Unhedged: Markets had an incredible year. Can that continue?

It's the most wonderful time of the year, folks, when investment banks and asset managers roll out their big predictions for markets in the year ahead. Are these predictions right? Not necessarily, but trawling through these outlooks is a fantastic way to judge the market mood. Right now, let me tell you, that mood is very warm and fuzzy. In 2025, markets have swatted off a whole range of horrors, tariffs, geopolitical splits, institutional degradation, all the scary stuff.

And that means that now, even with what seems to be a big fat AI bubble inflating in plain sight, investors are feeling pretty good about what markets will deliver next year. Today on the show, we're going to run you through the key calls on Wall Street, where the consensus is, what can go right and, of course, what can go wrong.

This is Unhedged, the markets and finance podcast from the Financial Times and Pushkin. A very warm welcome to new listeners today who are tuning in as part of the FT's Global Boardroom event. I'm Katie Martin, a markets columnist here at the FT in London, and I'm joined by two of my favourite colleagues. In the studio with me, I have FT Markets workhorse, Ian Smith, one of the fine people here who does the hard work of reporting on what markets are up to every day.

And my usual co-pilot, Rob Armstrong, who harvests the organs of all that reporting and pontificates on it from his perch on the Arm Hedge newsletter. I'm going to get a business card. Rob Armstrong, organ harvester.

Organ harvester. So both of you, I think it's kind of important that we pause just for a tiny second here and reflect. on how incredibly resilient markets have been this year. One investor put it to me the other day that if you'd said to her, In April, right, the stock market was absolutely a meltdown. And if you'd said, right, by now, by the end of the year, stocks will be at all-time highs, bonds would be nice and well-behaved, she would have said, come on.

you're bonkers so so i mean let's start with rob like what went right here well i hate to toot my own horn but uh i will invoke Taco here. Trump always chickens out that the that moment in April was a moment when it looked like the president had lost his damn mind And was going to be, it was going to be an absolutely crushing tariff regime. And since then, he has consistently shown willingness to back off whenever tariffs really pinch.

And he's also shown that when other countries negotiate hard with him, he backs down there too, right? Brazil, China, they've mixed it up with him and it's gone okay. So... I think when you look at the market since April, that's the market saying we can live with the president's ill-considered trade policies.

For listeners who may have missed this little Rob Armstrong's 15 minutes of fame earlier this year. How could they have missed this? How could they have missed this? Because it went kind of nuts. Like Rob was the person who coined the taco trade, right? Trump always chickens out. It started off as a lame joke on one of your newsletters and then it became just like canon on Wall Street and then the president was upset about it and there were...

TikTok videos of people singing taco songs. Rob, this is your single greatest contribution to human knowledge, is it not? It's true. And the whole thing has culminated, as regular listeners will know, with Taco the Reindeer. who is the show's mascot, who was bought, one of our colleagues found it on the street. It's a reindeer with a label around her neck saying taco. And that's kind of where it all, for me, that's where the whole thing peaks.

You must be so proud. So Trump does pretty regularly chicken out, Ian. But it's not just that, right, that investors have been... quite positive about this year like the main thing is you just cannot argue with the corporate earnings all the kind of you know chaotic politics aside companies are doing fine

Yeah, earnings, as one investor put it to me a few weeks ago, has been the rocket ship for the stock market. They've just been amazing in terms of that strong performance in the US. It's a good reason why the US, which underperformed Europe at the start of the year, year caught right back up if you look just um uh you know on local currency terms uh i would add that you know the us is still you know behind europe when you kind of look in constant currency terms but yeah this ai

theme in markets has just been absolutely dominant and it's helped stocks come back from that trade shock and it's helped these stocks shrug off worries over valuation because the earnings are coming through and the investment is there. I would also add, if I can interrupt here, as I often do, I would also add that the economic strength has been broader than just the kind of data center boom. There was this idea going around that...

