Happy Christmas and a look ahead

In this last blog for 2025, I look back at what has been an amazing year for investors, albeit with a massive Trumpian Tariff Wobble in March and some Budget Panic in October and November.

A very broad collection of some 1,330 global shares (as measured by the confusingly named MSCI World Index) has gone up by about 20% this year. Yowzers. One runaway success has been a blistering performance of the US market, and the partridge on this pear tree has been AI.

Here comes Santa???

Market watchers will be wondering if we’ll have a Santa Rally this Christmas. This is the phenomenon that sees stock markets rise over the last five trading days of December and the first two trading days of January. If we look back about 75 years, the main US market has risen 8 times in 10 over this period.

No one quite knows why – the usual reasons bandied around are traders investing Christmas bonuses (why did I never work in one of these places!?) or investment managers ‘pimping their ride’ before year end (selling any losers to offset any tax payable on gains whilst buying winners before performance is calculated for the year). Or is it just that people feel a bit jollier and optimistic about the world, so buy into markets (“AI’s amazing, we’re all going to be rich and young and happy and just watch fake videos of funny cats all day”) before the January gloom makes them feel that we’re going to hell in a handcart and sell, sell, sell?

What does 2026 have in store?

Like everyone, I can see that things are sky high and nothing goes up forever. There will be a correction at some point – but nobody knows when.

Some think we are due a whopper because we were shielded from the true financial impact of Covid, and this has not yet fully washed through. How? Central banks slashed interest rates and sloshed loads of money into the system, buying Government bonds (which is effectively lending Governments money). This stabilised markets, which were close to a full-on meltdown. This sloshing money into the systems and lending Governments money is known as quantitative easing.

When interest rates are low on cash, and so we make less in interest, we have more appetite for riskier stuff, which might make us more (shares, so stock markets typically have a lovely time.

This makes sense, right? If your mate will give you £1 interest on a loan of a fiver, you’re more likely to lend it to him than if he offers you 5p. If you’d only get 5p you’re more likely to say, “Oh, OK, what the hell, I’ll invest it instead”. This is the impact of quantitative easing.

It arguably masks what’s going on and keeps share prices artificially high. So things haven’t really had the chance to auto-correct after the impact of COVID.

OK, OK but what to do?

Timing the market is an impossible game. I know this. However, it’s been a blockbuster year, so I plan to take some profits. Just sell a small amount and get a bit in cash in case things head south.

Outside of my nice ISAs and pensions, which keep tax low, I will put a bit of money into boring old short-term Government gilts. Where gains are free from capital gains tax. So if markets fall, I can remain calm and buy more shares just when every tabloid is screeching about Armageddon and markets are super cheap.

At the same time, I still have a small monthly direct debit which chips away little and often into my ISA, smoothing out the price at which I buy into markets. This just keeps going even if the world is wobbling and the aliens are invading – drip drip drip into the ISA.

As always, the answer to your own individual questions depends on your own timeframes and whether you need cash in the short-term. If you don’t, and you have long timeframes, then there is no need to do anything.

And so finally…

If you have enjoyed what we do this year or learned from it, please do leave us a Trustpilot review, if so inclined. It helps to spread the word and build our audience. We’re also keen to get more reviews of your pension through work or your investment platform, before we kick off our 2026 Best Buys process in January.

Thank you to all our amazing Boring Money readers for tuning in this year. On behalf of the whole Boring Money team, I wish you and your families a happy, healthy Christmas! We’ll see you back in January with tips and ideas on making more of your money in 2026.

Holly