In 2025, one force overshadowed almost everything else in markets. While familiar threats such as inflation, volatility, and growth uncertainty dominated the headlines, it was politics that proved to be the more powerful driver, influencing flows, sentiment, and decision-making across asset classes.
The conversations on Top Traders Unplugged this year repeatedly returned to power, policy, and control. Who decides the rules, and how far will they go to enforce them?
The Move Towards Deglobalization
One of the most persistent themes throughout 2025 was the slow but unmistakable retreat from globalization.
Tariffs moved from being tactical tools to strategic weapons. Trade was no longer framed around efficiency, but around leverage. Countries became more inward-looking, cooperation more conditional, and markets had to adapt.
This shift matters deeply for investors. Many of the assumptions that underpinned portfolio construction over the last few decades were built on a world that was broadly integrated, where capital flowed freely, supply chains optimized globally, and the dollar sat comfortably at the center of the system.
In 2025 and moving forward, that framework feels less secure.
US Politics as a Market Variable
No country shapes global markets more directly than the United States, and in 2025, that influence was impossible to ignore. Conversations repeatedly returned to the impact of US political decisions, not only on domestic assets, but on the structure of the global system itself. Tariffs, fiscal expansion, and the increasingly explicit use of economic policy as a political tool fed directly into market behavior.
One topic that consistently surfaced is the tension around central bank independence. Who ultimately controls monetary policy, and how much political pressure can the Federal Reserve absorb before its credibility begins to erode? What once felt like a theoretical concern now carries real market consequences.
The debate around future Fed leadership also sits at the center of this shift. The choice of the next Fed chair is a serious potential catalyst for changes in inflation expectations, risk premia, and global capital flows. Investors are already weighing how markets might behave under different political configurations, well before any decision is made.
The result has been a higher and more persistent level of uncertainty. For investors, this environment challenges traditional portfolio construction. Assumptions built on stable institutions and predictable policy responses are increasingly becoming less reliable. As a result, diversification needs to be revisited, not just across assets, but across regimes, behaviour, and policy outcomes.
The real lesson here is not about taking a political view but understanding that politics is becoming a structural source of risk that investors must live with.
Is Trust in the Dollar Fading?
As politics moved center stage, questions around dollar supremacy naturally followed.
The US dollar remained dominant, but the conversations were no longer complacent. Our guests discussed not just whether the dollar would lose its status, but how trust in the system has evolved over time.
Sanctions, trade disputes, and other forms of weaponized finance raised uncomfortable questions. If access to the dollar system can be restricted or influenced politically, what does that mean for reserve management, capital flows, and long-term allocation decisions?
These were not alarmist discussions. They reflected a growing awareness that monetary dominance is as much about trust and stability as it is about scale. For investors, this meant revisiting assumptions about currency exposure, geographic diversification, and what safety really looks like in a more fragmented world.
The Need to Revisit Diversification
One of the clearest conclusions to emerge from our conversations this year was that “true” diversification can no longer be ignored. The 60/40 portfolio, which served as a reliable default for years, worked well enough that many investors stopped questioning it. In 2025, it became far less dependable. Why? Because the world it was built for no longer looks like the world we are investing in today.
Higher interest rates have fundamentally changed the role bonds play in portfolios. Acting as both income generators and shock absorbers, they were the perfect major addition to portfolios. But in a world that is shaped by higher inflation, larger fiscal deficits, and more politicized monetary policy, bonds have behaved less reliably. At times, they have amplified volatility rather than dampened it. That shift alone forces a reassessment of what balance really means in a portfolio.
At the same time, uncertainty itself has become more pervasive. Markets have always dealt with the unknown, but 2025 felt more abrupt. Political decisions landed suddenly, and geopolitical tensions flared without much warning. Drama and disruption showed up from places investors were not actively watching. Even if the future was never predictable, it now feels less linear and more prone to surprise.
Another important theme was dispersion. Even within alternative strategies that are often grouped together, outcomes varied widely. In the CTA and trend-following space, for example, performance diverged meaningfully across managers. Differences in time horizons, portfolio construction, risk management, and execution mattered a lot. This dispersion was not a weakness but evidence that diversification within strategies is just as important as diversification across them.
Taken together, these dynamics point to a broader shift in thinking. Investors must now understand what truly drives returns and risk in different parts of a portfolio. Holding exposures that respond differently to stress, policy shifts, and structural change is more important than relying on things to stay the same or hoping for the best. This is a necessary response to a market landscape that is more uncertain and far less forgiving of complacency.
Where to Find Diversification
Of course, we did not spend the year only talking about what has stopped working. Just as much time was spent discussing where diversification might be found in a market environment that feels less predictable than the one investors have grown used to.
One area that came up repeatedly was managed futures and CTAs. These strategies tend to operate across many markets, including equities, bonds, currencies, and commodities, and are designed to adapt as conditions change. Their ability to go both long and short, and to respond dynamically to price behavior, makes them structurally different from long-only allocations.
We continued our mission to educate our community about trend following, which has long been a core pillar of the show and, personally, my favorite approach. Does it promise certainty? No, quite the opposite. What makes trend following appealing in uncertain environments is that it does not try to predict what comes next. It simply responds to what is already happening.
Beyond systematic strategies, real assets featured more prominently in the conversation this year. Commodities were discussed in the context of supply constraints, geopolitics, and the move toward a more fragmented world. Land also came up as a long-term asset that behaves differently from financial markets. Unlike paper assets, it is largely insulated from the day-to-day noise of markets.
Another important area of discussion was options and volatility. These were not framed as tools for speculation, but as ways to better understand and manage risk. This focus ultimately led us to the launch of U Got Options, a new series created in collaboration with the Chicago Board Options Exchange (Cboe). This series brings you closer to the mechanics of the market by learning directly from practitioners who work with options and volatility every day. And so far, it has been a huge hit.
As always, it is important to be clear about intent. None of these discussions were meant to tell anyone what to invest in or how to allocate capital. Markets are complex, and every investor’s aspirations are different. The goal is to broaden thinking around diversification in a changing world, not to offer investment advice.
Closing Reflection
As we step into 2026, there is no sense that the uncertainty is fading. If anything, 2025 sharpened our awareness of just how quickly the landscape can change.
What this past year did give us was clarity of a different kind. It reminded us that process matters more than prediction, and that staying flexible is a necessity. It also reinforced the value of revisiting first principles, especially when the world no longer behaves the way it used to.
Finally, none of this would be possible without our guests who generously share their thinking, challenge our views, and bring depth to every conversation. Nor without the extraordinary co-hosts whose perspectives, debates, and disagreements shape the tone and integrity of the show week after week. Top Traders Unplugged is a collective effort, and we are grateful to everyone who helps make it what it is, not least the amazing team that operates and produces the show behind the scenes.
Thank you for listening, engaging, and thinking alongside us. We look forward to continuing the conversation in 2026!
This is based on episodes on Top Traders Unplugged, a bi-weekly podcast with the most interesting and experienced investors, economists, traders and thought leaders in the world. Sign up for our Newsletter or subscribe on your preferred podcast platform so that you don't miss out on future episodes.
