From 2025’s lessons to 2026’s opportunities

Markets can be unpredictable and often defy expectations - and 2025 was no different. Political upheaval, tariffs, and recession warnings dominated headlines last year. Yet despite the doom and gloom, markets soared to new highs, reinforcing the value of staying disciplined, diversified, and focused on the long-term. In this article, we recap 2025 by the numbers and three top investing lessons to help you navigate opportunities in 2026.

A tongue twister, but it’s true! Political uncertainty dominated 2025. From U.S. President Donald Trump's inauguration, relentless tariff announcements, the longest government shutdown in U.S. history, and a snap election right here in Canada, the year was packed with political drama. If you were looking for a reason to not invest, the political headlines built up a wall of worry that offered plenty (Figure 1).

This wall of worry didn't stop markets—they climbed over it. So why the disconnect? Markets tend to react quickly to perceived worst-case scenarios, but as we saw repeatedly in 2025, reality rarely matched the drama of the headlines. Policy changes often take time, get watered down, or never materialize at all. Investors who waited for the political "all-clear" signal sat on the sidelines while markets marched higher. The most profitable decision for investors wasn’t about politics—it was about staying invested for the long term and not letting political turmoil derail their portfolio.

Canadian markets aren't known for grabbing attention. We often fly under the radar, delivering results in quiet fashion—no surprise there, eh? It's easy to overlook what's happening in your own backyard when headlines keep directing attention south of the border. But as we learned in 2025, the top markets aren’t always the loudest. Canada delivered one of its best performances in decades, reminding us that investment gains don't always require a border crossing—sometimes the best ones are closer than you think.

And it wasn’t just Canada. Markets across the globe posted strong gains (see Figure 2). Opportunity showed up across different markets, and the key was being positioned to benefit. No one knows where the next winner will come from, but being globally diversified means you're already positioned to take advantage no matter where it emerges.

Figure 2: A world of opportunity

If you were invested in Scotia Portfolio Solutions, you would’ve captured the global upside we saw in 2025— and it’s designed to help you stay positioned for future opportunities. Diversification and professional management, all in one solution.

From the very beginning of 2025, economists said a recession was inevitable. The reasons piled up: stalled economic growth, escalating geopolitical conflicts, mounting job losses, and an AI bubble ready to burst—to name a few. And yet, markets proved resilient.

Nowhere were predictions more rampant—or panic more intense—than “Liberation Day” in April. When the Trump administration announced sweeping tariffs, markets didn't just dip, they plunged. The U.S. saw its sharpest two-day drop since the throes of the COVID-19 pandemic in March 2020, falling over 10%. It felt like the long-awaited recession had finally shown up. Investors who'd been nervously watching the headlines got their confirmation—time to sell and get out. But then? Not even one week later, everything flipped. A tariff pause sparked a nearly 10% single-day rally, one of the swiftest and strongest market recoveries since the financial crisis in 2008. The investors who panic-sold to cut losses? They missed the rebound.

Figure 3: The difference of a day

Trying to predict the perfect moment to jump in or out of the market sounds smart in theory. But 2025 showed why it's nearly impossible to pull off—even most experts don’t get it right. The winning strategy usually isn’t guessing what comes next, but rather staying disciplined and invested.

If 2025 taught us anything, it's that the principles of smart investing remain constant even when markets feel anything but. Political uncertainty tested our patience, global markets challenged our assumptions, and discipline proved to outweigh prediction. As we look toward 2026, these lessons aren't just a reflection on the past year—they're a roadmap forward.

• Portfolios persist past politics. Don't let political noise derail your plan. Fundamentals matter more than rhetoric, and policy outcomes are rarely as extreme as the headlines suggest.
• Opportunity knows no borders. The globe’s round—if you only look at one side, you’re missing half of it. A diversified portfolio can help ensure you're ready to catch the next winner, wherever it emerges.
• Discipline beats prediction. Time in the market matters more than timing the market. Staying invested is how you capture growth.

Uncertainty is normal, but navigating it doesn't have to be overwhelming. Your Scotiabank advisor can help you review your plan, stress-test your strategy, and make sure you're positioned for whatever 2026 brings.