Every year, the market gives investors lessons. And every year, investors painfully relearn the same ones in new disguises.
That is why myths are so expensive. A myth is a comforting belief that survives even after reality has moved on. Myths don’t usually cause dramatic blowups overnight. Instead, they create quiet misalignments that compound over time, destroying wealth.
In 2025, three myths did most of the damage. Each one sounded reasonable. Each one quietly invited investors to make decisions for the wrong reasons.
The Myth of Short-Term Performance
It’s natural to want market performance to deliver a simple truth: winners are wise, losers are foolish. If something went up, it must have been right. If it lagged, it must be broken. But performance is a trailing indicator. It tells you what happened; it doesn’t tell you why it happened, or whether it is repeatable from here.
This year was a perfect example. By early December, the S&P 500 was up roughly the high teens for the year, which created confidence that “stocks are working again.” Yet a large share of that return was tied to a very small group of companies. By December 2025, the so-called Magnificent Seven represented about 35% of the S&P 500’s total value—seven companies out of 500, yet one-third of the index’s total capitalization.
That kind of concentration matters. It means many investors who thought they owned “the market” were actually riding a narrow AI-linked leadership wave. When a small set of names dominates index weight, performance can feel broad even when the drivers are thin.
The evolved investor doesn’t worship performance. They interrogate it: “What created these returns?” “Are those drivers durable, or cyclical?” “What must be true for this to continue?” “What happens if it doesn’t?” Performance in any given year is important, but it’s not the whole story. It is one chapter in a longer book.
The Myth That Quantity Equals Diversification
Most investors like diversification, but many don’t practice diversification well because the industry often sells it as a product package rather than a behavioral discipline. This myth shows up in two forms.
First, people diversify investments but not exposures. If you own five different funds that all hold the same mega-cap tech leaders, you aren’t diversified, you’re concentrated in disguise. In a year when the Magnificent Seven made up roughly a third of the index, that risk was easy to miss.
True diversification means owning assets that respond differently to different futures. Not just different tickers, but different economic engines.
Second, people diversify advisers but not philosophies. Families often assemble a roster of specialists: a wealth manager, a tax pro, an estate attorney, an insurance expert, maybe a business banker or philanthropic consultant. That can look like diversification. But if those professionals are not coordinated around one plan, you don’t have diversification. You have fragmentation at best and confusion at worst.
When advice is fragmented, the same few problems tend to show up: portfolios managed without a tax strategy in mind, investment strategies created without understanding optimal withdrawal strategies, and insurance decisions made without integrating long-term legacy goals. Diversification is not about quantity. It is about resilience and coordination.
This is one reason the family office mindset continues to flourish. It is not because people want more complexity. It is because they want one coherent strategy across investments, taxes, legacy, and life planning.
Myth Three: That the Fiduciary Label Guarantees Alignment
The fiduciary standard is a noble, client-positive principle. But in a marketplace where nearly everyone claims it, the label itself no longer tells clients very much. A fiduciary declaration without fiduciary design is like a nutrition label on junk food. It may be technically accurate, but it doesn’t make the meal healthy.
When the true meaning of fiduciary isn’t embedded into the structure of advice, what goes wrong is usually subtle drift: Portfolios stick with legacy holdings because changing them would reduce fees. Advice tilts toward a preferred platform or “house” solution. Conflicts are disclosed, but still shape decisions. Clients stay fully invested longer than prudent because outflows hurt recurring revenue.
Notice that most of these are not ethical scandals. They are model pressures. Human beings respond to incentives, even when they mean well. That’s why the evolved investor asks two questions, not one: “Are you a fiduciary?” and, more importantly, “How is your business engineered to make that real for me?” Labels can confuse, but structures deliver.
When Myths and Memes Intersect
Myths are old stories that refuse to die. Memes are new stories that spread faster than the truth. 2025 gave us both.
Retail investing speculation resurfaced in a very visible way last year. A fresh meme stock wave formed around heavily shorted names like Opendoor, Kohl’s, Krispy Kreme, Rocket Lab, and GoPro. Opendoor surged more than 300% over a month, Kohl’s jumped about 38% on Reddit-fueled short-squeeze chatter, and several others spiked on social momentum before cooling off.
These episodes don’t invalidate the market. They remind us how quickly narrative can overpower fundamentals when frictionless apps and social proof combine.
That meme energy made the three myths discussed above even more dangerous, because it intensified the temptation to chase what is winning, to “diversify” by adding more of the same, and to trust labels rather than processes.
The evolved investor replaces myths with better questions: “Is the story true, or just popular?” “Are my exposures truly different, or merely re-packaged?” “Are my advisors coordinated around my desired outcomes, or operating in lanes that benefit my advisors?” “Is fiduciary duty built into the design of the firm, not just declared?”
Markets will always create stories. Your job is to make sure your plan isn’t living inside one. If you can answer the questions in this blog with clarity and confidence, you can navigate almost any market year without being pulled off course by the myths of the moment.
If you want help pressure-testing your plan against these myths, we would be glad to talk through it with you.
