discussing. That’s precisely why we focus on preparation rather than prediction. Decades of evidence show that attempts to jump in and out of markets consistently work against investors, not for them.

How to Navigate the Year Ahead

With all this in mind, it can be tempting to adjust your portfolio now, perhaps leaning more “defensive” in anticipation of a potential pullback.

Our guidance hasn’t changed: resist that temptation.

Your portfolio is already built around your long‑term objectives and your capacity to handle temporary declines. Adjusting based on short‑term feelings or forecasts isn’t planning, it’s speculation.

A more constructive step is simply ensuring you have enough cash set aside for any known short‑term needs. That buffer prevents you from having to sell investments at the wrong moment. Beyond that, your long‑term investments should remain just that - long‑term.

One of the quirks of good financial planning is that it often looks like inactivity. Those who understand this tend to find comfort in it.

Looking Ahead with Perspective

Whether 2026 delivers another year of gains or throws in a period of turbulence, your long‑term trajectory remains unchanged. Market declines have always been temporary. The long‑term progress of the world’s most successful companies has not been.

Your job isn’t to forecast the next twist in the market cycle - it’s to stay invested through whatever comes. The volatility of 2025 reinforced that this approach works.

We continue to have strong conviction in the long‑term wealth‑building power of owning shares in leading global businesses. These companies will keep innovating, adapting, and growing, regardless of whatever headlines dominate the moment.

We’ve likely touched on much of this during your annual review, but when volatility inevitably reappears, we’ll be here to reinforce the message and help you stay grounded.