How 2025 Wrapped Up, And What We’re Watching Next We hope everyone had a great New Year and is off to a productive start to 2026! Below is our outlook on the year, along with some other housekeeping items… As 2025 came to a close, markets showed a little hesitation right at the finish line. The final trading sessions were mildly lower, and we didn’t get the classic year-end “Santa Claus rally” many investors look for. But zoom out, and the bigger picture was still very positive. The S&P 500 finished the year up roughly 16%, marking its third straight year of double-digit gains. That puts this run among the stronger multi-year stretches we’ve seen in quite some time. So even though things felt choppy at the end, investors who stayed focused on fundamentals were rewarded. Tech and AI-related names drove much of the upside early, but as the year went on, participation broadened and more cyclical areas joined the rally. That’s a theme worth carrying into 2026. Summarizing 2025 is easy: Markets delivered strong returns, earnings held up, and the economy avoided the slowdown many feared. The more interesting question looking ahead is this: Can the market repeat it, and what actually has to change under the surface for that to happen? History tells us markets can keep going, but rarely in the same way. That idea shapes how we’re thinking about the year ahead. Theme #1: Returns Likely Moderate and That’s Normal After several strong years, moderation is often the next phase. A few reminders from history: We’ve had a bull market in every decade for the past 100 years Nearly half of bull markets make it into a fourth year Fewer than 40% post strong gains in that fourth year Pullbacks of 10–15% are common even in healthy bull markets In other words, slower returns and occasional drawdowns are often the cost of extending a bull market. For 2026, returns are likely to be more earned, more selective, and more dependent on fundamentals and not broad multiple expansion. Theme #2: Leadership Will Change Leadership is how bull markets survive. Historically, about three-quarters of bull markets see leadership shift after the first three years. That shift usually extends the cycle rather than ending it. We’re seeing signs of that already: More sectors gaining traction Less reliance on a small group of mega-cap names Improving participation across healthcare, industrials, materials, and other cyclical areas This kind of rotation is healthy. It refreshes the market and creates new opportunities beyond the higher valuation areas. Theme #3: Volatility Picks Up As market transition phases, volatility usually follows. Why? Valuations are higher, leaving less room for disappointment Policy headlines and macro noise aren’t going away Expectations reset, which leads to sharper short-term swings Two additional factors matter in 2026: Midterm elections . Historically, midterm election years tend to bring more volatility as markets price in uncertainty around fiscal policy, taxes, regulation, and government spending. While outcomes often resolve positively over time, the path there is rarely smooth. High earnings expectations. When expectations are elevated, even “good” results can lead to pullbacks if companies miss slightly or guide conservatively. What Still Supports a Constructive 2026 Even with moderation and volatility, the foundation is still solid: Earnings remain the anchor Participation continues to broaden Rate pressure is no longer tightening - the Fed is now more of a tailwind than a headwind Margins and profitability are improving, helped by productivity gains The Economy: Slowing, Not Stalling Economic data in 2025 quietly surprised to the upside. Growth held up even as the labor market cooled. Unemployment levels moved higher but remained consistent with a slowing economy and not one of the verge of recession. The biggest story was and still is productivity. Companies continued to grow profits even as hiring slowed. That productivity backdrop helped support margins and earnings and is a key reason the economic foundation remains intact. The argument can be made that this is the AI effect. Where AI Fits Now AI is still a major investment theme, but the market’s focus is evolving. Capital spending topped $400 billion in 2025 and could approach $600 billion next year, largely tied to infrastructure and data centers. The shift now is this: The market is less interested in who is spending and more interested in who is benefiting. Moving from builders to adopters, simply companies that can translate AI investment into productivity, margin expansion, and real earnings growth. Venezuela We’re all aware of the capture of Venezuelan President Nicolas Maduro…an event that has broad geopolitical ramifications. Venezuela currently has the largest proven oil reserves in the world. The practical reality is that Venezuela currently produces a fraction of its potential because of years of underinvestment, sanctions, and infrastructure decay. Bringing production back online will take billions of dollars and years of work, it’s not an overnight fix or like turning on a faucet. Near term, expect some choppiness in oil as headlines drive volatility. Longer term, if Venezuelan production actually makes it back into global markets, it could shift supply and benefit U.S. energy players. Either way, geopolitics stays part of the backdrop for both commodities and equities. Retirement Contribution Limits Have Changed 401(k), 403(b), and most 457(b) plans: Contribution limit rises to $24,500 in 2026 (up from $23,500). IRA (Traditional & Roth): Annual contribution limit increases to $7,500 (up from $7,000). Catch-up contributions (age 50+): Up to $8,600 (up from $8,000). “Super” catch-up (ages 60–63): Up to $11,250 if your plan allows. We look forward to a great 2026 and navigating the year together. As always, don't hesitate to reach out if you have any questions or concerns.

