Year end letter 2025, and 2026 Forecast

2025 is not over, and I am reflecting on what happened in the previous eleven months. It is clear that investors have numerous opportunities to continue creating wealth. All the noise and fears presented by the media circus aim to divert you, as an investor, from fundamental research toward clickbait distractions, should be ignored.

‘The best investment opportunities often exist where people are not looking, and the media and Facebook won't help find good ideas.

The top two ideas that I am seeing are commodities leading over equities in 2026, followed by yield steepening (lower short-term rates, accompanied by higher long-term rates).

That's very beneficial for banks and financial institutions, as well as for material companies.

(Reference: Refintiv data subscription 12/25)

Regardless of what leads in 2026, trillions of dollars are still parked in domestic Money Markets(Reference: FRED.com Money Market balances 7.4Trillion Q2 2025), with a significant portion of retail investors concerned about the country's direction and skeptical that any progress in 2025 was genuine.

This untapped gold mine is a boon for us! I mentioned it in September: short-term rates fall, investors seek better returns, which could boost Equities, Bonds, Commodities, Real Estate, Venture Capital, and more. A cringeworthy statement, even crypto coin Investors may benefit.

No surprise, 2026, like 2025, is not going to be a relaxing day on the beach. It will be more like the pu-pu platter at a Chinese restaurant; someone will eat all the jerk beef and spareribs, leaving only some unwanted crab rangoon.

No one wants the rangoon, why is it even there?!

A more distinct and poignant statement would be to articulate that very few equity strategies, both domestically and globally, are historically cheap. We are bouncing off multi-decade highs in terms of earnings growth and other fundamental metrics.

We could continue at this level of growth for a while, largely due to the elevated expectations resulting from massive corporate expansion into Artificial Intelligence.

Over a trillion dollars have been spent in 2025 on Artificial Intelligence(Reference: WSJ print edition). Big winners include OpenAI’s ChatGPT, Google’s Gemini, Anthropic’s Claude, and other startups. Money will continue to flow into the new AI revolution, and corporate debt will be issued to build these massive data centers at an extraordinary cost. Personally, I am excited for what it brings us as consumers. The Investment opportunities are real, and still not totally priced in, especially the expansion of land, materials, computer chips, and effort into designing these massive complexes.

On a fun flashback note, as I began thinking what to say for the year-end letter, the WSJ broke the news of the Netflix/Time Warner merger.

I had a good laugh!

In 2000, AOL merged with Time Warner for an earth-shattering $ 360 billion (inflation-adjusted). In 2003, the company was broken up for a monopoly, and AOL was disintegrated into oblivion by Yahoo and up-and-coming Google.

Now, 25 years later, Time Warner is being acquired by Netflix for a mere $72 billion. An 81% devaluation over twenty-five years. Jokingly, if a board member from Time Warner offers you advice on how to grow a company, I would politely decline and say 'No, thank you.'

I hope you all enjoy Christmas and the holiday season.

Talk soon,

Chris

Christopher R Lakian

Owner, Portfolio Manager, AIF

Magnetic North Financial LLC

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