I presume there will also be a lot of retail selling of winners this year from people who put it off so the taxes would be delayed. Though I'm not sure how much retail moves the needle compared to funds.
Such predictions are of course difficult. Generally, managers will often 'stick to what is working' and only manage exposure levels. Certainly managers will take losses prior to year end, and exit positions they do not want to be embarrassed by. With some economic uncertainty, managers 'might' get a bit more defensive, which good benefit health, staples and utilities. But interest rates will play a role. If rates do go down, gold and tech will probably still do well. Banks should be fine but we would not expect the same degree of returns as this year. Retail is still important, and yes we might expect high volatility in early January as investors shift selling into a new tax year. But this can be offset by the January bounce in tax-loss selling stocks (which were oversold in December) so there is some balance. Of course, in addition to rates, the market will continue to be moved by corporate earnings. The outlook seems good at this time, but of course much can happen. Peter Hodson will soon be doing his annual 'prediction' column in the Financial Post, with publication on Dec 20. He was 5 for 5 for 2024, but 2025 was not a perfect call.