The Hidden Risk of Market Concentration Why remembering market history matters when enthusiasm runs high Markets have a way of convincing us that what’s working now will keep working forever, until they remind us otherwise. Every decade tells a story about what investors value most. In the 1960s and 1970s, the world’s largest companies were industrial and oil powerhouses like IBM and General Motors. Manufacturing defined the economy, and scale was the ultimate advantage. IBM’s market value, roughly $75 billion in the mid-1960s, made it a symbol of innovation and stability with unimaginable in size at the time. By the 1990s, the digital revolution had arrived. Microsoft, Intel, and Cisco defined a new era of growth and optimism. At its 2000 peak, Cisco traded near 200x earnings and briefly became the world’s most valuable company...before losing more than 80% of its value when the dot-com bubble burst. The 2000s brought a return to tangible assets. Oil prices soared above $140 a barrel, and ExxonMobil topped global rankings. Yet, quietly, Apple, Amazon, and Google were building the platforms that would dominate the next decade. By the 2010s, technology wasn’t just a sector, it was the market. Apple became the first trillion-dollar company in 2018, and the top five U.S. tech firms...Apple, Microsoft, Amazon, Alphabet, and Meta made up nearly 20% of the S&P 500 by decade’s end. Now, in 2025, we’ve entered the AI era. Nvidia, once a niche chipmaker, has become the world’s most valuable company at roughly $4.5 trillion, with Microsoft and Apple close behind near $3.9 trillion each. The top 10 companies now account for more than one-third of the entire S&P 500’s value, the highest level of concentration in over 60 years. The innovation behind this is real - but so is the froth. We’re seeing valuations stretch well beyond long-term averages, fueled by enthusiasm that assumes growth will continue indefinitely. It’s an exciting story, but history reminds us that even the best companies can become over-owned and overvalued when optimism runs unchecked - and - you probably already own more big tech than you think. We’ve had a lot of conversations lately about companies like Nvidia, Microsoft, and Broadcom which are the names driving much of this year’s market performance. They’ve been incredible performers, and it’s easy to look at the headlines and wonder if you should be adding more. But here’s what surprises most investors: if you own index funds or large-cap mutual funds, you already own them - and quite a bit of them. That’s because most indexes are weighted by size, which means the biggest companies make up the biggest portion of your portfolio. The S&P 500 isn’t divided evenly across 500 companies. The top 10 names led by Nvidia, Apple, and Microsoft now account for more than one-third of the entire index. Nvidia alone recently represents over 8% of the S&P 500, contributing an outsized share of this year’s returns. So while you might feel diversified across hundreds of holdings, much of your return is really being driven by a handful of companies. That’s what we mean by concentration. None of this is necessarily bad. These are strong, profitable, innovative companies that have earned their place. But it’s worth remembering that market leadership always changes. The same pattern has repeated for decades...industrials to oil, oil to software, software to platforms, and now platforms to AI. Every era has its giants, and every cycle brings new ones. That’s why we stay focused on balance. We want your portfolio to participate in the growth of today’s leaders, but not become dependent on them. It’s easy to think, “I don’t own Nvidia,” when in reality, you likely do - through your S&P 500 fund, total market fund, or large-cap growth fund. We're not saying avoid these names or overhaul your strategy. This is just a simple reminder to recognize that even broad market exposure today comes with a lot of concentration in a few big winners and to make sure your portfolio stays diversified enough for whatever comes next. So when you see Nvidia or Microsoft dominating the headlines, know that you’re probably already along for the ride. Keep perspective, stay disciplined, and remember that markets always change faster than we expect.

