Investing in the New Stock Market Cycle: 2026 and Beyond
- 2 days ago
- 9 min read
By: Thuy Tran, CIO (Thuy.Tran@KYUR.co)
Investing Challenges
Have you struggled with watching the rise and fall of your investment portfolio over the past year? Have you struggled with making confident investment decisions during the high volatility cycle? We have seen the highest highs as well as some big lows, but depending on portfolio management, you may have missed opportunities or made temporary losses permanent. No matter how your portfolio did in 2025, 2026 may still hold new surprises and it may be a good moment to pause and reevaluate your investing strategy.
In December 2024, KYUR Wealth shared with us an outlook for the market in 2025 in their previous blog, Partnering with a Registered Investment Advisor (RIA) - Building Your Financial Legacy Through the 7Ps. At the time, we expected secular long-term technological, demographic and secular trends to continue to make investing in equities an attractive long-term investment. However, entering 2025 we anticipated increased market volatility with an incoming presidential administration and the specter of new trade policies. The announcement of Tariff Liberation Day on April 2, 2025, was a significant paradigm shift that has led to the rules in the global trade playbook to be rewritten. It was also the catalyst for the April sell-off where at one point the market was down by over 10% only to recover to be positive approximately 18% by the end of 2025. We anticipated volatility but not of this magnitude. It reinforced our December 2024 opinion that it was time for investors to consider partnering with an experienced RIA through KYUR's 7Ps framework - in particular Portfolio Management Experience, Perspective, Performance and Process - to help manage their investment portfolios through times of market volatility.
The KYUR Investment Team averages over 20 years of portfolio management experience. This experience is invaluable as it provides perspective into navigating portfolios during times of market volatility. KYUR believes that an objective way to evaluate an RIA is to compare their annualized investment performance vs a standard benchmark such as the S&P 500. We suggest investors evaluate a RIA’s investment performance, net of fees, over a full market cycle which we define as 5 calendar years. A time that typically coincides with presidential cycles as each administration has its own economic policies that may impact the economy and stock markets.
In our opinion, the last full market cycle ended in 2024 (2020-2024). 2025 marked year #1 of a new market cycle.
Investing in the New Stock Market Cycle
Given the shifts in the market, there are many considerations to evaluate when Investing in the New Stock Market Cycle.
For perspective, let's look at the long-term chart below. It shows that the S&P 500 has returned 10% on average since 1950. However, there have been major geopolitical and macro events resulting in significant peaks and troughs.
Source: Personal Finance Club
What should investors consider in positioning their portfolios for year #2 of this new market cycle? KYUR believes there are 4 Pillars that should be the foundation of the investment process.
Pillar #1 - Active Investing
There are two major shifts going on from a global trade and technology perspective. Firstly, Tariff Liberation Day marked the end of globalization that began when China entered into the WTO over twenty years ago and the beginning of Deglobalization and Protectionism. Secondly, within the technology sector, the advent of AI has the market scrutinizing the viability of certain business models where AI may pose a significant threat. In both, competitive dislocations within sectors will emerge. While the outcome will play out over several years, if not longer, the potential investment implications are significant. In the former, Winners and Losers will emerge across all sectors-Industrials, Consumer, Financials, Healthcare-as a result of these trade policies. In the latter, technology companies who are best positioned along the AI food chain will likely emerge as Winners. Losers will be those whose business models are at most risk to AI or where the market fears that the ROI is not high enough to justify their AI capex plans.
As a result of these two forces, in 2025 intra-sector dispersion within the S&P 500 increased - the Winners outperformed the Losers - and we expect this to continue. The intra-sector dispersion relative to the S&P’s total return - stocks with larger index weights outperformed - was noteworthy.
Source: Finder
Many investors often choose a passive strategy. A typical passive strategy is to invest in an ETF that tracks the S&P 500. This ETF will own all 500 stocks in the S&P index and will replicate the index stock weights. This results in holding both winners and losers. While historically, the overall portfolio would average out to still provide a good return, in the current environment, the results are multiplied and the losers are really dragging down the winner’s returns. Therefore, KYUR believes the best investment strategy today is to own a subset of these 500 stocks rather than all of them. This is an active strategy of selecting the Winners that are positioned to benefit from these two shifts and avoiding the Losers. An important component of this investment strategy is portfolio construction, individual position sizing and active share. Simply put, less is more; actively managing a small number of stocks for optimization rather than passively holding a large number of stocks in the hopes they average out to a decent return. Technology companies comprise about 45% of the S&P ETF. Investors in passive investments such as the S&P 500 ETF may not be aware of the amount of sector concentration risk they are exposed to in a time of possibly higher intra-sector dispersion and if the large index weighted stocks such as the Mag 7 start to diverge. Looking at the individual stocks for those positioned to take advantage of current opportunities could maximize growth.
KYUR Wealth is an active stock manager and typically owns 40-50 stocks in its portfolios.
Pillar #2 - Quantitative Approach
A hallmark of the new administration is an increase in market swings based on sentiment driven by daily messages to social media that the market may find difficult to quantify. We expect this to continue in the current stock market cycle. Hence, it's increasingly important to focus on objective financial data rather than to get caught up in the sentiment of the day. At the end of the day, earnings drive stock prices.
Source: Flourish
It’s important to incorporate quantitative methodologies that focus on earnings and other quantitative factors that drive stock prices not market sentiment.