Without all these data centers, the U.S. would not be growing at all. And this turned out to be a mistake to think this. And up until quite recently. Broad-based economic growth in the United States supported the earnings that you and Ian are talking about. That may be slowing down now. We can talk about that. There's sort of some rumblings in the economic picture, but growth has been okay. Yeah, the fears that people had around a recession coming and...

partly from some of the economic disruption from President Trump's own policies, hasn't played out as badly as people worried about. And the inflation that people feared from the tariffs has not come through to the degree that people worried about. So you had those major things that were kind of holding back.

that have dissipated. I think the president now, looking at where things have ended up, stocks are high, but the US dollar has weakened. He's getting some of his interest rate cuts that he wanted. It's playing out in a way that some of...

Some people had really pushed for it at the start of the year. Yeah. Now, one thing I think is really worth underlining here is that, you know, as usual, the US blocks out all of the sun. Nothing else gets much of a look in. But the rest of the world, in terms of stock markets, has been performing incredibly well. Are you going to mention the plucky FTSE 100? I am. With year-to-date performance outstripping the blue chip S&P 500. Nicely put, Ian.

By three percentage points on my number. So if you look at the S&P 500, the big US index, in dollars, got to hand it to them. Good year from the septics. You're up 16% there year to date from America. But if you flip that into euros, if you're a euro-based investor and you've been in the S&P 500 this year, guess what you've made? 3%.

You've got that written down. I looked at it before we came in. It's 3%. So, you know, first of all, Europe just on its own terms has done incredibly well. You look at like stock markets like Spain, which is up, I think, about 45% or something. If you're a dollar-based investor and you've been in Europe all year, you have absolutely killed it. So I absolutely hand it to the States. It's had a fantastic year. But the rest of the world is off to the races. Korea is up.

I'm going to say 50%, something like that. Japan has had a fantastic year. You know, it's not all about the States. Hong Kong, Taiwan, the list goes on. And the FX has been hugely important this year.

Because of the trade policy. So the currency bit really matters. In a way that it hasn't before. So where you're sat is crucial to how you look at this year and how you'll look at next year. And the most interesting story of the year for me, in a way, is coming into everyone thinking the dollar is going to... strengthened because of tariffs, then the dollar dramatically weakens, worse start to the year since the 1970s, because people worry about the...

domestic economic impact of those policies? And is there going to be an exodus out of dollar assets? And then we've kind of seen a stabilisation towards the end of the year, but still the dollar's quite weak for the year and it really has mattered where you sit. While we are on the topic of global stocks, I should mention, though, I was rambling on somewhere about how amazing the results from Asian markets have been. And a young man, listeners.

long-time listeners this show might remember, a guy called Ethan Wu, who's now at some second... Ethan Wu? Yeah, he's now at some second-rate... weekly financial publication we will not name. Formerly of the FT. Formerly of the FT. And he emailed me to point out that the Asian stock markets are very much intertwined with the AI trade. Yeah. chip makers and chip testing companies and chip boundaries and like all the kind of back back

drop electronic equipment that the boom requires. Never mind, Ethan. I've written this myself this year, Rob. You obviously don't read anything that I put out there. No, it is important. The Korean market is... Absolutely jam-packed with semiconductor companies. Like the emerging markets, big EM stocks indices, like 10% of that is in...

TSMC, right, the Taiwanese semiconductor company. Samsung Electronics, SK Hynix, the list goes on. All those guys, yeah. And there's also been some corporate governance reforms in Asian markets. Investors have cheered as well that have helped.

Made a big difference, especially in Korea. Yeah, yeah. But so look, the dollar thing really matters and the rest of the world has done really well. Nonetheless, the US is still the... the global benchmark effectively because it is just so gigantic as an individual market and

From what I can gather from the sort of outlooks that are coming out so far from the banks and from investors, people are feeling very positive about how that's going to perform next year. So Deutsche Bank, for example, Binky Chadder. The U.S. stock strategist is looking for the S&P 500 to be at 8,000 at the end of 2026. It's now at 6,000. We're at 6,843. I'm looking at it right now.

