This January issue of the Observer lingers over a stretch of the river that many hurried past. Amid the noise and anxiety of 2025, extraordinary things went quietly right: a vast expansion of green energy in China, meaningful progress against several endemic diseases, and other developments that rarely commanded headlines but may shape lives for decades to come.
Uncertain times require clear thinking, and clear thinking requires … well, a functioning brain. In “New Year’s Resolution #1: Avoid lobotomies” we look at the threat that AI seductively poses to brains … yours, your alma mater’s, and your investment advisor’s. A short sidebar piece, “What Five AI Told Me About Investing in 2026, and what their answers tell you,” highlights the problematic patterns in AI’s response to an (admittedly unfair) question about what’s going to win in the year ahead.
Our colleague Lynn Bolin contributes two complementary pieces exploring income-focused investing for the uncertain years ahead. In “My 2026 Investment Plan,” Lynn walks through the construction of his conservative Core TIRA portfolio – a traditional IRA designed to generate a steady income of at least 4% while limiting drawdowns to -15% during severe bear markets. He demonstrates how different funds yield differently depending on whether they’re responding to interest rate cycles or stock market cycles, and evaluates adding Standpoint Multi-Asset (REMIX) to improve diversification. Particularly valuable: Lynn’s analysis of how his portfolio performed through both the COVID bear market and the Great Normalization’s rising rates, and his discussion of why he’s moved from a 65% stock allocation to 50% as forecasts from the OECD, Federal Reserve, and Conference Board all point to slowing growth ahead. Vanguard’s own time-varying model now recommends a 40/60 stocks-to-bonds allocation – a near-revolutionary flip from the traditional 60/40.
In “A Closer Look at Income Strategy,” Lynn drills deeper into the mechanics of generating steady income in an environment where short and intermediate Treasury yields are falling while long-term rates rise. Working from 30,000 feet (which Lipper categories produce income in low-yield environments) down to ground level (specific fund recommendations), he identifies funds that maintained consistent yields through multiple market cycles. His analysis reveals that some funds distribute more when stock market opportunities appear limited, while others fluctuate with interest rates – and a select few provide genuinely steady income regardless of market conditions. The payoff: an example portfolio that achieved 7.7% annual returns with a maximum drawdown of just -9.8% over the past six years while yielding 5.2%.
The Shadow, as ever, surveys the month’s most consequential changes in the fund and ETF world in “Briefly Noted.”
We also pause, briefly and with gratitude, to acknowledge those who have sustained the Observer—financially, intellectually, and through simple acts of encouragement. And then, before the current carries us onward, we raise a glass to what has been, to what is, and to what may yet emerge from upstream.
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