Markets Are Up - Even If the Headlines Don’t Feel That Way It’s been really easy to miss since it happened so fast, but our job is to keep you in the loop. Over the last few months, the U.S. stock market demonstrated remarkable resilience as it rebounded sharply from the tariff driven lows in April to setting fresh record highs for the S&P 500 the last few trading days. Climbing more than 20% from its recent bottom, the rally has surprised many investors and once again highlighted the market's ability to recover, even when there is plenty in the news to give you pause. While markets can be prone to irrational swings in the short run, over time, they often reflect broader economic trends. Right now, investors seem to be looking past daily headlines and focusing instead on longer-term drivers: the AI transformation, central bank support, gradual progress on trade, and a generally stable global economic outlook. So far, the only formal trade agreement signed this year has been with the U.K., one of America’s strongest allies. An important step, but a limited one. With the broader trade picture still evolving and a July 9th tariff deadline hanging in the background, trade policy remains a wildcard that could reintroduce volatility. On top of that, economic data is mixed. First-quarter GDP showed contraction, consumer spending has been uneven, and the federal deficit continues to grow. Moody’s recent downgrade of U.S. government debt added to the concern, raising the potential for higher borrowing costs for US taxpayers. Additionally, tensions in the Middle East, particularly the escalation between Israel and Iran, create more geopolitical risk. Still, investors have largely stayed the course. Bond markets, unlike in 2022, are doing their part to stabilize portfolios. International equities have awakened from their decade-long slumber and are showing signs of leadership, suggesting that investors are beginning to look more globally for opportunities. As we all know, markets don’t move in a straight line, and plenty of risks remain. But this recent rally is a useful reminder: staying invested, especially during periods of uncertainty, often proves to be the right call. Maintaining a long-term perspective, diversifying across asset classes, and resisting the urge to react emotionally remain cornerstones of investing. Stay invested, even when it doesn’t “feel good” in the moment. Here's why... If you invested $10,000 in the S&P 500 from 2005 to 2024, you would’ve returned over 10% per year. But if you missed the best 10 days, your return would have averaged 6.1% annually. Six of the seven best days for the S&P 500, over that 20-year period, occurred after one of the worst 10 days. That is truly the power of staying invested. As always, if you have questions or concerns about your individual situation, please don’t hesitate to contact us.

Below is a link to a recent BBC article - that we had the honor of being interviewed for - with commentary from us on what the tariffs could mean to Nike and the footwear industry: BBC - Nike and Tariffs

What a Week: Let’s Unpack It It’s been a roller coaster in the markets this week - sharp declines, sharp rebounds, and a fair bit of investor whiplash. But amid the headlines and volatility, there are a few key themes worth highlighting. Equity Markets The biggest jolt came midweek when markets staged a strong bounce on Wednesday. What changed? President Trump announced a 90-day pause on proposed tariffs, easing tensions and giving the market a breather. That news helped shift sentiment, and we saw equities snap back after several tough sessions. This week, the S&P 500 surged over 9%. However, since the tariff announcement after market close on April 2nd, the index remains down more than 5%. Bond Market On the fixed income side, the bond market is telling its own story. The 10-year Treasury yield has been rising, signaling renewed expectations around inflation, future Fed moves, or simply a re-pricing of risk. For investors with balanced portfolios, this matters - rising yields affect not just bonds, but also equity valuations and borrowing costs. Volatility Finally, it’s worth remembering that volatility, while uncomfortable, has often paved the way for strong market recoveries. Historically, when the CBOE Volatility Index ’VIX’ (which simply shows how concerned investors are about the stock market going up and down in the near future) spikes above 40, a level it hit earlier this week, the S&P 500 has averaged a 30% gain over the following 12 months, with a 95% likelihood of a positive return. The VIX reached as high as 60 midweek before pulling back to around 44 by early Friday. While past performance doesn’t guarantee future results, it does offer helpful perspective during turbulent times. Keeping Perspective At times like these, it’s important to remember that market volatility is not unusual and it’s part of the investing. As always, we’re keeping a pulse on the market, keeping our long-term view in mind while watching for short-term shifts. If the recent swings have raised questions or you’d just like to talk through your portfolio, we’re here. Don’t hesitate to reach out. Sometimes a quick conversation can go a long way in bringing clarity and confidence. We also know this kind of market movement can feel unsettling - and you're not alone in that. Just know that we’re here for you, and we’re always ready to talk things through whenever you need.

