Picture supply: Getty Photos
Coming into 2025, there have been good causes to be nervous about what would possibly occur within the inventory market.
We’ve definitely seen some bumps alongside the best way this yr, together with a inventory market correction in April following sudden shifts in US tariff coverage.
However up to now, 2025 has seen the inventory market carry out strongly.
The FTSE 100 has repeatedly hit new all-times highs. It’s up 17% up to now this yr.
Stateside, the S&P 500 is up by the identical quantity – and final week broke its all-time file stage.
Can that momentum keep on into 2026?
An unsure reckoning
I feel it might probably do. Whether or not it’ll, nonetheless, stays to be seen.
Which may sound like I’m sitting on the fence. However I feel there’s a justifiable argument on either side of that fence.
The concept of additional positive factors could make sense given what we now have seen this yr – sturdy inventory market efficiency even inside the context of a reasonably modest financial efficiency total.
If 2026 sees key economies just like the US return to sturdy progress, that might give the inventory market additional impetus, for my part.
From a glass half empty perspective although, maybe that sturdy inventory market efficiency this yr unaccompanied by a equally sturdy financial efficiency might imply that the market’s valuation is getting more durable to justify.
Added to that’s the threat that the massive AI-related growth we now have seen in some main shares this yr is solely unsustainable.
Searching for particular person bargains
Time will inform.
To some extent, what occurs to the broader market just isn’t crucial for me anyway, as I’m not investing available in the market as a complete.
Relatively than, say, placing cash into an index tracker fund, I choose on strategy primarily based on proudly owning a suitably diversified portfolio of particular person shares.
Why do I like this strategy of shopping for particular person shares?
Shopping for particular person shares lets me try to filter out what I see as unhealthy shares that may exert a downward drag on the efficiency of the market total.
As a substitute, I can concentrate on conditions the place I see a mismatch between what I feel is an excellent enterprise and the way the inventory market at the moment values it.
Down 47%, however I prefer it!
For example, one share I’ve been shopping for repeatedly this yr is Lululemon Athletica (NASDAQ: LULU).
Its shares jumped on the finish of final week on information that the chief government will step down.
When a share jumps as a result of the boss goes to depart, that’s usually an indication of shareholder frustration (and aid)! Even after that soar although, the Lululemon share value remains to be 47% decrease than it was in the beginning of the yr.
That displays weakening gross sales within the firm’s key North American market. Rising competitors from rivals like Alo and the specter of falling disposable incomes imply the dear yoga outfit maker must type out its North American efficiency as quickly as potential.
However its international enterprise is rising quick — and has tons extra progress alternatives. The Lululemon model stays sturdy and offers the corporate a variety of pricing energy.
From a long-term perspective, I see its present inventory market valuation as a possible cut price.