So Deutsche is kind of on the kind of top end there, but like HSBC, JP Morgan are more like 7,500. That's still a good jump from where we are now. You know, people can see that there are some valuations in AI stocks, for example, that look super, super bubbly. But, for example, DWS, the German asset managers, is calling this rational exuberance. You know, it makes sense. It's not irrational. BlackRock is saying, like, bubble framing is not helpful here.

JP Morgan Asset Management is saying there is more fuel in the tank. I could go on. These guys are never wrong. These guys, luckily, never wrong. I will make the case that they are right right now. And I think one I like my bull cases simple. And I think the bull case for next year is simple, which is we're going to have fiscal expansion that we know for sure.

Because the One Big Beautiful Bill Act, it comes into effect and that is going to push money into the economy. Just to pick one example, because the tax part of that bill goes into effect. into effect retroactively to this year, corporate and household tax refunds are going to be much bigger this spring than they were last year. Are you going to get a check in the post? You don't deserve one, Rob. I know. It's true.

So that and that's just one example of this. So I think that is going to happen. We know. And I think in general, we have a administration. That is very powerful and very activist that is rolling towards midterm elections that could make them irrelevant. If they lose control of Congress in the midterm elections.

Which are when, for those of us not in the States? Which are in November. If the president loses control of Congress, he's basically sitting alone in his office for the following two years. Plus Pete Trump. Watching TV. And so they're going to throw. everything at this market and this economy to make sure people are feeling good. I've said this on the show before, and I think that's a very simple case. I think that's Wall Street consensus, and I think it's quite logical. Thank you very much.

Yep, yep, job done. Now, because we are miserable journalists, we have to talk about stuff that can go wrong. The first big one is that this really is a bubble that we're seeing developing in AI. But what cleverer investors say to me right now is, listen, we don't know if this is a bubble. Even if it is a bubble, we don't know when it's going to burst. We could have another month. We could have another year. We could have another five years before this thing goes wrong.

You don't know whether this is a thing that can go wrong, but everybody accepts on some level that there are some frothy elements here. So my expectation would be not that the entire tech sector takes a huge hit. But some of the sort of sketchier projects, some of the more sort of, you know, overly optimistic private equity or venture capital backed things are going to fall over.

next year. There will be little accidents, but I don't think NVIDIA, for example, is going to get zeroed, right? This is a $4 trillion company and it will still be worth something in between, I would guess. three and five trillion dollars next year at a complete off the top of my head guess. So I don't think tech necessarily spectacularly blows up, but everyone accepts that

I think it's time for a few little pullbacks, a few little drawbacks. Someone put it to me like there's going to have to be proof points from AI next year. That's a good way of putting it. And the sense there is that you are going to need some return on some of the capital that's been deployed.

or that either ordinary people are going to have to show that they're willing to pay for this technology, or companies that it is really increasing their productivity in the way that the proponents of the technology have advocated.

I just wonder whether you do need proof points in something that is driven a lot by narrative and hype around particular stocks. You know, you might have some disappointments on projects. Will that stop kind of the broader stock rally? It's not kind of clear to me that it is. What's more convincing to me is that something on the monetary side, and I know we're going to come on to talk about, you know, the threat from inflation potentially, the expectations on the Fed to cut.

If there's going to be something that kind of kicks the legs from underneath the tech rally, you think it might be somewhere around the tightness of money. My project not playing out. Yeah. Yeah. I mean, there are lots of red flags. And so, you know, are we in?

you know the dot-com era or are we somewhere like 1997 where people are starting to get worried about valuations but then they go up for the next few years It's worth remembering that when Alan Greenspan, who was the chair of the Fed, when he talked about irrational exuberance and... evidence of bubbles in markets, that was like years before this thing blew up. So we could be years away from any sort of reckoning here. Exactly.

I think NVIDIA is actually quite scary, not because of any particular feature of its business model or the narrative around it, but instead just because of the number you just mentioned, $4.4 trillion company. Right. So let's say that goes down by 25 percent because somebody else's chips turn out to be good or there's not a proof point or something happens. So now a trillion.

