My Biggest Lessons From 2025 — And the Surprising Sector I’m Watching for 2026
Here's what surprised me most in 2025, what I would have done differently, and one stock I’m buying and one I’m selling going into 2026.
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Looking back on 2025, it’s hard not to respect how well the markets held up despite constant challenges. It was a year defined by resilience. These thoughts come from a recent interview I did on the Stocks & Markets podcast and focus on what mattered most in 2025 and what I’m watching as we head into 2026.
What Surprised Me Most in 2025
The biggest surprise was the market’s resilience. Coming into the year, valuations were stretched, tariff headlines were nonstop, every Fed meeting felt uncertain, and geopolitical risks in the Middle East, Ukraine, and parts of Asia surfaced regularly.
On paper, it looked like the setup for a meaningful correction.
Instead, the market climbed the wall of worry. The S&P 500 delivered strong double-digit gains, about 18% year to date as of mid-December, driven by solid earnings growth, productivity gains from AI, and eventual rate relief. This happened even as market breadth weakened later in the year. Money flows stayed broadly supportive, and investors remained focused on fundamental growth despite elevated valuations.
What I Would Have Done Differently
If I could rewind the year, I would have been more disciplined about protecting profits.
Selling winners is hard. Too often, tax concerns or fear of missing further upside kept positions intact even when prices were clearly extended. In hindsight, I would have leaned more heavily on my Trim vs. Sell framework:
Trim when the business outlook remains strong but price has outrun fundamentals. Giving back gains is often more costly than the tax bill, especially when cash and short-term fixed income offer reasonable yields.
Sell only when the original investment thesis is broken.
I would have locked in more profits from big winners and rotated earlier into areas just starting to improve. The volatility in 2025 reinforced how important disciplined selling is to long-term success.
The Sector That Could Surprise in 2026
Looking ahead, I think the REIT sector could surprise to the upside. The Real Estate Select Sector SPDR Fund (XLRE) looks like a rebound opportunity with 12% to 15% upside potential. Many names have been unloved and stuck in long consolidation ranges.
In my bottom-up fundamental and technical work, XLRE ranks just behind Technology and Communication Services. If leadership rotates, real estate, financials, and healthcare are logical beneficiaries.
Standout REITs include Welltower (WELL) , Prologis (PLD) , American Tower (AMT) , Equinix (EQIX) , and Simon Property Group (SPG) .
Valuations are reasonable, with average price-to-funds-from-operations around 20 times, only modestly above historical norms. Expected growth is near 6%, yields are around 3.4%, and returns are supported by long-term leases. Technically, the sector is improving, relative strength versus the S&P 500 is turning higher, and many holdings are signaling buys. Historically, rate cuts have been a strong tailwind for the group.
Lower rates combined with secular drivers such as data centers, industrial real estate, 5G, and AI infrastructure create a favorable setup. XLRE offers better upside asymmetry than financials, which I see closer to 10% upside next year.
One Stock I’m Buying and One I’m Selling
A stock I like going into 2026 is Dutch Bros (BROS) , which I wrote about here. The growth story remains compelling.
Unit expansion is accelerating, existing shops are producing record volumes, and loyalty-driven digital ordering continues to gain traction. Same-store sales are consistently strong, and management has a clear path to significant unit and revenue growth over the next several years.
Recent results reflected that strength, with solid revenue growth, improving profitability, and continued momentum.
From a technical perspective, the stock is holding key support levels, showing positive relative strength, and setting up for a potential breakout.
To fund new capital into Dutch Bros, I am comfortable selling Starbucks (SBUX) . Slower growth, pressured margins, and a premium valuation make it a natural source of funds. Rotating from Starbucks into Dutch Bros shifts exposure from a mature brand to a faster-growing disruptor in the same coffee space, with better upside potential.
Final Thoughts
2025 was a reminder of how resilient markets can be and how important it is to protect gains along the way. Heading into 2026, I like the setup in real estate and select growth names such as Dutch Bros.
Stay disciplined, protect profits, and stay focused on high-conviction opportunities.
This article reflects my personal views and analysis. It is for informational purposes only and not investment advice. Always consult a financial advisor for guidance specific to your situation.
I’d love to hear your thoughts and comments. Follow me on twitter: @louisllanes
At the time of publication, Llanes was long BROS.
