The overriding financial narrative of this week has been the return to the fore of tech stock, after a relatively brief period where more traditional companies had been favoured. The S&P 500 and Nasdaq indices both reached and closed at all-time highs on Friday. The latter is up a quite frankly ridiculous 42% over the last 12 months, albeit up from the arguably artificial, tariff-induced low. Still, they are real ‘paper gains’ if that is not an oxymoron!
The Dow Jones and FTSE 100 indices have been more sluggish this week dipping into negative territory, as perhaps the pressures on the world stage tease us that they might be easing. But even that is off a backdrop of 20+% increases on the year.
The Bloomberg summary is that resurgent optimism around AI’s economic promise is eclipsing Iran war worries into the week’s end, with chipmakers doing the heavy lifting on the back of strong results from Intel and SAP.
The UK markets might have been additionally unsettled by the deputy governor of the Bank of England warning of possible corrections in the values, (inevitably without prediction as to when or how much), in what hopefully was designed more to prepare us all for fewer interest rate cuts over 2026 than we might have wanted, as increases in global prices start to filter into the inflation figures.
I wouldn’t dare say that the new world order [Ed – financially rather than geopolitically of course!] has been returned. In fact, it highlights just how quickly sentiment can change even within asset classes and why a well-diversified portfolio remains the steadiest course through the uncharted waters. Especially when those waters are subject to two competing blockades!!
According to Bloomberg, the unprecedented criminal investigation by the Trump administration into Fed Chair Jerome Powell was abruptly called off Friday, potentially clearing the way for his proposed replacement, Kevin Warsh, to win Senate approval. A key Republican senator, Thom Tillis of North Carolina, vowed to block Warsh’s confirmation unless the matter was dropped.
I’m not complaining, but I am thinking of coining my own phrase for the current US administration; TRAGIC – Trump Really Always Gives In Completely!
Market News
The team at Tatton Investment Management have produced their usual Tatton Weekly which covers the following:
- Resilient equity markets, rising risks – Global economy holds overall momentum, despite Iran stalemate and fossil fuel supply constraints, but regional disparities are rising and risk feels meaningfully higher.
- Business sentiment holds strong – Despite the US Iran war, business sentiment is better than expected in the US, UK and Japan, whereas the EU needs the energy crisis over, and soon.
- Europe gets a Magyar boost – Will the brakes finally come off EU development now that Hungary’s ‘illiberal democrat’ Victor Orbán has been replaced by a Western facing premier?
And Rathbones contend that over the past week they’ve observed how conflicting information is making it challenging to see markets clearly. But while risks remain, there are attractive opportunities, particularly in supply chain resilience, defence spending, and continued investment in AI.
The latest Weekly Digest discusses the effects of uncertainty on markets, and the opportunities that lie therein, finding:
- The threat of re-escalation of the Iran conflict is tempering investor optimism.
- Governments are focused on defence spending and shortening and securing supply chains.
- This re-engineering of supply chains presents investment potential.
Additionally, there is an update from Charles Staney’s Group Chief Investment Officer, Patrick Farrell on their views of the current situation in the Middle East and what it may mean for markets and investments.
For a quick watch, Caroline Shaw at Fidelity explains why recent volatility hasn’t driven major portfolio changes. Hear how Fidelity have made modest adjustments, selectively added to technology and commodities, and why balance and patience remain key amid geopolitical uncertainty. Interestingly, before becoming a Portfolio Manager, Caroline received her master’s degree in civil engineering from the University of Nottingham. Click on the link below:
Chart of the Week from Marlborough
It’s been a turbulent year so far for stock markets and the situation in the Middle East remains anything but straightforward. Negotiations between the US and Iran have been stop-start, with progress at times and setbacks at others. But importantly, dialogue is continuing. And that matters.
Global investors aren’t waiting for a final agreement. They react to the direction of travel. The signal is that both sides are still engaged and, ultimately, looking for a path towards de-escalation. Markets have responded accordingly. They’ve moved higher and are now sitting just a few percent below all-time highs, despite the ongoing uncertainty around geopolitics, interest rates and the impact of artificial intelligence.