U.S. dollars have sprouted little wings and flapped off to money heaven, never to be seen again. And by the way, every active money manager in the world is overweight that stock. They have to be. So if you're active, which means you're a stock picker, or if you're passive, which means you're tracking an index, doesn't matter. You are still up to your eyes in this thing.

And we're all on the AI train now, you know, is a point we kind of made. But, you know, credit investors more. Now we're seeing some credit issuance coming through linked to the theme. They're asking the same questions about sustainability. A decent proportion of the U.S. economic growth and investment is tied.

up with this now so the worry you would have is if you really start to get a slowing of some of that investment or some surprise on that or you know some external factor that questions that then it has then that knock-on impact for the economic outlook which also hits stocks. You know, that's maybe more the scenario I would worry about, that double effect. Yeah. So with the sort of...

Caveat that we don't know if this is a bubble and if it is, we don't know when it's going to burst. Every investor and banker and analyst that I speak to at the moment accepts on some level that this is a possibility for at some point in the next few years.

That's big risk number one. Big risk number two is the macro, right? So... Everyone is assuming that, you know, hooray, inflation is defeated. Inflation is coming down and there's no need to worry about inflation anymore. So the US Federal Reserve can keep cutting interest rates.

There's just something just tinkling away in the back of my head that says, yeah, but what if? Because it turns out one thing that the economists and investors have been absolutely rubbish at for like the past five years is inflation. The market just keeps calling it wrong over and over and over again. What if it's wrong this time? I mean, like, Rob, to you, how big of a possibility is this? Well, first of all, it's the...

People have been bad at calling inflation for a lot longer than five years, Katie. Yeah, but especially though. I always say this, but I don't think it can be said enough. Inflation is the thing everyone thinks they understand. And they really don't. Because there's always there's all these really simple explanations of what causes inflation, like when there's too much money chasing too few goods. And that sounds like, oh, now I understand.

But it turns out to be a much more complex phenomenon and hard to predict and multifaceted. And we don't really understand why we had the inflation burst that we did a couple of years ago, why it was so big, why it ended so quickly. So it's this. big thing that we don't really have our arms around. But one thing we do know, Katie, is that historically inflationary incidents tend to bunch together.

In other words, they show up in little packs and then they go away for a while. And so you have to at least be open to the possibility that the story on inflation is not over, which... kind of brings us back to the bull case that everyone believes in for next year, which is that it's going to be kind of monetary and fiscal nirvana. A burst of inflation just ruins that whole bull case. Because you can't have the fiscal and monetary stimulus under inflation. It doesn't work. Yeah. And then-

Again, like so Rob and I were speaking to Adam Posen from the Peterson Institute about this just the other day on an earlier podcast. Listeners do check that out if you missed it. But that inflationary risk. is like very, very pronounced in a year when, you know, not to worry anyone or anything, but we do have a changeover at the top of the Fed. So the Federal Reserve Chair Jay Powell, he's due to step aside in May.

He may find another slot inside the Fed somewhere, but kind of not really the point. We're going to have a new chair of the FOMC, which is the Rate Setting Committee at the Fed. Now... It seems likely to me that the Trump administration will seek to appoint someone into that position who's going to be of a mind with Trump about, Trump's always been a low interest rate kind of guy, loves low interest rates.

So there's going to be pressure on this new Fed chair, most likely, to keep interest rates nice and low, keep borrowing costs nice and low, which is all well and good unless you have inflation either really digging its heels in or worse. kicking higher again because at that point you have nowhere to hide right you have probably a stock market that doesn't like that much and you probably have a

bond market that doesn't like that much if the Fed is not willing to tap the brakes on. In that scenario, you have a 2022 style situation where... There are no mainstream assets that are gaining in price and everyone gets completely hosed. This is not my central scenario, but this is a risk that I think people need to take pretty seriously. And it all starts with inflation. As ever.

