Commentary for December, 2025

Hello all - we hope you had a nice December.  It sure went quick!  

The markets were roughly flat this month.  The Dow added 0.7%, the S&P 500 gained a slight 0.06%, and the Nasdaq, which has a higher concentration of tech stocks, was down 0.5%. 

Here’s a look at how the markets moved this month:

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We also wrapped up a solid 2025.  The Dow was up 13%, the S&P 500 gained 16%, and the Nasdaq rose a nice 20%.  

Here’s a look at how the market did this year.  You can see it’s still hanging in the trading range that started after the April tariff announcements. 

Here’s a look at how the various market sectors performed this year. The top-performing sector, “Comm. Services” is communications stocks, which includes names like Google, Facebook, and Netflix.

Market volatility hit the lowest levels of the year this month.

One concern we have with the current market is the concentration – a handful of large stocks make up the bulk of the index.  This is not a healthy sign for the market. 

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We don’t spend much time on commodities, but the currency and metals markets were very interesting this year.  

The US Dollar had its weakest year since 2017, down over 9%.  There were several reasons for this.  Most notably, investors widely see a more dovish Fed (more likely to take a stimulative approach) in the coming months and years based on the likely Trump Fed replacement.  Rate cuts are coming next year, which brings borrowing rates down but the currency does not do well.  

There's also the massive debts and the Fed vs. Trump bickering that also weighed on the currency. 

When currencies do poorly, commodities and metals tend to do better.  Gold and silver had incredible runs this year.  

Here’s a long-term look at gold, where the rapid rise in 2025 is easy to see:

Silver was even more remarkable.  It benefited from the weaker currency, but it’s also used in many important products today, like AI data centers and electric cars.  China announced new restrictions on exporting silver beginning Jan. 1, so this also fed into the rapid rise.

 

This is not an area we would be excited about putting new money into, as it’s showing all the characteristics of a bubble.

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FED

The Fed also had an impact on the markets this month, where they held a policy meeting and announced another reduction in interest rates and will buy more bonds to keep rates down. 

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ECONOMY

We had some very positive economic reports released this month, but there’s also some reason to worry.

First, the GDP report showing the strength of our economy came in surprisingly strong. 

The employment report was also positive, albeit only slightly.

This is the concerning part.  Employment seems to be weakening.  Right now, there aren’t a lot of jobs being lost, but there aren’t a lot being added, either.  When looking at hiring on an annual basis, we’re roughly flat.

There has been an increase in the amount of job cut announcements, too.

A lot of these leading indicators have been declining and tend to foreshadow a recession.  This can be seen in the red line in the chart below.  Every time this line declined in the past, a recession followed.

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INFLATION

The government shutdown has distorted the inflation metrics released this month, but when looking at inflation on a year-over-year basis, inflation is moving lower.

However, when we look at inflation month-by-month, prices are clearly still rising. 

When excluding food and energy (what economists call the “core” inflation), prices are still higher every month.

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OTHER ECONOMIC DATA

Other economic data releases were mixed this month, too.

The manufacturing side of the economy showed another decline, while the service side saw another increase. 

Retail sales were exactly flat, but when you exclude auto sales, the retail sector looks a little better.

Durable goods took a turn lower.

Consumer confidence continues to be an issue as it continues to fall.

Small business optimism rose ever-so-slightly.

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Where does the market go from here?

In the very short term, looking out a few weeks, we may need to move a little lower before turning higher.  We’re still on the expensive side looking out a little further, so we would stay a little more cautious at this time.  




This commentary is for informational purposes and is not investment advice, an indicator of future performance, a solicitation, an offer to buy or sell, or a recommendation for any security. It should not be used as a primary basis for making investment decisions. Consider your own financial circumstances and goals carefully before investing. Past performance cannot guarantee results.

Commentary for November, 2025

Hello all - we hope you had a nice November.  

The markets saw some weakness early in the month, but a late-month rally saw them close well off the lows. For the month, the Dow added 0.3%, the S&P 500 gained a tiny 0.1%, and the Nasdaq, which has a higher concentration of tech stocks, had its first monthly loss since March with a decline of 1.5%. 

Here’s a look at how the markets moved this month:

Here’s a look at the performance of the various sectors in the market:

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The market is still trading in the tight range we’ve seen the last several months.

Although the market was higher, this month saw volatility hit its highest level in six months.  We’ll talk more about what caused the volatility later.

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AI concerns sparked the selling in the markets this month. 

Tech stocks have grown massively over the past year on the back of the AI hype, with these companies spending billions and billions building out AI.  Investors have started to worry that the return on all this spending may not be large enough to justify the costs.    

The concerns were enough to trigger selling that sent the tech sector and broader markets lower. 

There remains a lot of excitement around AI, though, and we are probably still in the early innings of this run.  

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Interestingly, Bitcoin also had a very rough month. 

It’s interesting because Bitcoin and tech stocks tended to move together.  As we can see in the chart below, the gap has become very wide.  Is it possible tech stocks sell-off even more?  Or perhaps Bitcoin will rebound to close the gap?

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FED

The Fed also had an impact on the markets this month.  

The minutes from their latest meeting suggest that a widely-anticipated rate cut in December may not happen.  Stocks fell on the news.

 

The odds of a rate cut were as high as 100%, but this news sent those odds as low as 25%.

