By Craig McAvinue – 6 January, 2026
A movement that changes both people and institutions is a revolution
December and 2025 draw to a close and positive numbers across the major markets remain..
Also consistent with the pattern for 2025, the US dollar lost a little ground against some other major currencies, leading to a negative year for the greenback.
Data from Google Finance
So 2025 marks the hat trick for the S&P 500 in terms of ending deep into positive double digit returns. Whilst 2025 gains were down in comparison to the previous two years, the combined gain of 86% since 1 January 2023 represents the 6th best winning streak in the last 100 years.
Across the Pacific Ocean in Japan, Asia’s largest developed economy we also saw a similar pattern. The third year of gains and the three year total returns on the Nikkei very similar to the S&P
Despite seeing positivity across the lion’s share of global markets in 2025, Asian markets edged out their European counterparts. India and Vietnam’ market also had very strong years thanks to greater foreign investment and political stability encouraging this.
The best performing market though was Taiwan with a 35% gain in the last 12 months.
In previous blogs I have talked at length about the density of gains in these current markets and nowhere illustrates this more so than Taiwan. 65% of the Taiwanese market is centred around one industry – the semiconductor.
Known as the “Brains of all modern electronics”, the microchips that are an integral part of this sector have been a key driver in AI. Being labelled a revolution, it fits a familiar pattern we’ve seen a few times before: a general-purpose technology that quietly starts in infrastructure, then explodes economically once it becomes usable at scale.
Other “revolutions” that have been compared have been mobile which started around 2007 and its closest analogy, the internet which started to become usable at scale from the mid 90s.
More deeper comparisons from days gone by include the railways and electricity.
Lessons were learned from all of these technological advances in terms of overinflated valuations where the markets got carried away. One that most will remember is the dot com bubble that burst in 2000. It’s quite frightening to most of us who clearly remember the countdown and excitement around a new millennium and century that the first quarter of that century is now over…..time does fly.
Inevitably there will be many comparisons between what is happening now with AI and the dot com bubble a quarter of a century earlier. Whilst caution must always be taken with these high market prices, there are core structural differences with this latest round of fast moving technological advances.
Back in 2000 many of the companies creating the bubble were not established, often without profit of cash flow and sometimes without revenue. Initial Public Offerings (“IPO’s) were much easier to list on mainstream markets and pure speculation created fake valuations.
Today the AI gains are in the hands of companies with massive revenues, strong margins and with a ready to go customer base.
So whilst the overview of 2025 (and indeed the last three years) looks very positive from afar, we do have to keep in mind that 80% of gains in the US came from this one area. The overall economic picture may not be as rosy. Consumer driven businesses are down, inflation is still a little too high for comfort and wages not keeping up with inflation in many parts of the world signal difficult times for many.
So as we head into 2026, the cliched but correct mantra about not holding all your “eggs in one basket” does need to be considered given that any adjustments will most certainly hit the AI basket harder….
Happy New Year
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