“We choose to go to the Moon in this decade and do the other things,” said US President John F. Kennedy in his famous 1962 speech, “not because they are easy, but because they are hard.” Markets seemed to heed this advice during 2025, performing well not despite the challenges, but because of them. Trade wars, armed conflict, extreme weather – the headwinds were real. Yet markets found ways to succeed. Trade shocks became temporary dips. AI’s unpredictability fuelled industry performance. Let us distill the lessons from this remarkable year.
The rand renaissance
Few predicted South Africa’s currency would strengthen by 12% against the US dollar in 2025. The catalyst? Multiple variables matter more than any single headline. Yes, precious metals rallied. But equally important was the government’s medium-term budget statement, which landed better than expected.
The lesson is straightforward but often forgotten: single-factor analysis fails. Markets are complex systems where multiple forces interact. Those who waited for perfect clarity missed significant gains. Those who recognised improving fundamentals despite imperfect headlines were rewarded.
Principles over predictions
As we enter 2026, it is tempting to extrapolate 2025’s trends indefinitely. History suggests caution. What endures are principles: quality businesses with sustainable competitive advantages outperform over time. Diversification provides resilience when shocks arrive. Valuation matters. Temperament trumps intelligence.
The markets of 2025 succeeded not despite the challenges but, in Kennedy’s words, because they were hard. Those difficulties forced investors to think carefully about where genuine value resided. They punished complacency and rewarded preparation. At Melville Douglas, we approach 2026 with the same philosophy that served our clients well through 2025’s turbulence: buying quality businesses at sensible valuations, maintaining appropriate diversification, and keeping a long-term perspective even when headlines scream for action.
If you have questions about how your portfolio is positioned for the year ahead, please reach out to your portfolio manager.