2026 Market Update: Pushing the Limits and Navigating the Path Ahead

Insights

As we step into 2026, we wanted to share our first market and planning update of the new year. At Tomoro, our mission is to act as your financial thought partner, providing steady guidance and nurturing solutions as we navigate a global landscape defined by structural transformation.

Looking back at 2025, we saw a year of remarkable resilience where global equities reached near all-time highs despite early volatility. As your stewards, we are focused on helping you stay centered on your unique path as these macro forces evolve.

As it relates to planning and critical thinking sessions with clients, we experienced an increase to our Tomoro Fee-Based subscription offering. These deep-dive engagements allow us to go beyond the portfolio to address the foundational pillars of your financial life: 

• Legacy & Protection: Designing comprehensive estate & asset protection frameworks.
• Business Stewardship: Navigating growth strategies and structured exit planning for business owners.  
• Family Office Integration: Establishing the path and structure for current & future multi-generational projects. 
• Strategic Tax & Legal Coordination: Partnering with your counsel to examine entity structures and mitigate exposure across business, ordinary, and estate taxation.
• Risk & Liquidity: Evaluating entity formation designs and standing up credit facilities for future asset acquisitions.

2025 Year-in-Review: Resilience and Records

The final data from 2025 highlights a year of stark performance divergence across asset classes. Per analysis from Goldman Sachs Asset Management, the year was defined by a surge in “safe haven” assets and a powerful rally in international equities:

• Gold’s Stellar Year: Gold enjoyed a record-breaking 2025, rising 64.58% to end at $4,319.37/troy oz, propelled by geopolitical tensions and a weakening U.S. dollar.
• International Strength: Emerging Markets (EM) and International Small Cap equities led the way, returning 34.29% and 32.54% respectively. In Japan, the TOPIX surged 25.46%, its highest year-end level since 1989.
• U.S. Equity Resilience: The S&P 500 finished the year up 17.86%, driven by massive investments in AI infrastructure.
• Bitcoin Declines: In a reversal from prior years, Bitcoin saw negative performance in 2025, ending the year down 7%.
• A Weakening Dollar: The U.S. dollar index fell by 9.37% as markets priced in Federal Reserve rate cuts and responded to shifting trade policies.

2026 Outlook: Pushing the Limits

Citing BlackRock’s 2026 Global Outlook, the theme for this year is “Pushing Limits.” We are moving beyond temporary market shocks into a period of deep structural change. BlackRock identifies five “Mega Forces” that are now the primary drivers of return:

1. Digital Disruption and Artificial Intelligence: AI has become a capital-intensive macro force. Global spending ambitions are reaching $5–8 trillion through 2030, a buildout occurring at unprecedented speed. We are watching for a potential “growth breakout” where AI-driven productivity could boost U.S. growth above its long-term 2% trend.
2. Demographic Divergence: A growing split between aging developed nations and younger emerging markets is fundamentally reshaping labor supply and global demand.
3. Geopolitical Fragmentation: The world is moving toward competing blocs and re-wired supply chains, which increases the need for active investment strategies.
4. The Future of Finance: The financial system is evolving rapidly through tokenization and stablecoins, creating a more dynamic but more leveraged landscape.
5. Transition to a Low-Carbon Economy: Massive capital is being deployed for the energy transition, which is now intersecting with the massive energy needs of AI data centers.

The Diversification Mirage: A key takeaway for 2026 is that traditional portfolio “ballast” -like long-term Treasuries – offers diminished protection. We believe this environment calls for a more dynamic approach, seeking unique return sources rather than relying on broad indices that are increasingly concentrated in a few mega-cap themes, a view reinforced by BlackRock’s recent investment commentary on positioning for 2026.

Strategic Planning: Refining Your Map

As your partner, we are dedicated to ensuring your long-term strategy remains calibrated for the specific policy shifts taking place in 2026.

• Estate Tax Updates: We are closely monitoring shifts in estate tax laws. For the latest updates on how these 2026 changes may impact your family’s legacy, please refer to this summary provided by our partner, Michael Canarick: [Estate Planning Newsletter Link].
• The One Big Beautiful Bill Act (OBBBA): For our business-owner clients, the OBBBA has introduced significant new tax rules, modified deductions, and expanded exemptions that fundamentally change the exit planning window.

Growth & Exit Planning: 2026 Strategic Themes

1. Optimizing QSBS Eligibility: The OBBBA has enhanced Qualified Small Business Stock (QSBS) benefits, increasing the gain exclusion cap to $15 million. With new graduated exclusions starting at year three, the timing of your corporate restructuring is more critical than ever to protect your long-term growth.
2. Strategic Deal Structuring: Choosing between an “asset sale” and a “stock sale” remains a pivotal decision. For many, a stock sale continues to offer the most efficient path, utilizing capital gains rates and avoiding the complexities of depreciation recapture to maximize your net walk-away.
3. Capitalizing on Expanded Exemptions: With federal gift and estate tax exemptions now reaching $15 million per individual ($30 million for married couples), 2026 offers a unique window to lock in value. Gifting or trust transfers prior to a business sale can freeze the asset’s value and shift future growth to the next generation tax-free.
4. Income & Gain Modulation: The OBBBA’s increased standard deduction ($32,200 for married couples) and adjusted tax brackets provide a new framework for timing your income. We can help model whether accelerating or deferring transaction components will keep you in a more favorable tax posture.
5. Valuation-Driven Deductions: The permanence of 100% bonus depreciation for property acquired after Jan 19, 2025, is a powerful tool. Reinvesting in capital expenditures today can reduce your current taxable income while simultaneously enhancing the valuation dynamics of your business for a future exit.
6. Thoughtful Succession & Internal Transitions: Whether your path leads to a family transition or an Employee Stock Ownership Plan (ESOP), the rules have evolved. Utilizing tools like the Section 1042 tax-deferred rollover can allow you to exit your business while deferring capital gains, aligning your personal liquidity with the continuity of your company’s legacy.

Sources

Goldman Sachs Asset Management, Market Monitor: 2025 Year in Review

BlackRock, 2026 Global Investment Outlook

BlackRock Investment Institute, Weekly Investment Commentary: Three Investment Lessons for 2026