While the situation remains highly unpredictable, our chart this week shows that historically, investors staying the course through the beginning of the year have tended to be rewarded.
While the drivers of recent volatility have been unique to 2026, it’s not unusual for the early part of the year to prove choppy for the US S&P 500 index, with a weak patch through February and March. This period often coincides with ‘earnings season’ when US companies update the market on performance and, in many cases, seek to reset expectations.
What is interesting is what tends to follow. Historically, markets have tended to stabilise and then build momentum into the summer months. This suggests that if the US and Iran can find a formula for a durable peace, then, if history is any guide, markets could continue to push upwards from here.
As our chart shows, over the 20 years from 2006 to 2025, the average annual return for the S&P 500 was 10.4%, according to research by Australian asset manager Ophir.
This is where investing can be difficult. It rarely feels comfortable at the turning point. Markets are forward-looking. They respond to changes in direction rather than reacting to today’s headlines. But step back and the broader lesson is simple.
Markets are often cyclical. They move through periods of weakness, consolidation and renewal. The opportunity often emerges before confidence returns. So, the real challenge is behavioural. We are wired to react, particularly when the news flow is constant and often negative. Even experienced investors feel that pressure.
The instinct to act can be strong, but it’s rarely what drives long-term returns. A clear philosophy and a disciplined process matter far more. This is why, for many investors, having someone else manage their money can be valuable. It creates distance from the noise, reduces emotional decision-making and allows a structured process to guide outcomes.
Card Sharps
I’ve been dealing with a few people, both clients and non-clients, who are constantly being tempted by unregulated ‘investment’ opportunities. Of, course they are all ‘unmissable next best things’, ‘guaranteed to make money’ and usually something to ‘get into now before the prices go through the roof’. There is an understandable temptation and FOMO, and as regulated financial advisers the solutions that we offer are boring in comparison. This week’s missive from 7IM highlights this phenomenon:
Massive hype online. Huge price increases. An increase in crime. Bafflement among traditional investors. Nope, we’re not talking about crypto.
We’re talking Pokémon.
Now. Would you pay, let’s say, £100 for a slip of cardboard with a drawing of an imaginary electric mouse on? Nope.
And yet. This card sold for £1 million about a month ago …
Source: CardLadder
And two months ago, this one sold for £12.2 million!
Source: CardLadder
(Yes, they do appear to be identical. Let’s just move on).
And an index* which tracks the value of about 10,000 different Pokémon cards is up 180% over the past year – six or seven times the return of the FTSE 100 or S&P 500 over the same period.
Source: CardLadder
And that sort of Pokémon-ey (not sorry) means people are getting interested – even to the point where collectible card shops across the UK have been robbed over the past weeks**.
Now, we’ve seen this before. Beanie Babies and stamps and (four hundred years ago) tulips. The psychological factors at play with collectibles are incredibly strong. People get sucked in, and suddenly there’s a market, then a bubble, then a burst bubble.
First, it grabs attention. Our brains notice contrasts. Pokémon and £1 million pounds?! Click.
Secondly, there are no fundamentals. Pokémon cards don’t generate income, dividends or cashflows. There’s no maths you can do. So, prices are driven almost entirely by what the next person is willing to pay … based on how theyfeel.
And feelings are shaped by stories (no-one comes over all emotional about an Excel file). Collectibles are especially powerful here. It’s a childhood memory, paired with the idea of scarcity. “If you want to own a slice of your own history, you’d better hurry up!”
Finally, there’s the powerful urge to complete the set (Gotta catch’em all!). Psychologists have been studying this foryears – from stamp collectors to vinyl fans to World Cup sticker albums. Once you’ve got most of a set, the last few items become massively important. You pay up.
None of this makes Pokémon card collecting stupid. It doesn’t even make the prices people are paying wrong.
But it’s worth noting that in a market ruled by stories, status and social identity, there’s no way to know what happens next. Whether that’s tulips, cards or crypto, something based only on stories, status and social identity isn’t an investment. It’s a hobby.
Reflections
I shouldn’t be too harsh on those clients though. I had cause this week to read the Vulnerability Task Force’s guide for advisers with clients experiencing sudden wealth.
