In a world dominated by negative headlines and constant “breaking news,” it continues to be difficult to maintain the long-term mindset required to be a successful investor. The news cycle is short-term by design. Financial plans are not.

That tension makes perspective more important than ever.

Despite the noise—especially out of Washington—2025 turned out to be an excellent year for investors. The economy remained resilient, corporate profits surprised to the upside, and nearly every major asset class delivered positive returns.

Below is a look back at what actually happened in 2025, followed by a brief discussion of what we may be heading into as we turn the page to 2026.

First, the Returns

2025 was another strong year across markets (total returns through December 31, 2025):

Returns that are positive across all asset classes like these don’t happen every year, but we’ll take them! It’s hard to overstate how broad-based the strength was in 2025.

The State of the Consumer

Household wealth continues to grow.
U.S. household net worth reached a record $167 trillion by the end of Q2 2025 (the most recent data available), and that figure is almost certainly higher today given asset appreciation in the second half of the year.

Even more remarkable: since the start of 2020, household assets have increased by roughly $60 trillion, while liabilities have risen by only $4 trillion. That means assets grew by about $15 for every $1 of new debt.

This expansion of wealth rarely makes headlines, but it matters.

Consumers remain financially resilient.
Despite ongoing concerns about affordability, inflation-adjusted checking account balances are higher across all income levels than they were in 2019. In addition, the household debt-to-income ratio, the percentage of income used to service debt, is lower than at any point between 1980 and 2020. Consumers still have spending capacity.

Inflation and interest rates stayed in focus.
Partly as a result of last year’s political campaigns, many feared a renewed inflation surge in 2025 that never fully materialized. The most recent inflation reading stands at 2.7%, down from 2.9% a year earlier. Uncertainty around tariffs caused the Federal Reserve to pause rate cuts for much of the year, but by late 2025, the Fed resumed easing, lowering rates by 0.75% overall.

The State of Corporate America

GDP growth surprised to the upside.
Tariff concerns initially pushed GDP forecasts lower, yet real GDP growth is now expected to land around 2.6%, roughly in line with earlier expectations. That resilience continues to be a defining feature of this economic cycle.

Profit margins reached multi-decade highs.
Despite widespread skepticism, corporate profitability remained strong. S&P 500 companies reported net profit margins of 13.1% in Q3—the highest level in more than 15 years. This helped drive 39 new all-time highs for the index in 2025.

The State of Investing

It wasn’t just the S&P 500.
International stocks, bonds, small caps, real assets, precious metals, and even cash all delivered positive returns. For diversified investors, 2025 was a reminder of why asset allocation matters.

A brief word on gold and silver.
Gold finally surpassed its prior inflation-adjusted peak, last reached more than 45 years ago. Silver hit a new nominal high but remains far below its inflation-adjusted level from 1980. For perspective, $1,000 invested in stocks over that same period would now exceed $170,000.

Artificial intelligence dominated the conversation.
AI investment reached historic levels, fueling concerns about a potential bubble. Whether today’s enthusiasm proves excessive is unknowable. History, however, is instructive. Railroads, electricity, and the internet all experienced speculative periods, and all permanently raised productivity and economic growth. AI appears to be following a similar path, with real efficiency gains already emerging across industries.

Looking Ahead to 2026

Forecasting the future is always harder than explaining the past.

At present, expectations remain cautiously optimistic. The U.S. economy is projected to continue expanding, supported by ongoing AI investment, strong consumer spending, particularly among higher-income households and retirees, and fiscal stimulus from the OBBBA.

Inflation is expected to hover around 3%, slightly above the Fed’s target, while Wall Street expects, currently, that the Federal Reserve will continue a measured rate-cutting cycle. Corporate earnings growth is expected to persist, though elevated valuations could lead to periods of volatility.

Key risks include:

• Persistent tariff-related inflation
• Concentration risk in AI and technology
• Geopolitical and policy uncertainty

In short, the outlook for 2026 is positive, but not without risk. Diversification and discipline remain as important as ever.

The Bottom Line

2025 was a reminder that markets often perform far better than the headlines suggest. Uncertainty about the future will persist, but there is currently nothing on the horizon that clearly threatens the broader economy or long-term financial market trajectory.

That being said, the unforeseen happens regularly. We are likely to come across more difficult times at some point. Therefore, our focus remains unchanged: staying disciplined, diversified, and aligned with your long-term goals, regardless of short-term noise.

Thank you for the trust you place in us. I look forward to continuing the journey together in 2026.