The largest investment house in the world: forget everything you knew about diversification

“The global economy and the capital markets are undergoing a deep transformation due to megapowers and especially AI,” write the investment giant Blackrock and challenge the conventional concept of diversifying the investment portfolio: “With macro forces driving the markets it is difficult to avoid taking a big bet on their direction – therefore there is currently no neutral position in the market, not even exposure to stock indices.”

1The US will try to pass a test it has failed for 150 years: According to Blackrock, the US is facing a historic attempt to break the long-term growth trend of about 2%, a threshold that no technological progress in the last 150 years has been able to break. Thanks to the AI ​​revolution, which requires huge investments in infrastructure, for the first time the task seems possible. If this happens, the pace of research may increase and lead to scientific breakthroughs in areas such as materials, medicines and technology.

On top of that, Blackrock points out that the problem with AI today is not a lack of chips, but land and energy. Data centers may consume up to a quarter of all electricity in the US by 2030. Therefore, they recommend overweighting infrastructure and energy, and in particular the power companies and networks.

2Replica investments will permeate the entire economy: The forecast is that the huge capital investment needed to build the AI ​​infrastructure will affect the entire economy. BlackRock remains overweight US stocks and the AI ​​sector in particular. However, they write that “even if the numbers line up at the macro level, there is no guarantee that these revenues will flow to the tech giants that are currently building the AI ​​infrastructures.”

3More investments, more leverage: Due to the required replica investments a higher level of leverage is inevitable. The good news: Private sector startups are healthy, especially among public tech companies. The risk: a high structural cost of capital that will affect the wider economy. “A more leveraged system also creates vulnerability to shocks, such as a jump in bond yields resulting from fiscal concerns or a policy tension between inflation management and debt costs. Leveraged governments don’t have much room to absorb such shocks.”

4The dispersion illusion: Attempts to spread assets away from the US or away from AI constitute greater active decisions than in the past, claim Blackrock. They add that “traditional means of diversification, such as long-term bonds, no longer provide the protection they provided in the past.”

Instead of buying “a little bit of everything” or spreading out between countries, investors should be much more focused, and choose areas that can succeed in several different scenarios. Specifically, they point to private equity funds and hedge funds as a substitute for diversification.

5The celebration in developing markets is on its way to an end: After a strong performance in 2025, the phase of early interest rate cuts and strengthening of the local currency is over. Blackrock is moving to overweight bonds in foreign currency (dollars) and prefers bonds over stocks in these markets in the short term. In a five-year strategic view, there is a preference for equities in India due to its young demographics and rapid digitization. The one who still receives compliments and an investment recommendation is Spain, due to strong economic foundations.

Goldman Sachs: Emerging markets will cost more

Goldman Sachs anticipates a year of accelerated global growth and normalization of the inflation environment, conditions that are expected to support the markets alongside an easing monetary policy. However, alongside the optimism, the bank points to a series of risks that could cloud the forecast: from a renewed acceleration of inflation that will curb interest rate cuts, to disappointment in company profits or unexpected geopolitical shocks. With the pricing levels in the markets already high, Goldman Sachs estimates that the way forward will be accompanied by occasional volatility and “corrections” in the short term.

1The winds of struggle will be replaced by accelerated growth: The research department of Goldman Sachs predicts that the USA, the Eurozone and China will grow at rates of 2.5%, 1.2% and 4.8%, respectively. In the USA, the expectation is to accelerate in the first half thanks to supportive financial conditions and fiscal incentives. In addition, the bank predicts that US core inflation (excluding food and energy) will fall to an annual rate of 2.3%. This, despite the effects of the rollover of tariffs to the consumer.

2The main risk comes from the employment market: The main threat to the optimistic outlook comes from the direction of the US labor market. A sharp deterioration in employment could disrupt the baseline scenario, especially in light of indicators pointing to an increase in layoffs and unemployment. However, the cyclical acceleration planned for the first half of 2026 may be able to curb this trend.

3The central bank that will remain an exception in the landscape: Goldman Sachs expects further interest rate cuts from the Fed in 2026, with the labor market dictating the pace and extent of monetary easing. In addition, they expect that the European Central Bank will wait as the easing cycle continues, and that the Bank of Japan will remain the exception in the landscape and move towards a higher interest rate regime.

4The markets that will outperform: In the developed markets, 2026 is expected to present growth opportunities but also face high valuations and risks. The bank estimates that the assumptions will outweigh the risk factors and lead to single-digit returns at a medium-high rate. At the same time, they expect that the emerging markets will show continuous overperformance thanks to favorable macro conditions and commodity cycles (increase in demand and prices of raw materials that benefit the producing countries), alongside growth in profits, the expansion of AI, deregulation and exchange rate headwinds resulting from the weakening of the dollar.

5The dollar will weaken, oil prices will fall: According to Goldman Sachs, the US dollar, which has already lost about 9% this year against the basket of currencies, probably still has some way to go. In addition, they expect oil prices to fall as the oversupply in the market continues. On the other hand, gold, which reached record levels of more than $4,300 per ounce in 2025, may continue to be a focal point for investors who fear negative macro events, concerns about financing the high deficit in the US and the weakness of the dollar.

Bank of America: The prospects for a wonderful fourth year in the markets

“Do the stock markets still have room for growth? Are stock valuations too high? What, if anything, could disrupt economic growth and market resilience?” ask Bank of America economists and try to answer.

The Chief Investment Officer, Chris Heisey, claims that diversifying the investment portfolio is more important than ever and suggests including value stocks, small companies and stable sectors (such as health), to reduce risk and prepare for unexpected events. Alongside this, he suggests combining investments in issues with growing global demand, such as security and electricity production, in order to benefit from significant long-term growth potential.

1Six reasons for optimism: The American consumer is strong despite the difficulty of those with low incomes; Huge investments in AI infrastructure; Legislation encourages growth; The weakening of the dollar helps exporters and multinational companies to compete in the world; global recovery thanks to interest rate cuts and measures to encourage growth; And finally the Fed’s policy, which reflects a cycle of interest rate cuts.

2“Owl Market”: The bank’s investment manager calls the current situation “Owl Market” – cautious investors watching from the sidelines. As confidence rises, a lot of money that is “on the fence” may enter the market and push stock prices even higher.

3The risks: The main concern is that trade tensions will cause companies to pass on part of the new costs that will be created to consumers, which will have a negative effect on the spending side. Uncertainties surrounding AI and the need to prove profitability from the huge investments in it also create risk. Finally, the longest government shutdown in history in 2025 may continue to weigh on the economy and its full consequences have yet to be clarified.

4The potential opportunities: The bank emphasizes two areas – electricity and security. AI brings enormous power requirements to run data centers. Therefore, the bank marks as an opportunity the fields of energy efficiency, renewable energy, gas, nuclear energy, transmission infrastructure and critical minerals. Regarding security, the bank notes the global arms race, which also includes huge investments in cyber warfare, drones, space and satellite systems and AI-based defense systems. The weak point is that many security stocks are already “expensive” and trade at a high premium – which requires caution.

5Consequences of the interest rate reduction: After the Fed has already reduced interest rates three times in 2025, the bank is analyzing the possibility that the trend will continue. They point out that, unlike in the past, “the Fed lowers interest rates while the economy accelerates. A decrease in financing costs at such a time may provide additional fuel for a wide range of companies, and further expand the participation of additional stocks in the market increases.” The bank adds that “since 1990, following the easing by the Fed, small stocks have outperformed large stocks, on average, both in the short term and in the long term.” However, for bond investors, lowering interest rates brings with it the risk of lower yields, which may prompt bond purchases already now in order to “lock in” better interest rates.