There are periods in markets when everything feels orderly. Trends extend, volatility is contained, and investors begin to assume that tomorrow will look much like yesterday. Then there are periods of transition.

2026 feels like the latter. Not dramatic or apocalyptic, but rather transitional. The underlying mechanics of the global system are shifting. Financial assets remain large relative to tangible wealth. Real yields, while off their extremes, are still historically compressed. Governments are more active than they have been in decades, using fiscal policy, industrial strategy and monetary tools in ways that shape capital flows directly. That backdrop does not demand fear. It demands thoughtfulness.

If we strip away the headlines and look at what actually drives markets, we can construct a positioning framework that is grounded in structure rather than noise.

Start With the Drivers That Actually Matter

At its core, every asset price reflects growth, inflation, risk premiums and discount rates. These forces determine what future cash flows look like, how much investors are willing to pay for them, and how those future earnings are valued today.

In 2026, none of these drivers are settled. Growth is moderating, but not collapsing. Inflation has cooled from its peaks, yet remains structurally firmer than it was in the disinflationary decade that preceded the pandemic. Discount rates are no longer in a steady downward glide path. Risk premiums in certain sectors appear tight, while in others they are pricing in far more pessimism than fundamentals justify.

That combination means the simple playbook of the 2010s no longer applies. Buying long-duration growth and relying on falling yields to expand multiples was a powerful strategy in a world of declining rates and abundant liquidity. Today, balance matters more than leverage to one macro outcome.

Avoid the Hidden Macro Bet

Many portfolios appear diversified on the surface but are, in reality, highly exposed to a single macro regime. They are implicitly positioned for disinflation, falling interest rates, stable geopolitics and a dominant US dollar. That environment delivered strong returns for more than a decade, so it is understandable that capital gravitated toward it.

But the world has changed. We now operate in a regime where nominal growth may be higher, inflation can re-emerge intermittently, currencies can realign and governments are more willing to intervene in markets. That does not invalidate equities. It simply means equity selection must reflect these possibilities rather than assume a return to the prior decade’s stability.

The equity market is not a monolith. It is a mosaic of businesses, each exposed differently to growth, inflation and policy dynamics. Our task is to understand those exposures and construct a portfolio that does not rely on one narrow outcome.

Real Cash Flow Matters Again

When financial assets expand more quickly than real underlying wealth, valuation becomes vulnerable. In such environments, the distinction between companies generating cash today and those promising cash far into the future becomes critical.

We are inclined toward businesses with tangible pricing power and durable demand. Companies tied to infrastructure, energy systems, supply chains and industrial capacity sit closer to real economic activity. They produce goods and services that remain necessary regardless of monetary conditions.

This does not mean innovation is irrelevant. On the contrary, technological leadership remains a powerful driver of long-term returns. But in 2026, growth must be supported by earnings and cash flow, not simply by expanding multiples. When money is no longer free, discipline reasserts itself.

Geographic Diversification Is a Risk Tool

For much of the past fifteen years, global equity exposure became synonymous with US exposure. The concentration was rewarded, and understandably so. Yet history cautions against extrapolating dominance indefinitely. Across the last century, even major powers experienced wealth destruction during certain phases of the broader capital cycle. Survivorship bias can make recent decades look permanent. They are not.

Today, structural divergence is visible. The United States remains innovation-driven but fiscally stretched. Europe is slower growing yet industrially undervalued in places. Japan is emerging from decades of deflation with improving corporate governance and capital discipline. Select emerging markets are benefitting from supply chain reconfiguration and resource leverage.

Diversifying across political systems, currencies and industrial bases is not about diluting conviction. It is about reducing structural fragility.

Think Carefully About Currency Risk

When real yields are low and governments rely on monetary flexibility to manage debt burdens, currency risk becomes a central consideration. Cash may feel safe, but it is ultimately an exposure to policy decisions.

Equities can provide partial insulation, particularly when companies generate global revenues and have the ability to pass through cost increases. Businesses anchored in real assets or essential services often fare better during periods of currency adjustment than those whose value rests purely on financial engineering.

In an environment where money itself can be devalued, ownership of productive, real-world assets becomes increasingly important.

The 60/40 Assumption Is No Longer Sacred

The traditional balance between stocks and bonds thrived in a world of steadily declining interest rates. Bonds acted as ballast when equities fell, and the negative correlation between the two became widely accepted.

In a regime of structurally lower real yields and higher inflation volatility, that relationship cannot be assumed. Bonds may still play a role, but equity selection carries greater responsibility. Within equities, diversification must occur across business models, capital intensity, geographic exposure and sensitivity to macro drivers.

The objective is to create internal balance, so that different segments of the portfolio respond differently as growth, inflation and discount rates evolve.

Redefine Risk

Volatility is uncomfortable, but it is not the most important measure of risk. True risk lies in failing to preserve purchasing power, in building portfolios overly dependent on one narrative, or in being forced into reactive decisions during periods of stress.

As macro conditions shift, dispersion between sectors and regions is likely to increase. That dispersion creates opportunity for active investors willing to look beyond index weightings and assess businesses individually.

In transitional periods, patience and selectivity tend to matter more than speed.

Position for Structural Capital Cycles

Periods of economic transition often coincide with significant capital reallocation. Industrial policy has returned. Energy security is a priority. Defence budgets are expanding. Supply chains are being reconfigured. Digital infrastructure continues to scale.

These forces underpin multi-year investment cycles rather than short-lived trends. Companies positioned at the intersection of capital expenditure, technological enablement and infrastructure renewal stand to benefit as governments and corporations deploy capital in pursuit of resilience and competitiveness.

Such opportunities are not speculative. They are rooted in tangible spending commitments and strategic necessity.

Policy Friction Is Real

History also reminds us that high debt levels and widening wealth gaps often provoke policy responses. Taxation, regulation and intervention tend to rise during late-cycle phases. We do not assume extreme outcomes, but we recognise that political and regulatory considerations are increasingly relevant to equity investing. Jurisdictional exposure, governance standards and balance sheet strength deserve attention alongside earnings growth.

Resilience is rarely accidental; it is built into the structure of the portfolio.

How We Are Positioned for 2026

Our approach to 2026 reflects a commitment to balance. We favour businesses generating sustainable cash flow and possessing durable competitive advantages. We diversify geographically rather than relying on a single dominant market. We maintain exposure to structural capital cycles in infrastructure, energy and industrial capacity, while remaining selective in innovation where valuation aligns with earnings power.

We are not bearish equities. Global shares remain one of the most effective long-term vehicles for wealth creation. But we are cautious about complacency and attentive to the structural realities shaping returns.

The TAMIM Takeaway

2026 is not a year for dramatic predictions. It is a year for disciplined construction.

When financial assets are elevated relative to tangible wealth, when governments are active participants in markets and when growth and inflation dynamics are shifting, portfolios should be built with intention rather than assumption.

The objective is not to forecast the precise turning point of a cycle. It is to own businesses capable of compounding capital across multiple environments. In transitional periods, strength lies in balance.