It seems like every day, month, and year, there are fresh predictions about which markets, sectors, or assets will perform the best. You see the headlines: maybe it’s the rise of AI-driven companies, the spread of cryptocurrencies, or gold regaining its status as a safe haven.

While these stories can be very persuasive, it’s wise for investors to be cautious about completely changing their portfolios based only on these forecasts.

The Unpredictability of Markets

History shows us that economies and markets are fundamentally unpredictable. Each year, the leading and lagging sectors shift in surprising ways, making it impossible to consistently pick the winners ahead of time.

For example, in recent years, technology stocks have swung dramatically between being a market leader and an under performer. This kind of volatility highlights how challenging it is to rely on past trends to make future decisions. Unforeseen events—like geopolitical shocks, policy changes, or sudden shifts in how consumers behave—are quickly reflected in stock prices, making it almost impossible to anticipate every twist and turn. As the economist Ezra Soloman once quipped:

 “The only function of economic forecasting is to make astrology look respectable”.

Figure 1: Sector returns Jan 07 to Aug 25

Data: see footnote[1]

It’s important to remember that even sophisticated investors with huge amounts of data and analysis rarely succeed in consistently outsmarting the market.

Recent results showed that over the 10 years leading up to the middle of 2025, a stunning 97% of professional UK-based global fund managers failed to deliver returns above the market[2]. This is a damning result.

While it can be tempting to adjust your investments based on exciting forecasts or recent strong performance, a disciplined, long-term approach remains the most sensible path. The ups and downs you see in market sectors illustrate the randomness inherent in markets; indeed, the graphic above shows the randomness in markets and the risks of chasing yesterday’s winners.

A diversified exposure across all sectors can provide investors with a smoother journey over time. It gives you the confidence that you’ll benefit from whichever sector dominates in the future.

Ultimately, investors should focus on diversification and their long-term objectives, rather than letting themselves be swayed by short-term trends.

General Investment Risk Warnings

Please remember the value of your investments and any income from them can go down as well as up and you may get back less than the amount you originally invested.  All investments carry an element of risk which may differ significantly.

If you are unsure as to the suitability of any particular investment or product, you should seek professional financial advice.   Tax rules may change in the future and taxation will depend on your personal circumstances. Charges may be subject to change in the future.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. Portfolio performance data are for illustrative, educational purposes only and do not represent live client portfolios.

 

[1] iShares Global Comm Services ETF, iShares Global Consumer Discr ETF, iShares Global Consumer Staples ETF, iShares Global Energy ETF, iShares Global Financials ETF, iShares Global Healthcare ETF, iShares Global Industrials ETF, iShares Global Tech ETF, iShares Global Materials ETF, iShares Dev Mkts Prpty Yld ETF USD Dist, iShares Global Utilities ETF

[2] S&P Global: SPIVA Europe Mid-Year 2025. GBP-denominated funds, ‘Global Equity’ category. For reference, other categories did not show any material improvement in results (‘Europe Equity’: 88%, ‘UK Equity’: 87%, ‘Emerging Markets’: 88%).