Market Outlook: Small/Mid Caps, Global Equities, and Bond Opportunities with Brian Belski

Market Transition and Broadening Growth

• 📈 The market is transitioning from a momentum and multiple-driven upside, seen since Q4 2020, to an earnings-driven environment.
• 💡 While earnings-driven markets are positive, they are historically less explosive than momentum-driven ones.
• 🎯 A broadening out of the market to include more small and mid-cap stocks is seen as positive for the long-term breadth of the secular bull market.

Global Equity Performance and Currency Shifts

• 🌍 In 2025, a snapback is expected for global markets, driven by a reduction in political fear in the US and currency fluctuations.
• 💰 Europe and some emerging markets presented an attractive value proposition, with Canada showing significant outperformance in 2025, largely due to gold and its banking sector.
• 📊 For 2026, a more balanced performance across all markets is anticipated, requiring fundamental growth in emerging markets and Europe beyond just materials and energy.

Investment Strategy for 401(k)s

• 🔑 Investors are advised to remain longer-term invested and avoid trying to time the market, as missing the best days significantly impacts compound annual growth rates.
• 📊 A recommendation is made to broaden holdings within 401(k)s to include more value, small/mid-cap, and dividend growth stocks, while maintaining some exposure to equal-weight tech.
• ⚠️ It is advised not to run away from US stocks based on fear or political rhetoric.

Bond Market Opportunities

• 🏛️ Bonds are considered an important part of a longer-term portfolio and have been a somewhat forgotten asset class.
• 🎯 The 3.50% to 4.50% yield range for bonds is seen as an area to own bonds, representing a return to more normal market conditions seen over the last 30 years.
• 💰 Taking on credit risk above current Treasury yields is not explicitly recommended, but the bond market itself is viewed favorably within its historical range.