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Another good year in the books!
Brett Lozowski
2025 was another good year for financial markets. However, it wasn’t exactly smooth sailing to the top.
The US stock market (S&P 500 index) finished the year gaining 17.8%. The International stock market (Vanguard Total International Stock Index) had a record year posting a 32% return. Bonds (US Aggregate Bond Index) finished the year up 7%.
Financial markets overcame a 20% correction in April due to global trade tensions and tariffs. Yet, financial markets remained resilient and finished the year at all-time highs.
Wall Street celebrated three different cheers to the New Year:
- The Federal Reserve lowered interest rates three times in 2025 benefiting bonds.
- Inflation continued to ease despite new global tariffs being introduced.
- Corporate profits surged due to technological and AI advancements.
Many have raised the question, “Is it out of the ordinary for financial markets to do this well?”
The 2025 stock market had its 7th best year in the past decade and recorded its 9th best year over the past 20 years. What does this tell us? The terrific year for financial markets was just an average year based on recent history!
As the saying goes, past history is not indicative of future return. In the past century, there have been quite a few decades with lackluster returns. It is anyone’s guess what happens next. The only certainty in financial markets is fluctuation in either direction.
When times are good, you will see us selling stocks. This helps fund your cash flow needs or allows for rebalancing. As the saying goes, “Buy low and sell high!” If things go sour, you will certainly be thankful that we are trimming the stock gains along the way.
Our New Year’s Investment Resolution is to keep you diversified, rebalance quarterly, and ease any worry minutes you may have about financial markets uncertainty. We are always happy to chat if there is anything on your mind.
We are grateful for you all. Cheers to the New Year!
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