Year End Update
2025 was a year of surprises — most of them pleasant, at least for equity investors. As we close the books, here is what mattered, what we learned, and how we are thinking about the year ahead.
The Year in Review
U.S. equity markets delivered strong returns for the second consecutive year, driven by a handful of mega-cap technology companies and the accelerating AI investment cycle. The S&P 500 finished the year well above where most strategists expected.
But it was not a straight line. Markets navigated geopolitical uncertainty, shifting expectations around Federal Reserve policy, and a brief but notable correction in the third quarter that tested investor resolve.
What Worked
- Staying invested: The biggest risk in 2025 was being on the sidelines. Market timing would have been punishing.
- Quality bias: Companies with strong balance sheets and consistent earnings outperformed, particularly in the back half of the year.
- Tax management: Active tax-loss harvesting during the Q3 correction created meaningful value for taxable portfolios.
What We Are Watching for 2026
- Federal Reserve rate policy and the path of short-term interest rates
- Earnings growth broadening beyond mega-cap technology
- Geopolitical risk, particularly around trade policy and energy markets
- Continued evolution of AI's impact on corporate productivity and margins
Your Plan Comes First
As always, your investment portfolio exists to serve your financial plan — not the other way around. Whether 2026 brings calm or volatility, your plan was built for both.
Past performance is not indicative of future results. All investing involves risk, including the possible loss of principal.