Markets Took a Hit Yesterday and They're Still Sliding Today. Here's What to Know. The markets had a tough day yesterday and unfortunately, the selling hasn’t let up much today either. To recap: on Thursday, the Dow fell about 1,500 points (roughly 3.5%), while the S&P 500 and Nasdaq were down 4% and 5%, respectively. The Russell 2000, which tracks smaller companies, dropped nearly 6% and officially dipped into bear market territory. Today, markets are still under pressure as investors digest the impact of what sparked all this: a sweeping new round of tariffs announced by President Trump. What’s Going On? President Trump rolled out a plan to impose “reciprocal tariffs” on imports from over 180 countries. The goal, according to the administration, is to level the playing field claiming that many countries charge the U.S. more to import goods than we charge them. Here’s the short version: A 10% baseline tariff applies broadly, but many countries are facing much higher rates. China is now subject to a 54% total tariff when you include previous rounds. The EU is hit with a 20% tariff, Japan 24%, India 26%, and Vietnam tops the list at 46%. Others, like the U.K., Brazil, Singapore, and Australia, are seeing the baseline 10%. The market wasn’t expecting anything this aggressive, and the sharp reaction reflects concerns about rising costs, slower global trade, and the potential for an economic slowdown. Who’s Getting Hit the Hardest? Some sectors and companies are feeling the pain more than others: Retailers that rely on cheap imports saw massive drops Big international players like Apple fell hard as well, even if their direct exposure to tariffs is limited. Tech in general is having a rough stretch, as it usually does during high-volatility periods. Smaller companies, especially those more exposed to cost swings, were heavily sold off. That said, not everything was red: Real estate investment trusts (REITs) held up better than most. With bond yields falling, some investors shifted into interest rate–sensitive sectors like real estate. International companies with minimal exposure to the U.S. weathered the storm relatively well. Fixed income has held up relatively well considering a drop in the 10-year treasury rate touching 4%. What Happens Next? That’s the big question and part of the reason markets are still sliding today. There’s a lot of uncertainty around how long these tariffs will last, whether other countries will retaliate (China already has with a 34% tariff announced today) and how all of this plays into inflation, interest rates, and the broader economy. Bottom line: we’re in wait-and-see mode, and markets don’t love uncertainty. What Should Investors Do? Here’s our advice: don’t panic. Sharp drops like this can be unsettling, but they’re not unusual and reacting emotionally usually does more harm than good. During times like this, it can be difficult to see through the uncertainty. Something to keep in mind….Since 1975, the 50 best stock market days were preceded by an average market decline of 6.7% over one month and 10.2% over two months. If you’re a long-term investor, days like these are part of the journey. And if you’ve got cash on the sidelines, there may be some solid buying opportunities emerging. And if you’re unsure what your next move should be? That’s okay, too. Sometimes the smartest play is to sit tight, stay diversified, and not let short-term noise throw you off your long-term plan. As always, if you want to talk through what’s going on or explore any opportunities, we’re just a call or message away.

