The Peace River Team at Morgan Stanley

The fourth quarter closed out a year defined more by shifting expectations than by singular outcomes. Inflation data moved unevenly, interest-rate expectations were repriced more than once, and markets continued to digest the implications of rapid innovation alongside persistent geopolitical and policy uncertainty. As always, prices reflected not just what occurred, but how investors interpreted what might come next.

Several developments stood out over the quarter. Central banks signaled growing openness to future rate cuts after a prolonged period of restraint. Market performance became increasingly concentrated, with a narrow group of large, innovation-driven companies accounting for a meaningful share of equity returns. Global events—including ongoing conflicts and election-year rhetoric—periodically drove short bursts of volatility. Each of these influenced prices in the moment, but none altered the underlying structure investors ultimately depend on.
As is often the case, markets responded less to what happened than to how investors believed those events would shape the future. And that shift—from reviewing results to predicting what comes next—is where the financial world reliably pivots each December.

Every December the financial world gears up for “forecast season.” Strategists, pundits, newsletter writers, podcasters, and self-anointed market prophets publish their lists of predictions for the coming year—Wall Street produces forecasts the way children leave out glasses of milk for Santa: far more than anyone could possibly consume. And like those glasses of milk, most don’t age particularly well. These outlooks appear everywhere, each one wrapped in confidence and numerical precision that belies how little anyone truly controls.
The flaw in these forecasts isn’t a lack of intelligence or effort—it’s the nature of markets themselves. Markets move on expectations about the future, and the future refuses to sit still. To forecast an entire year with real accuracy would require anticipating inflation, interest rates, labor markets, productivity, consumer behavior, earnings, regulation, geopolitics, supply chains, innovation, and sentiment—then correctly predicting how millions of people will react to whatever surprises emerge. History has been clear on how that usually ends.

What mattered over the past year, and what continues to matter heading into 2026, is far more grounded. How portfolios are built. How they remain aligned with the market that actually exists. How discipline is maintained as conditions evolve. We made adjustments during the year, but those changes were deliberate and rooted in process, not reactions to headlines. Prediction is obsessed with the waves; process builds the vessel.

The waters are always moving—that’s normal—but movement isn’t a reason to abandon a well-built vessel; it’s the reason we’re in it in the first place.
As we enter the new year, our commitment remains unchanged. We stay disciplined in how we build portfolios and deliberate in how we adjust them. We stay anchored to structure rather than speculation, and to quality rather than narrative. The goal isn’t to predict what 2026 will bring. It’s to make sure your portfolio is built to carry you through whatever it does bring.

So as forecasts continue to circulate—some still fresh, many already warming on the counter—remember that you don’t need certainty to succeed. You need perspective, patience, and a plan built to withstand the unexpected. If a prediction rattles you, call us. If one excites you, call us. If one seems perfectly reasonable, that’s often the best time to call us.

After all, forecast season passes quickly. Process is what lasts.

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