When it comes to markets, everything is relative.
In 2025, the Dow Jones Industrial Average gained 12%. The S&P 500 was up 17%. The Nasdaq 100 finished higher by roughly 20%.
On the surface, those sound like solid years. And all things being equal, they were.
But markets don’t exist in a vacuum.
The MSCI Emerging Markets Index was up 34%. Asia gained 47%. Latin America rallied 52%. Africa surged 74%.
So was 12% in the Dow good? Was 17% in the S&P good?
Good compared to what?
If your capital was tied up in U.S. large caps while the rest of the world was compounding at two, three, even four times that rate, it wasn’t the right place to be.
There’s no such thing as “balance.” There are only allocations. There are only decisions.
Where did you put money? Why? What was the process? And, more importantly, have you adapted?
Because the real question is not what worked last year.
The real question is whether you’re positioned for what’s working now.
From Mag 7 to Mag Who?
So far in 2026, the S&P 500 is up less than 1%. The Nasdaq 100 is actually down on the year.
Meanwhile, MSCI Emerging Markets Index is up another 14%. Asia is up 19%.
Latin America is higher by more than 20%, with Brazil and Peru both up roughly 24% out of the gate.
This is not a small divergence. It’s a structural one.
Look at the ratio between the S&P 500 ETF (SPY) and the MSCI Emerging Markets ETF (EEM).
It just closed at new multi year lows, completing a major top and following through to the downside:
That’s not noise. That’s a trend.
And trends are what pay.
For more than a decade, U.S. mega-cap technology was the only game in town.
Allocators crowded into the same handful of names. Career risk demanded it. Relative performance forced it.
Now the leadership is coming from the places with less or no exposure to those very themes.
Different countries. Different sectors. Different drivers.
That is what trend change looks like.
The question is simple.
Have you adjusted to the new leadership? Or are you still positioned for the last cycle, waiting for it to come back?
Drill Baby Drill, Not Code Baby Code
I’m old school. When I think about emerging markets, I think about commodities.
Yes, there is plenty of technology exposure today in places like China, Taiwan, and Korea. That’s led some investors to label emerging markets as a new growth trade.
But the market doesn’t care about labels. Price is the final arbiter.
Right now, especially in Latin America, this is still very much a commodities story.
Latin America just hit fresh 52-week highs relative to the S&P 500. That’s not subtle. That’s leadership.
At the same time, oil and gas services stocks are pressing new highs relative to the S&P as well. The VanEck Oil Services ETF (OIH) is already up more than 36% to start the year:
That’s not random. That’s sector exposure doing the heavy lifting.
The S&P 500 has less than 5% combined exposure to energy and basic materials. The Nasdaq 100 has less than 2%.
In Latin America, energy and materials make up more than 32% of the index.
So when Natural Resources are leading globally, which they are, it shouldn’t surprise anyone that the markets with real exposure to those sectors are outperforming.
This is not complicated. It’s math.
For years, investors were told the United States was the only place to be. Mega-cap growth. Asset-light businesses. Software. Platforms.
That was the narrative.
But markets rotate. They always have.
The trend shifted last year. In 2026, it’s accelerating.
You can argue with the narrative. You can debate the macro. You can hope for a reversion.
Or you can follow the trend.
Everybody thought there was only one place to hide.
Everybody was wrong.
The only question left is whether you’re still positioned for yesterday, or if you’re willing to participate in what’s actually working today.
Stay sharp,
JC Parets, CMT
Founder, TrendLabs