KYUR Wealth employs a quantitative investment approach. KYUR’s proprietary model seeks to identify inflection points in the key earnings drivers for companies.
Pillar #3 - Larger Market Cap Companies
In an era of deglobalization and protectionism, smaller companies in certain sectors face a double- edged sword of lower regulation costs and tariff related costs. Those companies that still need to raise prices to offset these costs may lose market share if they lack pricing power. Larger companies face the same issues, but they have the resources - through optimizing pricing, cost savings and supply chain strategies - to better manage their margins. Larger companies can take market share as weaker players leave the market. Furthermore, within the US there are large companies who hold “legal” oligopolies within their sectors and their position will grow even stronger in a period of deglobalization.
KYUR Wealth typically invests in large cap companies in the S&P 500 and globally.
Pillar #4 - Proactive Risk Management
As measured by the first quarter’s returns vs the annual returns, to date this has been a volatile decade for the S&P 500. For example, in 2020 the S&P 500 was negative 19.6% at the end of Q1 only to finish the year with a positive 18.4% return. In 2022, it was negative 4.6% and finished with a negative 18.1% return. In 2025, it was negative 4.2% only to finish with a positive 17.9% return. In fact, at the beginning of Q2 the S&P 500 continued to decline and was negative over 10% in April immediately after Tariff Liberation Day before it rallied from the lows. Volatility will be a constant in this new cycle.
In times of market volatility, KYUR is first and foremost a risk manager whose focus is to effectively manage portfolios during these market declines and try to preserve capital. KYUR's investment process begins with a proactive risk management process rather than ending with a reactive one. KYUR does not start by asking how much we can make on an investment. Rather, we ask how much we can lose? Once we can parameterize this critical question, we can evaluate the potential return and whether the risk reward is appropriate.
Returns of the S&P 500, source Google Gemini
KYUR Wealth’s core investment philosophy is that the key to optimal investment return is control of the risks of capital losses. Rigorous risk control better protects investors in market dislocations and effectively increases long-term returns by minimizing the catch-up periods in recoveries following market corrections.
Conclusion
The most recent full market cycle (2020-2024) generated cumulative positive returns but was marked by significant volatility. Similarly, we are optimistic that there are secular drivers in place so that the new stock market cycle will generate cumulative positive returns, but it won’t be a straight line. Despite the Supreme Court’s ruling on the legality of the tariffs, market volatility will remain as the administration has other trade laws it can enact. KYUR believes quantitative and active rather than passive investment strategies are the best way to navigate the current paradigm shifts - Deglobalization and AI - that will be a recurring theme in the new market cycle. In this new economic arena, differentiating the Winners from the Losers will be the key to victory. We continue to believe that now is the time for investors to consider partnering with an experienced RIA who has the 7Ps and implements the 4 Pillars as a foundation of their investment process.
About KYUR Wealth
KYUR Wealth (www.KYUR.co) is a Registered Investment Advisor located in Newport Beach, CA in the heart of the financial business district of Fashion Island. KYUR was founded by investment executives with extensive experience in equities and alternative asset classes. The team has managed equity, fixed income and hedge fund strategies at leading Wall Street firms, including Morgan Stanley, Bank of America Merrill Lynch, Neuberger Berman, Man Group and GLG Partners.
Thuy has over 20 years of investment experience and managed equity funds at Neuberger Berman, Man Group and GLG Partners across U.S. and Global markets, in Europe, Asia-Pacific and Emerging Markets. Thuy has an MBA in Finance and Strategic Management from the Wharton School of Business at the University of Pennsylvania. He was selected as a Wharton Fund Fellow to manage a portion of UPenn’s endowment fund. He earned a B.Sc. in Economics and Accounting from NYU Stern School of Business and graduated from Choate Rosemary Hall.
For a complimentary consultation please contact Thuy - thuy.tran@KYUR.co
KYUR Community
KYUR is a community partner with UCI's Merage School of Business and the Halbrook Center for Investment and Wealth Management. KYUR is working with the associate director to raise awareness for its weeklong summer 2026 financial literacy program for high school students. For those who have high school-aged children, nieces/nephews or grandchildren who may be of interest, please contact Thuy.
Disclosures
All information presented is informational and educational purposes only and is not intended for investment decisions. It does not constitute an offer to sell or a solicitation of an offer to buy any securities. Past Performance is not indicative of future results. Investing involves risk, including the potential loss of principal. The S&P 500 index is a market-capitalization weighted index of 500 of the largest publicly traded companies of the US. It is not possible to invest directly in an index. Reference to “Tariff Liberation Day” and specific market events of 2025 are based on historic data analysis. Market Volatility can be unpredictable. KYUR Wealth’s strategies regarding Active Management, Quantitative Analysis, Large Cap focus and Risk Management are subject to change based on market conditions. Please consult with a qualified financial advisor before making investment decisions.
This material is proprietary information and may not be reproduced or otherwise disseminated as a whole or in part without prior written consent. Any data services and information available from public sources used in the creation of this material are believed to be reliable. However, accuracy is not warranted or guaranteed. NotebookLM was used to produce illustrations and podcasts. AI can get things wrong, verify important information.
Neither the Company nor the authors shall be liable to any person for any action taken on the basis of the information provided. Some statements contained in this material concerning goals, strategies, outlook or other non-historical matters may be forward-looking statements and are based on current indicators and expectations. These forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update or revise any forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements.
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