People Have Memories. Markets Do Not.

People have memories. Markets do not. And that difference matters as we head into a new year.

As 2025 draws to a close, many of us look back. We summarise the financial year that has been, revisit setbacks and wins, and try to draw conclusions. Reflection has its place, but it can be problematic when investors let memory shape their view of markets.

When we do, we risk seeing patterns that are not there. Recent events feel more important than they are, narratives replace evidence, and confidence in the past clouds judgment about the future.

Unlike people, markets do not remember last year's headlines or yesterday's prices. They operate in the present, guided by expectations about the future. Each day, prices are set based on current information and forward-looking assumptions. Buyers and sellers assess what is known, agree on a price, and then the process resets.

This lack of memory is a strength. It allows markets to function as efficient processors of information, constantly updating without emotion, attachment or hindsight.

Successful investing is rarely about producing the best year-in-review or outsmarting the market. It is about understanding its mechanics and working with them. Over time, markets reflect human progress as companies adapt, innovate and create value. Despite inevitable setbacks, that progress has historically been reflected in long-term returns.

What investors can control is not outcomes, but decision quality. That means having a financial plan grounded in evidence, aligned with personal circumstances, and designed to keep emotion out of decision-making. For families with more complex financial situations, a trusted advisor can help turn that structure into consistency over time.

As we step into 2026, the lesson is simple: do not start the new year weighed down by last year's narrative. Give yourself the opportunity to start with a clean slate—just as markets do every day.