Sudden Wealth Syndrome (SWS), a concept introduced by psychologist Dr. Stephen Goldbart, describes the emotional and psychological difficulties some individuals face when they acquire substantial wealth unexpectedly. It frequently presents as adjustment difficulties, anxiety, loss of identity, and in some cases, depressive symptoms. For practitioners, recognising SWS as a legitimate behavioural response (not a character flaw) is crucial.
Some clients respond with impulsivity, excessive consumption, or destructive habits such as gambling, substance misuse, extreme overspending, pursuit of high-risk investment schemes, etc. These behaviours require sensitive intervention, clear boundaries, and often interdisciplinary support from therapeutic professionals.
The guide highlights what we probably already know deep down that independent advice, that is at least advice that is independent from the close family and friend contacts that the individual may have (or suddenly acquire), which is regulated and authorised, is crucial for their long-term benefit.
So, we at JB Wealth will stick to the boring basics of financial planning because it underpins the future wealth of our clients. If you are in any doubt, please speak to your usual JB Wealth advisor.
Your Help
I’d welcome your help on two points please, if you don’t mind.
The first was sparked by a stat that was presented at a seminar I attended this week. According to a survey conducted by Barnett Waddingham, a long established actuarial and advisory firm, 60% of members of workplace pension scheme members are unaware that from April 2027, any pension funds that they have in their pension pots when they die, are included in the calculation of any whether any inheritance tax is due. That doesn’t just affect those in retirement, although mortality is likely to be a larger part of the thought process for those, but pre-retirees with large pension pots and equity in their property should at least be aware of their position. So, my plea is to just be aware if in conversations over the watercooler [Ed- this is the UK, so you mean coffee machine] there is any confusion, get your colleagues to seek guidance of how these changes might affect them.
Secondly, is a follow on to the above issue and is something that has been on my mind for a while. Now that putting as much as you can into pension arrangements in order to pass it on to future generations will no longer be the most tax-efficient way, the solutions are going to need to be more complex and nuanced. Care should be taken as to which family members are going to receive the legacy money and when. This requires a family-wide discussion around topics that we often find difficult; money and death.
So, my question to you is are you open to having those multi-generational conversations and meetings, and how we can encourage more of them to happen?
Miscellaneous
IHT receipts reached £8.5bn for the 2025-2026 tax year, up from £8.2bn the previous year, and increased by £141m between February and March 2025, when they stood at £755m reports International Adviser. Last year’s decision to maintain the freeze on thresholds for the £325,000 nil‑rate band and the £175,000 residence nil‑rate band until 2031 is the ‘key driver’, says Quilter tax and financial planning expert Rachael Griffin, with property prices meaning the value of the family home alone is often enough to push estates into IHT, leaving little room for other assets to be passed on tax‑free. “Further strain is already building,” said Griffin “Restrictions to Agricultural Property Relief and Business Relief from April 2026 will increase exposure for business owners and farming families, while unused pension pots will fall within the scope of Inheritance Tax from 2027, bringing what has long been the largest asset outside the estate firmly into charge. This policy change alone will turbo-charge receipts for years to come.
There was £44.1mn reclaimed in over-taxation on pension withdrawals in the first three months of 2026, according to the latest figures from HM Revenue & Customs. FT Adviser says, that in its pension schemes newsletter this month, HMRC revealed that during the quarter there were 13,942 reclaim forms processed, with an average reclaim of £3,165. About £1.6bn has now been reclaimed by people overtaxed on pension withdrawals since 2015. Tom Selby, director of public policy at AJ Bell, said: “Now more than 11 years since pension freedoms and flexible pension withdrawals were introduced, the spectre of pension over-taxation continues to loom over HMRC. “The fact HMRC is still yet to address one of the enduring flaws in its approach to taxing those who choose to flexibly access their pension pots means many are forced to take matters into their own hands to be reunited with their money.
Best of luck to anyone running in the London Marathon on Sunday. I won’t be taking part for any number of excuses you might want to think of for me, but I salute your efforts however well it goes and look forward to catching up next time.