The year ahead: Risks and opportunities in 2026

Many of the concerns investors are focused on today are not new. “The headlines heading into 2026 remain much the same,” Wong said, pointing to ongoing trade uncertainty, geopolitical conflict, and questions about whether stock prices are elevated.

At the same time, strong earnings growth — particularly in areas tied to artificial intelligence — has helped support higher stock prices. “If anything, the earnings growth for some companies has slightly outpaced their stock market return over the past few years,” Wong said, citing companies like Nvidia as examples where business fundamentals have largely kept pace with investor enthusiasm.

Still, he cautioned that strong returns can’t be taken for granted. “We’ll need to see a similar path of earnings growth for stocks like this to continue to do well,” he said.

As investors look toward 2026, one of the clearest themes emerging from today’s markets is the importance of not relying too heavily on a narrow set of winners.

In recent years, a small number of well-known companies and markets have driven a large share of overall returns. While those trends have been powerful, they can also create hidden risk if portfolios become too concentrated.

“Getting more diversification into portfolios is a good idea,” Wong said. Looking back over market history, Wong noted that periods where returns are driven by a narrow group of stocks have tended to be followed by periods where performance becomes more evenly spread.

He emphasized that this isn’t about abandoning growth areas like artificial intelligence, which continue to hold long-term promise. “It’s not that the AI story isn’t exciting,” he said. “It’s just that after a certain point, the math on the winners becomes challenging.”

Instead, the focus is on balance. When too much of a portfolio’s performance depends on the same stocks or themes, even small changes in expectations can have a bigger impact than investors might expect. That’s why spreading investments more broadly — across different regions and types of companies — can matter more in periods like this.

In the year 2025, the markets outside of the U.S. were really willing to price in some future growth, Wong said, pointing to opportunities that can emerge beyond the most familiar parts of the market.

Diversification, Wong stressed, isn’t limited to equities. Fixed income is once again playing a meaningful role, particularly as bond yields remain well above the levels investors became accustomed to in the previous decade.

“Investment-grade bond yields remain reasonably high in this environment,” Wong said, noting that 10-year maturity Government of Canada bond yields above 3% represent a very different opportunity set than what was available just five years ago. Importantly, bonds have also begun to reassert themselves as a source of stability. “We started seeing bond yields really act as a diversifier against equity markets,” he said.

If risks increase in 2026, Wong believes bonds could once again provide ballast. “There could be some decent diversification potential from bonds at these levels,” he said, adding that investors are now “in a position now to get a pretty decent return on a lower-risk asset class in general.”

Ultimately, the goal is not to time the market, but to stay aligned with long-term objectives.
“It remains important to not put all your hopes into a single year or a single idea,” Wong said, emphasizing that “a disciplined plan that emphasizes a return that compounds over time…is a time-tested approach for building wealth towards your goals.”