January 11, 2026

  • How Did Markets Perform In 2025?

    This is the time of year when many investors look back at 2025 and ask, ‘How did the markets do?’ It is not just about what made or lost money, but how each asset performed relative to the others.

    Studying past performance is interesting, but it is not always helpful for deciding what to do next. This post looks at how 2025’s returns set the stage for 2026.

    Because 2026 is a midterm election year, market performance is likely to matter even more to the party in power. With that said, the market is not the economy. Asset class performance reflects diverse economic forces (risk appetites, rate expectations, foreign growth, government interventions, and real asset demand), all interacting in a complex global backdrop.

    Before thinking about what comes next, it helps to look back at how we got here.

    A Look at Recent History

    2022 was the worst year for the U.S. stock market since the 2008 financial crisis.

    2023 was much better, but most of the gains came from a handful of highly concentrated sectors.  

    2024 saw nearly every sector post gains – driven primarily by AI enthusiasm and a robust U.S. economy. Bitcoin surged to an all-time high, and Gold saw its best performance in 14 years. On the other hand, bonds suffered amid reflationary concerns and fears of a growing deficit.

    For 2025, I predicted a bullish year (driven by AI), but expected more volatility and noise. That is what we got and what we wrote about in the post: The Seven Giants Carrying the Market: What the S&P 493 Tells Us About The Future.

    So, looking back, how did markets actually perform in 2025? Here is a table showing global returns by asset class.

    A Global Look at 2025: Slowing, But Strong

    Table showing 2025 total returns across global asset classes, with silver and gold leading and crypto negative

    At a high level, 2025 was a year of solid gains, with diversification paying off: metals and international markets led, while crypto lagged.

    Here is a closer look at asset class performance (based on total return figures through the end of 2025):

    • Silver (+145.88%) and Gold (+64.33%) dominated returns, a rare year where precious metals outperformed traditional equities.
    • International equities surged, with the MSCI Emerging Markets Index (+33.57%) and MSCI World ex-USA Index (+31.85%) outpacing U.S. benchmarks.
    • U.S. major indices such as the Nasdaq 100 (+21.24%) and S&P 500 (+17.88%) remained strong.
    • Smaller U.S. stocks and value segments delivered respectable but more modest gains.
    • Fixed income and bonds produced positive but lower returns.
    • Cryptocurrencies — Bitcoin and Ethereum — ended the year with negative performance, illustrating ongoing volatility in digital assets.

    This split suggests that 2025 became a year of diversification returns, with non-U.S. equities and metals playing a larger role than in recent U.S. market-centric rallies.

    Diving Deeper Into Business Performance

    via visualcapitalist

    One of the most striking themes in U.S. equities throughout 2025 was the pronounced divergence in performance across sectors and stocks, as illustrated by VisualCapitalist’s winners-and-losers visualization.

    Unsurprisingly, AI and data infrastructure companies were among the biggest winners of the year.

    Continuing the trend from our broader perspective, precious metal producers also saw gains, reflecting a wider appetite for inflation hedges and geopolitical safe havens.

    Meanwhile, real estate investment trusts (REITs) struggled amid elevated borrowing costs and high yields, which made alternative income assets more attractive. Non-AI software companies and oil & gas stocks also underperformed.

    In Closing

    None of this guarantees how 2026 will play out. It does suggest a few things to watch: whether the strength in metals persists, whether international markets can build on their leadership, and whether crypto’s drawdown turns into a reset or a renewed rally. It also reinforces a familiar lesson: diversified, rules‑based portfolios can thrive even when leadership rotates (did you read last week’s article?)

    On one level, a systematic, algorithmic approach means not spending too much time trying to predict markets. On another, it is hard not to think about what might come next — especially as AI becomes more influential and pervasive.

    What do you expect for 2026? Will cryptocurrencies recover, or will they continue to shake out? Will AI keep booming at this pace or begin to normalize? And which sectors do you believe have the potential for the biggest surprises?

    Onwards!

  • A Deeper Look At Oil Reserves

    Last week, we took a look at oil reserves amid Venezuela-related headlines. However, knowing where oil reserves are isn’t enough to understand the entire picture.

    When the U.S. recently eased sanctions on Venezuela, headlines touted the country’s 300 billion barrels of proven reserves — the world’s largest. But here’s the paradox: Venezuela produces less than 1% of the global oil supply. What explains the gap between paper wealth and market irrelevance?

    The short answer is, in 2026’s energy landscape, not all barrels are created equal.

    Why Reserves Data Misleads

    To understand why those headlines can mislead, it helps to look at how the market actually prices different types of crude.

    For investors, reserves are table stakes; the edge lies in understanding which barrels can become durable cash flows. To see why, it helps to start with how the market actually prices crude. For example, oil benchmarks are determined by API gravity (which measures crude density relative to water) and sulfur content.

    While Venezuela holds the world’s largest reserves, most of its crude is heavy and sour(high-sulfur), making it more expensive to extract and refine than the light, sweet benchmarks that command premium prices.

    Below is a chart showing Oil Benchmarks Around the World. It maps major oil benchmarks by API gravity and sulfur content, highlighting how far Venezuela and Canada sit from the lighter, sweeter crudes that anchor pricing.

    via visualcapitalist

    This chart highlights an important reason why the Middle East still has such dominance in the industry. For contrast, Saudi Arabia, with half Venezuela’s reserves, produces 12x more oil daily.

    Venezuela’s Production Collapse

    Venezuela is unique among producers, boasting over 300 billion barrels in proven reserves and a reserves-to-production ratio of more than 800 years. It’s the highest in the world by a large margin.

    That 800-year figure is a mathematical ratio, not a forecast. It ignores the politics, capital constraints, and shifting demand that will determine whether this oil ever reaches the market.

    Put differently, a sky-high reserves‑to‑production number can signal untapped potential or reflect deep structural constraints that paralyze monetization.

    In the 1970s, Venezuela’s oil production reached approximately 3.5 million barrels daily, accounting for over 7% of the world’s oil output. Since then, production has fallen drastically due to underinvestment, deteriorating infrastructure, and geopolitical factors such as sanctions. Currently, Venezuela produces approximately 1 million barrels per day, which is roughly 1% of the global supply.

    Who Can Actually Produce

    Venezuela’s predicament is a lesson in the difference between resource endowment and resource power.

    For investors and operators, the real signal isn’t who has the most reserves, but who can turn underground barrels into reliable cash flows at competitive costs.

    Here is a chart showing the Oil Production & Reserves of the Top 25 Producers.

    via visualcapitalist

    The United States leads the list of global oil producers, pumping more than 20 million barrels per day. It also has machinery focused on heavier crude.

    With its heavy-crude infrastructure and capital depth, the U.S. may play an outsized role in shaping how Venezuelan reserves are monetized in the years ahead.

    The Bigger Picture

    All of this is happening against the backdrop of an uneven energy transition: EV adoption, non-OPEC supply growth, and shifting alliances are redefining which barrels matter.

    Venezuela’s position serves as a reminder that, in a world gradually decarbonizing, we still remain heavily reliant on oil. As a result, not all crude – or all producers – will be valued equally.

    In an era of shifting energy demand, these contrasts underscore how resource endowment and production capacity can tell very different stories, and why future energy security and market dynamics will depend not just on what lies beneath the ground, but on who has the ability (and political will) to bring it to market.

  • Here Are Some Links For Your Weekly Reading – January 11th, 2026

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