Yes. And as you say, there's two ways that inflation is bad. One is that the Fed can't cut by the three or four times in terms of quarter percentage point cuts that the market is currently expecting. And then that has that ripple effect for your markets that you guys are talking about. And another is that the new Fed chair leads a pack there that doesn't respond to it.

in a way that makes people really worried about its ability to control longer-run inflation. Long-term inflation expectations have been well-behaved this year, even with the worries of our Fed independence. But that will come back up again if there's any signal. that the new chair will not bear down on inflation or will be willing to run it higher or run interest rates lower than they need to be.

And then the dollar impact that we've seen on global portfolios this year will be a walk in the park. You know, if we see a proper downdraft in the dollar, which I think you would see if you had a Fed that was not willing to tamp down on inflation. then we're in trouble. I mean, Rob, from your perch over there on the other side of the Atlantic, how is this situation looking to you? There is a lot of noise about Kevin Hassett.

who is now the heir presumptive to the throne of Jay Powell, being very much in the thrall of the president, not... being the kind of person who will stand up to the president's demands for low rates. And I would like to make the following bold prediction, which is that it's going to be fine at the Fed. I don't think it matters loads if it's Hassett or one of the other top candidates.

I'm just writing this down so that I can timestamp it. I'm just saying it. I think I think that once you're in that chair, once you're in that chair, you are your eyes turn from the president and turn towards history. And you don't want to be Arthur Burns, the Fed chair who famously, from decades ago, famously let inflation run out of control. You're secure in your position.

The markets exert a lot of pressure on you, not just the president. And I think it'll be fine, you know, and I'm also in general a bit of a skeptic about the power of the Fed. I think the Fed is sometimes... That's okay, because they're going to take some of it away, Rob. But look, I think it's important. Don't get me wrong. What I'm saying is that...

In a lot of cases, the market leads and the Fed follows rather than the other way around. And we attribute a lot of powers to the Fed because it's sort of. makes the universe look like a simpler place when there is a group of women and men in a room pulling a lever that is controlling the economy. But it ain't really like that.

So I don't think Hassett will make a massive mistake with inflation, and I don't think the Fed is as powerful as people generally say anyway. What I am saying, Katie, is I've given you tons of opportunities to make fun of me when I turn out to be wrong about this next year.

It's such an interesting question. Yeah, it's a rationalisation that I hear a lot from international money managers. Yeah, it comes down to, yeah, when they are in the seat, do they make decisions based on their view of economic growth and inflation?

Or do they succumb to political pressure? And you have the question live now already with Stephen Moran. We are one of the Trump appointees to the Fed. Is he currently making decisions based on his deeply held economic beliefs, as he said, or is he calling for a lower interest? because he knows that's the job he's supposed to do. And it's definitely something that divides international investors. And the worry is that there is an economic veneer that is very convincing.

But really, we know what decision they're going to be taking. Ian, though, you have to keep in mind there's a big difference between being a member of the committee and being the chair. If you are the chair and you cut rates... In the face of rising inflation, you will spend the rest of your days on Earth as the butt of people's jokes. You will hear about nothing.

for the rest of your life. Rob will turn up at your house on a Saturday morning. It will be the first line of your obit. Yeah, exactly. I'll come to your house with a bullhorn. Ha ha! That's an excellent impression of a bullhorn. And so it's going to be the first line is obituary and he'll tough it out. I agree with you on that. And also, you know, the 10 year, you know, looking at the 10 year US Treasury, you know, it's down.

from the start of the year it's hard to look at the market now and say there are huge worries around this but yeah we have seen a steepening in the yield curve so long-term rates rising faster than short-term rates and we have had outside of the us wobbles in big bomb markets such as

our own, and France. And to a degree, Japan's coming on the radar now, where people are saying, well, you know, that's maybe signs of things to come at the long end of government yield curves, that there could be some like sources of volatility there. But yeah, Rob, I take your point.