Volatility Returns: What’s Driving the Market Swings? After a period of relative calm, stock market volatility has surged to levels not seen since late 2020. Last Friday marked the end of a streak of six consecutive trading days where the S&P 500 moved up or down by more than 1%. What’s causing this stock market whiplash, and what should investors make of it? Tariff & Trade Uncertainty In the run-up to the 2024 Presidential Election, now-President Trump considered import tariffs to be a central part of his economic plan. The implementation of tariffs - targeting both allies (Canada & Mexico) and rivals (China) - has introduced significant uncertainty, fueling market instability. Whether these tariffs serve as a negotiation tactic for fairer trade or a means to pressure bordering nations on immigration and drug control, the lack of clarity is breeding concerns about economic growth and stock market volatility. Each day, and sometimes each hour, brings another curveball. Investors remember Trump’s first term when U.S./China trade tensions in 2018 led to a turbulent market. In Q4 2018, the S&P 500 dropped 13.5%, wiping out healthy year-to-date gains. Stock Market Impact The S&P 500 has already experienced a 10% drawdown from its February 18th peak. Last week, the Nasdaq entered correction territory, and now sits 12% off its recent high as investors sought alternatives such as fixed income, dividend-paying equities, and international markets. The correlation between tariff discussions and market pullbacks is no coincidence. The uncertainty surrounding these policies has led investors to take a more defensive stance, shifting toward value-oriented stocks and away from high growth sectors. Historically, the S&P 500 experiences declines of 5% roughly once per year, while 10% corrections happen about every other year. While the triggers for these declines may change -this time, tariffs and geopolitics - the pattern of market corrections remains a normal part of investing. Shifting Tides - The Case for Diversification Following is something we frequently discuss on CNBC - in fact we did so yesterday on Power Lunch. Watch Matt’s latest appearance here:

Deepseek and its Low Cost Claims The final week of January was a whirlwind for the stock market, with tech stocks taking center stage. On Monday, the Nasdaq saw its sharpest decline in over a month following news from China about DeepSeek, a ChatGPT competitor. NVIDIA, a dominant force in AI infrastructure, faced a staggering setback, losing nearly $600 billion in market value - the largest single-day dollar loss in U.S. stock market history. DeepSeek claims to operate at a fraction of the cost of U.S. competitors, requiring less processing memory to train and run. While the long-term implications remain uncertain, this development introduces increased volatility and uncertainty in the near term. Earnings Sensitivity Last week also brought earnings reports from four of the Magnificent Seven, along with other key U.S. companies. So far, 77% of S&P 500 companies that have reported Q4 2024 earnings have exceeded expectations, while 63% have surpassed revenue estimates (FACTSET). Historically, positive earnings surprises have led to modest stock price increases, while negative surprises resulted in declines. However, recent quarters have shown heightened market sensitivity to earnings results. For example, IBM exceeded expectations and issued a strong outlook, leading to a 13% one-day gain. Conversely, Lockheed Martin fell 9% after reporting lower-than-expected revenue and offering cautious guidance. Recently, S&P 500 companies that beat both sales and earnings expectations saw an average stock price gain of 3.6% post-announcement, well above the five-year average of 0.9%. Meanwhile, companies that missed estimates saw an average 5% decline, compared to the historical average of 3.1%. Market Concentration With the S&P 500 trading at above-average earnings multiples, investors are watching earnings reports closely. All 11 sectors of the index are expected to see earnings growth in 2024. Why does this matter? The Magnificent Seven currently make up 30% of the S&P 500’s value and accounted for 50% of the index’s gains in 2024. To sustain market growth, the remaining 493 companies will need to contribute more significantly. While the market has reached new highs over the past two years, those gains have been driven by a small group of companies. For context, the only other time such a limited number of stocks dominated performance over a two-year period was during the late-90s dot-com bubble. This narrow market leadership presents a double-edged sword. On one hand, it raises concerns about whether a handful of companies can continue to outperform. On the other, it creates an opportunity for broader market participation, with the rest of the S&P 500 looking more attractive from a valuation and diversification perspective. Periods of concentrated market leadership often lead to increased volatility as investors weigh sticking with what has worked - the Magnificent Seven - versus diversifying to reduce risk. The S&P 500 is currently top-heavy, with its 10 largest companies accounting for 30% of the index. January managed to post gains, but not without some turbulence. We expect market volatility to rise in 2025, compared to the relative calm of the past two years. Last but not Least - Tariffs Additionally, tariffs have recently moved to the forefront. While new tariffs on Mexico and Canada were announced and then delayed by a month, the U.S. moved forward with tariffs on China. The uncertainty surrounding potential tariff impacts adds another layer of market unpredictability. In summary, markets face increasing uncertainty from new AI competition, earnings sensitivity, narrow leadership, and trade policy developments. While diversification may not have been "in style" in recent years, it remains a valuable tool for managing volatility. As always, investors should maintain a long-term perspective and avoid getting caught up in short-term market swings. If you have questions or concerns about your individual situation, please don’t hesitate to contact us.

Over the past few years, the breakdown of the S&P 500 has changed drastically. Although the visual is over a year old, today Nvidia...