For me, the start of the year is less a ritualized new beginning than an analytical moment. In Paris, where I live and work, everyday life often resumes early on—without a real break, without much distance. That's precisely why I consciously take time at the start of the year to classify the dominant narratives. When everything seems to be in harmony at the market level, I become skeptical. This is precisely the feeling I have at the start of 2026: many issues are familiar, have been played out many times before – and are increasingly driven by momentum. For a contrarian value investor, this is not a comforting sign, but rather a call to take a closer look.

Momentum is losing steam – fundamentals are returning

2025 was another year in which momentum factors dominated entire market segments: from the euphoria surrounding GLP-1 therapies to trade tensions and the ongoing AI boom. Towards the end of the year, this momentum noticeably slowed. At the same time, European stock markets performed much more unevenly. In such an environment, stock picking becomes more important to me – not as a question of style, but as a necessary response to growing discrepancies between price performance and fundamentals.

This development was also evident over the course of the year. Phases of increased volatility – such as in connection with the US tariff increases announced in the spring – initially led to significant market distortions, but subsequently opened up selective entry opportunities. For me, the decisive factor was not so much the short-term market direction as the ability to separate price signals from actual value signals.

Active allocation instead of passive adjustment

In an increasingly erratic market environment, I am focusing more on active portfolio management. I have adjusted my exposure to the banking sector and added Erste Group to the portfolio. In addition, positions in the corporate services sector have been built up, including Publicis. These steps served to further develop the portfolio structure in the respective market environment.

Focus on the productive economy

For some time now, I have been placing greater emphasis on the concept of the productive economy. The focus is on companies with tangible assets, clear operational expertise, and comprehensible value creation. I prefer tangible assets and deliberately avoid consumer staples. I am continuing to develop this approach by increasingly basing my stock selection on the ability to return capital to shareholders on a sustainable basis, regardless of the sector. Industrial, service, and financial companies are treated equally in this regard.

Looking ahead to 2026, one aspect is becoming increasingly important to me: the clarity and visibility of capital allocation. In an environment of heightened uncertainty, I favor companies whose investment, distribution, and balance sheet policies are transparent and comprehensible.

Value as an adaptation strategy, not a timing tool

Value investments are often understood as temporary positions – as a means of exploiting a particular macroeconomic window. I do not share this view. For me, value is based on a conscious, often contrarian market analysis in which undervaluations are identified in a targeted manner and without sectoral reservations. This is precisely why this approach is suitable for navigating economic fluctuations and adapting to different market regimes.

In 2026, it is precisely this adaptability that is likely to be decisive: less momentum, more differentiation – and an environment in which fundamentals once again play a more decisive role.

Yann Giordmaina, Head Value Division and Fonds Manager, LFDE.