2025 Has Certainly Been Quite A Year!
2025 Has Certainly Been Quite A Year!
2025 has certainly been quite a year! As I think back over the past nine months of the market, the term resilience bubbles to the top. Despite a President who likes to shake things up - especially regarding tariffs; despite the geopolitical turmoil and corporate and consumer indecision that has resulted; markets have risen. As tariffs have left the front page, the Federal Reserve and potential rate cuts have led the way along with higher corporate profits and the potential benefits of Artificial Intelligence. Investors who bought gold because they feared runaway government spending and un-sustained debt will lead to higher inflation have made money in gold. Investors who have shifted away from US companies to those overseas have seen strong returns as the dollar has weakened.
So, what is going on? Will markets continue to climb or will we have the correction so many talking heads are predicting? Can Federal Reserve rate cutes and tax refunds in the spring bolster consumers and lead to another leg of the rally? Will Artificial Intelligence generate higher corporate productivity and higher profits, which could lead to higher stock prices outside of the MAG 7 tech stocks? Will the government shutdown finally bring an end to this strong stock market?
The future is never known with clarity, but there appear to be reasons to remain optimistic despite daily headlines beating the negative drum. To me, the answer may be far less technical and more seasonal. To me, the first Christmas commercial and background jingle seen and heard last week signals a historically positive time for the markets and I see no benefit in feeling “Bah Humbug”.
What have we done in managing our fee-based portfolios this year? We played it safer early by reducing equity and using gold and other hedges to offer upside without equal downside. We have slowly added equity since April and plan to add a bit more in the next month. We will maintain a position in commodities to hedge against inflation and stand ready to change our mind if economic indicators change. Until then, enjoy the ride and the holidays.
