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As the calendar turns toward 2026, most investors will make the exact same resolution they always do: set it, forget it, and trust the market to do the work. Money will continue flowing into index-tracking ETFs, built on the belief that passive investing remains the safest and smartest path forward.
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That approach worked well when markets moved in broad, rising waves. When growth was widespread, trends were durable, and most sectors advanced together, owning the index was enough. But that environment is fading, and in 2026, relying on it could become a liability.
Markets are no longer moving as a single unit as leadership narrows. While some sectors are powering ahead, others are stagnating, and many are steadily losing capital. In this kind of market, passive exposure no longer offers protection and begins to dilute returns.
The performance gap already tells the story. An investor holding an ETF tracking the All Ordinaries is up around 5% for the year, which is solid, but uninspiring. Compare that with investors who focused on where capital has actually been flowing. Materials are up more than 28%, while Industrials have gained over 8%. That difference is not chance, it’s the result of selectivity.
This is the lesson markets are already delivering as we move toward 2026: broad exposure is no longer enough. Stock picking really matters.
Passive strategies assume that tomorrow will broadly resemble yesterday. But many of the trends that carried markets higher are now mature. When those trends roll over, they rarely do so gently. Volatility does not treat all investors equally. It punishes those who are fully exposed, indiscriminate, and slow to adapt. In a passive portfolio, there is no sidestep; you absorb the full impact.
Active investing, when done correctly, is not about constant trading or chasing noise. It is about recognising where capital is being allocated, where it’s being withdrawn, and which companies within leading sectors are genuinely delivering. It is about focus with discipline, not diversification for comfort.
Looking ahead, the market will reward investors who are prepared to be precise about sectors, entries and risk. The easy gains of simply owning “the market” are behind us, at least for now. What lies ahead is a market that separates preparation from complacency.
So, if there is one resolution that matters for 2026, it is this: stop outsourcing your thinking to an index. Learn to identify leadership, rotate with capital, and protect yourself when trends begin to fade.
Because in 2026, doing what everyone else is doing may feel safe, but it may quietly be the most dangerous strategy of all.
For now, good luck and good trading.
Dale Gillham is Chief Analyst at Wealth Within and an international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in bookstores and online at www.wealthwithin.com.au.
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