Comments from other officials later in the month suggested that a rate cut in December would be likely, in their opinion, and stocks rebounded on the news.  

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INFLATION

With the government shutdown, many economic indicators were not released, including the CPI.  However, the PPI was released, showing inflation growing again at the business level. 

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OTHER ECONOMIC DATA

Other economic data releases were light this month, too, but the info we did receive showed a mixed picture.

The manufacturing side of the economy showed a decline, while the service side saw a decent increase. 

Retail sales showed a slight increase.

Consumer confidence continues to be an issue as it continues to fall.

Small business optimism fell again, too.

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Where does the market go from here?

We hit very oversold (cheap) levels in the market this month, and we’re now in that rebound.  There may be some time left in the rally, and December is historically a good month for stocks.

We hit very high ‘Fear’ levels this month, and that tends to occur at bottoms of markets.

Zooming out and looking at a much bigger picture, indicators suggest we are at very expensive levels in the markets.  This is something to keep in mind for the longer term.

This commentary is for informational purposes and is not investment advice, an indicator of future performance, a solicitation, an offer to buy or sell, or a recommendation for any security. It should not be used as a primary basis for making investment decisions. Consider your own financial circumstances and goals carefully before investing. Past performance cannot guarantee results.

Commentary for October, 2025

Hello all - we hope your October was a nice one.

Yet again, stocks were higher on the month. The Dow rose 2.5%, the S&P 500 gained 2.3%, and the Nasdaq, which has a higher concentration of tech stocks, added a solid 4.7%. 

Here’s a look at how the markets moved this month:

Here’s a look at the performance of the various sectors in the market:

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The market is still trading in the tight range we’ve seen the last several months.

 
Although the market was higher, this month saw volatility hit its highest level in six months.  We’ll talk more about what caused the volatility later.

This month was also unique in that we saw a day where the S&P 500 (which has 500 stocks) had 300 stocks move lower on the day, but the market still closed higher.  This hasn’t happened in 35 years!

 

In fact, the market continues to rise while fewer and fewer stocks are higher.  In a healthy environment, as markets rise, more stocks should be above their recent average.  That’s not the case today.  Below is a chart showing fewer stocks above their recent averages.  

This can happen because big AI-related stocks keep getting bigger, so they have a larger impact on the market.  Right now, the ten biggest stocks make up 41% of the S&P 500.  That means 490 stocks make up 60% of the market.  That’s incredible, and potentially dangerous. 

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We’ll look at gold real quick, which had been a hot story as it rose very quickly to new record highs.  The bubble finally deflated this month. 

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What was going on with the markets this month?

The cause of the volatility earlier this month was due to concerns about the banking sector.  

Think back a few years to 2023 when smaller banks like Silicon Valley Bank collapsed.  Markets fell sharply on the news since they were the first banks to collapse since the 2007-08 banking crisis.  This sector had been fairly quiet since then, but this month, two more regional banks collapsed.  Investors decided to sell first, ask questions later and markets fell on the news.

It turns out, the problems with the two banks that failed were isolated to bad loans they made to questionable borrowers.  The issue quickly faded and markets recovered.

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CORPORATE EARNINGS

With little to no economic data out from the government this month due to the shutdown, corporate earnings grabbed headlines.  The results from the third quarter have been pretty solid, too.  About 65% of the companies in the S&P have reported results and according to Factset, earnings are up over 10% and revenue is up almost 8%.

This gave investors confidence and markets continued their march higher.  

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TARIFFS

Tariffs also grabbed headlines.  

One day we’d see negative headlines like this:

Then we’d get headlines like this:

 

This presents an incredibly frustrating investing environment.  But in the end, it looks like the issues with China have been cooled.  At least for now.

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FED

The Fed held a policy meeting this month and announced another highly-anticipated rate. 

 

Fed chief Powell seemed very reluctant to do this.  He made a point to note that a rate cut at their next meeting in December may not occur.  Prior to this meeting, investors thought there was a 91% chance of a rate cut in December.  That number quickly fell and now stands at 70%.

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INFLATION

Inflation was one of the few data points out this month. Inflation remains an issue as it holds at its high levels. 

When we look at inflation on a month-to-month basis, prices continue to rise.

When excluding energy and food from the calculation (which economists call the “core” measurement), inflation rose steadily yet again. 

While the CPI data was released this month, the PPI was not.  With the way things look in Washington right now, we might not get it next month, either!

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OTHER ECONOMIC DATA

Other economic data that was released this month showed a mixed picture.

While there weren’t any jobs data released, several big companies announced massive job cuts.  For example, UPS announced 48,000 job cuts and Amazon announced 30,000.  That’s a big deal!

With a more granular look at the economy, the manufacturing side rose slightly again, while the service side saw a surprising drop. 

Consumer confidence continues to be an issue as it fell yet again.

Small business optimism turned lower, too.

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Where does the market go from here?

We hit very overbought (expensive) levels in the market late this month, so it wasn’t a surprise to see stocks sell off a little.  These dips have been quickly bought, so it will be interesting to see if investors step in and buy more here.  We’d like to see a bigger pullback before we got too excited.

This commentary is for informational purposes and is not investment advice, an indicator of future performance, a solicitation, an offer to buy or sell, or a recommendation for any security. It should not be used as a primary basis for making investment decisions. Consider your own financial circumstances and goals carefully before investing. Past performance cannot guarantee results.