So that's a nice segue there, Ian. Thank you. So two main risks so far are AI goes pop, inflation goes bang. These are the two things you really need to worry about. But there are other things that could... upset the apple cart and people are feeling incredibly optimistic about next year. One of them is like weirdly, as you mentioned, the Japanese government bond market.

It's certainly starting to look like the Bank of Japan is raising rates a little bit too slowly for the market's liking. And inflation, like there's been no inflation in Japan for like ever. And now suddenly they've got quite sticky inflation.

It looks like the Bank of Japan is raising rates a little bit too slowly to deal with that. And so what you're seeing is some long term Japanese government or short term even Japanese government bond yields are kicking higher. That matters globally because at a certain point.

Japanese investors are not going to see the rationale for putting money to work overseas. They're just going to stay at home, right? And Japan is a massive buyer of US, UK, European, loads of different types of different government bonds. This has been flagged as a risk to global macro for years and years and years and years. But now when people talk to me about it, they're a bit more like...

I think this could actually be on, you know, like maybe it is time for Japan to really forcefully step back from global debt markets. Ian, you speak to a lot of debt investors. How seriously are they taking this? Yeah, very seriously. We saw times earlier in the year, April, May, where there was kind of weak auctions of long-dated Japanese government debt that added to people's anxiety that there's maybe this glut of long-term debt, that there aren't the buyers that there once were.

pension funds and life insurers might not need as long term debt as they once did. And at the same time, governments are issuing record amounts and there might be a bit of a supply demand problem for very long term debt. And Japan... As you say, if yields rise to points where people don't want to invest or pull money home from Eurozone government debt, for example, and invest it at home, then it's like taking another...

kind of guaranteed buyer out of other international debt markets that are experiencing some of the same dynamics. And the thing that's compounding it in Japan is the new prime minister who came in, presented as, you know, the... margaret thatcher of japan and one fun manager put it to me the other day it's kind of

put in a keynesian policy right so in some ways the market yeah the spending um announcements that have come through are way more than some what some in the market were expecting so you've kind of got this free spending governments theme at a time where long-term bond yields are already quite high. In the UK, the third year is higher since 1998 this year. So you're seeing some dramatic kind of moves.

higher or at least a kind of gradual shift higher and it's just something to be looked at next year it could be a source of volatility in markets outside of Japan, where government bond deals just hit a level where it drags, you know, it remunerates people more and drags people out of risky assets like stocks. Or Japan, as you say, you might see that repatriation of capital. The other, like...

The potential curveball that I think we do need to keep a little bit of an eye on this coming year, and I hate to say it, is crypto. Because... We've seen a big pullback in Bitcoin prices over the past few weeks, and that has tended to coincide here and there with pullbacks in riskier bits of the stock market. What you've got here is a market that is dominated by retail investors, right, in crypto.

And they're the same people who are dominating large parts of the US stock market, for example. So I don't think it's impossible that you see wobbles stemming from the crypto market. leak through into more established markets like stocks in a way that I just think is worth keeping an eye on over the course of this year. Rob, what's your take on that?

I think Adam Posen, to invoke his name again, was very good on this, making the point that the crypto markets are very much entangled with the U.S. debt markets at this point. That stable coins link short-term treasuries to basically the whole crypto ecosystem. So we know there is some connective tissue. between what I think of as the real world and the fake world of crypto. And so I don't know how that's going to play out, but I'm agreeing with your point that crypto world is connected.

Yeah. To the other parts of the market now in ways we're going to discover possibly the hard way. Yeah, I think those are the two links. Yeah, two stable coins. But also, as you say, the kind of retail link between.

crypto and stocks you know and it does feel like from some of the market moves and speaking to investors you know in recent sessions where you've seen stocks sell off with crypto they've talked about that kind of liquidity link between the two yeah whereas you know if they need if they're getting margin called because

they've made kind of bought crypto on margin and what do they sell they sell some of the stocks they've bought right it's a plausible kind of causality that does seem to be happening yeah so we do need to watch it

