Reviewed by Gotrade Internal Analyst
Gotrade News - Stock investors enjoyed a massive run throughout 2025, but Morningstar is warning against getting too comfortable this new year. The market’s focus is now shifting from strictly chasing aggressive growth to hunting for value in lagging sectors to keep portfolios moving.
Morningstar’s Director of Personal Finance, Christine Benz, believes investors need to reset their expectations and stop relying on short-term historical data. This pivot is crucial to finding the best investments in 2026 without getting trapped buying at the top.
Key Takeaways:
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Small-cap stocks are looking way more attractive right now compared to the pricey big tech giants.
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Non-US markets offer cheaper valuations and exposure to different sectors like basic industries.
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Don't bank on those 15% annual returns repeating themselves this year.
Many investors feel they’ve missed the boat because stock prices soared so high last year. However, Benz emphasizes that not every corner of the market is overpriced right now.
According to Benz, value-oriented companies and small-cap stocks haven’t rallied nearly as hard as growth stocks. Adding exposure to these sectors could be a smart way to complement a broad market strategy beyond just holding the S&P 500 ETF.
Diversification opportunities are also wide open in international markets, which US investors often ignore. Benz notes that non-US stocks actually performed really well last year and still look cheap from a valuation standpoint.
A global portfolio gives you a "twofer": potential currency tailwinds and exposure to financials and industrials. These sectors are often underrepresented in a US market that is currently heavily concentrated in tech.
The biggest mistake to avoid this year is assuming that the historical 15% returns are the new normal. Benz suggests investors temper their equity return expectations to under 10% to keep financial planning realistic.
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That’s the market update worth watching today. Follow Gotrade News for timely coverage on US stocks, ETFs, and macro moves that shape market direction. For a structured starter guide, visit the Gotrade Blog to learn the basics and build your plan.
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Reference:
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The Morning Star, 5 Mistakes to Avoid With Your Investment Portfolio in 2026. Accessed on January 23, 2026
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