Last year was an uncharacteristically strong year for active management. According to Interactive Brokers, retail traders on its platform beat the S&P 500, generating an average return of 19.2% versus the index’s 17.9%. Furthermore, the broker’s hedge fund clients did even better by generating an average return of 28.9%.

If you were part of that cohort, then congratulations are in order! Outperforming the S&P is no small feat… but if lately it feels like the strategies that helped you smoke the index last year have lost their juice, I’m here to tell you that it’s not your imagination.

Around Halloween, markets started to undergo a broad-based rotation, and those changes don’t appear to be going away anytime soon.

Here are the three rotations that I’ve seen that have shifted the drivers of portfolio return: Gold, Growth, and the Global Trade.

Over the last two years, the two primary metals – gold and silver – have been on an absolute tear. From January 2024 to Halloween of last year, the price of gold went from $2,039 per troy ounce to more than $4,002/ozt – a 96% rally. Meanwhile, during that same timeframe, silver went from $22.94/ozt to $48.69/ozt – a 112% rally that was comparable to gold.

However, since the ‘Halloween Rotation’, silver has gone parabolic. As of this writing, silver is trading at $92.22/ozt – another 89% in less than three months, while gold has “only” appreciated to $4,616/ozt – a pedestrian 15%.

So why have the two metals decoupled since Halloween?

There are a couple reasons why silver might be outpacing gold: silver has industrial uses that gold generally doesn’t and supply imbalances can accelerate prices beyond demand as a store of value… but in my opinion, the parabolic price action we’re seeing in silver is mostly speculative as it’s structurally easier to generate return on a $100 asset than it is on a $4,600 one.

Outside of the market (beta) factor, the biggest systematic performance driver that explains equity returns is Growth vs Value.

Starting two years ago through the first week of October of last year, growth stocks had far outpaced value, generating a return of 63.4% vs 35.1% (not annualized)...

However, since the factor’s own ‘Halloween Rotation’, value stocks have turned the tables and outperformed growth 18.7% to just 5.5%.

So again, why the rotation?

It’s no secret that fundamental equity valuations have been stretched for some time now, with some metrics exceeding dotcom levels. However, with the introduction of a paradigm changing technology into the global economy – the likes of which hasn’t been seen since the dawn of the internet – valuations have been able to ‘bend but not break’ from the massive amounts of investment in AI… until now (maybe).

Just as we saw at the dawn of the internet age (for those of us who were around at the time), market hysteria is like a rising tide that lifts all boats until the winners and losers are eventually washed out. After two years of run-up, it looks like it’s time for a purge, and I’m guessing we’ll start to see some AI stocks fall by the wayside in 2026.

The final reason I believe we’re seeing a market rotation is a shift in sentiment away from the US and in favor of global markets. According to ETF.com, the outperformance of international stocks relative to the US early in the year can be partially attributed to fund flows.

So far, popular index ETFs like SPY, IVV, QQQ, and IWM have lost more than $20 billion in combined total outflows in the opening weeks of the year. Meanwhile, global and regional ETFs like the Vanguard International Stock ETF (VXUS) – which includes exposure to non-US developed nations and emerging economies like China (are we still really calling China an “emerging economy”), India, and Taiwan – have attracted more than $1 billion of inflows.

Why the US exodus?

This shift is likely multifaceted. First, U.S. equities may struggle to sustain current valuation levels. Second, U.S. geopolitical actions - warranted or not - may be increasing investor caution. Lastly, the U.S. fiscal trajectory appears increasingly unsustainable, reinforcing the case for diversification.

The Halloween Rotation marks a meaningful shift in what drives portfolio returns. Precious metals leadership is changing, value is reasserting itself after years of growth dominance, and capital is increasingly flowing beyond U.S. borders. Investors anchored to last year’s winners may find that adapting to these new dynamics - not doubling down on the past - will matter most in the year ahead.