One final thought to leave you with, because I think we've covered a lot of ground about what's likely to happen next year. One thing that is worrying me slightly at the moment is that I can't find anyone who's taking the other side of this. Everyone agrees with everybody else. That is... generally not a good sign in markets. So even Albert Edwards at SG, the French bank, he's like, he's a perma bear. He's always bearish. And I was just reading his latest note and he was saying,

Look, I do think this is going to be horrible and I do think it's all going to fall over and I think stocks are overvalued. But, and I quote... I struggle to see an imminent macro trigger for a major bear market. It's the capitulation worries, you know, when you start to see those signals, right? It's when people start to say, well, maybe the press to earnings ratio should just be higher than it has in history.

history you know you know and you saw in the dot com was it like per click like you know new valuation metrics come through yeah so when when the bears you know when the pessimists are slightly throwing in the towel there's a part of me that thinks i don't know man i feel like i've seen this

movie before and it did not end very well so yes if you can't find any pessimists that can be alarming if you're a listener and you are a pessimist feel free to drop us a line unhedged at ft.com but we're going to have to be back in just one sec with Longshore.

Okie doke, it's time for Long Short, that part of the show where we go long, a thing we love, or short, a thing we hate. Ian, last time I asked you this, you came up with a long list of animals. What have you got this time? I'm going to... I'm going to go short a thing I love. Which is, and it hurts me to say this, but I think K-pop demon hunters might have reached its peak in terms of its grip.

on the world's children and young adults. I still don't really understand what it is. And I think you don't need to. You're too old. You're not allowed. I'm too old. You know what the taco trade is, but you don't know what K-pop Demon Hunters is. Sorry. Sorry. I'm very old. This is an excellent film based on a South Korean.

pop group who are Demon Hunters an animated movie and it's got incredible songs and like my children are addicted to it and now all parents are addicted to it who have young children and yeah it's just been incredible hype Kind of think frozen on steroids. Okay. But I feel like we've reached the peak. Okay. It's a good one from Ian. And he's younger than us, Rob, so he's more down with the kids. What have you got, Rob?

I am going to do a real old man long, which is I think 2026 is going to be a good year for the kind of fuddy-duddy old man stocks that I like. quality businesses, value businesses that are steady, have high returns, aren't growing really fast. That's been a neglected class of stocks much of this year. And if any of the bad stuff that we talked about in this show happens, these kind of solid producers are going to do well. So quality, value, the stuff I grew up with, I'm long at all.

One funny thing that people often say to me is that like, you know, yes, we like the AI trade, but within that we want to buy quality. And I'm like... Do you normally just buy any old rubbish? This is just slightly silly, but I do take your point nonetheless. I am going to be long of buying the dip. Like, say what you like about this as a dumb strategy, but I tell you what, it works.

It worked really well for people this year in 2025. It's been a consistent strategy for retail investors who are wiping the floor with the professionals as usual. So, yeah, you know. If you find a dip, this is not investment advice. And if it was investment advice, as I always say, it would be terrible. But buying a dip works for people. So you're saying Rob was right all along. No, I'm not saying that. No, I wouldn't go that far. Sounds like a bit late. Definitely would not go that far.

Okay, that is all we have time for today. Ian and Rob, thank you so much. Listeners, especially those who've come through the FT Boardroom event, thanks for sticking with us. Hope you've enjoyed the show. We will be back in your ears on Thursday, so listen up then. Unhedged is produced by Jake Harper and edited by Brian Erstad. Our executive producer is Jacob Goldstein. Topher Forhears is the FT's acting co-head of audio.

Special thanks to Laura Clark, Alastair Mackey, Greta Cohn and Natalie Sadler. FT Premium subscribers can get the Unhedged newsletter for free. A 30-day free trial is available to everyone else. Just go to ft.com slash unhedged offer. I'm Katie Martin. Thanks for listening.

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justification whatsoever for not doing the right thing even if the right thing is hard to do. Which also means that if the context changes or the information changes, it is absolutely fine to also change your mind. That's executive decisions with me, Steve Sedgwick. Get it wherever you're listening to this.