Looking Forward Without Losing Perspective
A few notes on 2025 events and a couple of thoughts regarding 2026 before January is over.
Stocks
At home and around the world, the equity markets had a good year. The S&P 500 was up 17.9% in 2025 with the Mag7 responsible for 42% of this return. The DJIA was up 14.9% and the NASDAQ 100 was up 20%. On the international front, the MSCI All-WorldxUS Index was up more than 29%, with Germany, the UK, Italy, Spain, Greece, Poland, South Korea, Vietnam, South Africa, Brazil, and Mexico all outperforming the referenced index.
Bonds
On the debt front, outcomes depended on geography. Locally denominated emerging markets debt was the winner, with many emerging markets debt funds finishing up 20% or more for the year. Those funds or positions tied to the U.S. and U.K government were in the black, though just barely, up from 0.40% to 2.6%.
Dollars and Crypto
The U.S. dollar had a tough year, off more than 9% against a basket of six currencies. While Bitcoin started the year strong and reached highs of $120,000 it turned down in Q4 and remains rangebound between $85,000 and $90,000.
Precious Metals
Gold and silver were the place to be as both retail investors and central banks pursue certainty in a very uncertain world. Gold was up more than 65% in 2025 and silver more than doubled during that time. And just in January, silver is up more than 50%, to $114 per ounce.
Real Estate
U.S. housing prices and overall household wealth continued to rise, though there is price weakness in some residential real estate markets. Luxury home sales saw notable growth. Globally, institutional investment in real estate increased and was especially noticeable in markets such as India.
2026 Observations
Russia and Ukraine – at some point, Russia will get tired. They are drafting 50 year olds and hiring mercenaries.
U.S. and the World – the Trump administration is changing America’s role in the world, which role has been in place for 80 years. The reactions range from irritation to rage to entertainment to applause, depending on your political views and how engaged you care to be in the process.
World Debt – is so large as to be unmeasurable. Attempts at measuring such suggest numbers of $350 trillion to $500 trillion. We see no reason to have debt on either side of the balance sheet.
Commercial Shipping- non-state actors’ attacks on commercial shipping are increasing the cost and delivery times of international ship transport. This will show up in pricing and availability.
Since 1989 no top-performing S&P 500 sector has gained 20%+ over a decade and not lost money over the ensuing 10-year period. The tech sector has achieved this 20% annual/decade point.
The Schiller CAPE ratio stands at 39, the second-highest measure in 150 years. It stood at 44 in 1999.
Private credit, meaning non-bank institutional lenders, has grown into a multi-trillion dollar industry. Private credit makes loans to companies who don’t qualify for traditional bank loans, and then often sells this debt to retail investors through vehicles such as floating rate funds or interval funds. This will not end well.
There will continue to be new innovations designed to increase our quality of life. There will continue to be companies who make products and offer services which meet the needs of people. And there will always be challenges in the world. I’ve found a focus on what is going right instead of what is going wrong seems to serve me well.
And until we see you again, wishing you only the best.