We hope you and your family had a wonderful Thanksgiving holiday last weekend! It’s hard to believe we are only 20 days away from Christmas -this year really has flown by.
As we close out another successful investing year, we would first like to take a moment to express our sincere gratitude to you, our clients, for your continued partnership and the trust you place in us to manage your most important financial assets.
Well, 2025 certainly had its fair share of drama, specifically, April comes to mind, where the S&P 500 Index declined -11.52% in four trading days only to recover over the next 22 days to close out the month with only a -1% loss.
Tariffs, sticky inflation, geopolitical riffs, and economic policy uncertainty have all played a part in causing performance drag at various times throughout the year. But here we are, with year-to-date S&P 500, Dow and Nasdaq Index returns of 16.76, 12.63 and 21.89%, respectively. If you remember, our initial 2025 S&P 500 Index return forecast was 7-10% total return. In this case, we are happy to be humbled once again by the market.
Last month (November), markets incurred a brief valuation sentiment driven sell off, only to recover and end the month at near record highs. The recovery, caused by renewed confidence in additional Federal Reserve rate cuts, was a key driver, in addition to positive economic and corporate profit outlooks and continued announcements of artificial intelligence cap-ex structural investment.
Looking ahead, markets will continue to take directional cues from the job market, which will be key to preserving consumer spending during the important holiday shopping season. We expect slower but still positive job growth as government data delayed by the recent shutdown fills in. Fiscal Stimulus of approximately $130 billion in annualized incremental consumer tax cuts from the One Big Beautiful Bill Act (OBBBA) will start flowing in February 2026, not far off.
The Trump Administration has also pivoted toward tackling affordability challenges. The K-shaped economy – where upper income individuals enjoy rising asset values while those living paycheck-to-paycheck continue to struggle remains a challenge. Policies to help lift the bottom half of the “K,” perhaps through the housing market, may help shore up the overall consumer spending picture.
Broadly though, the U.S. consumer continues to hang in there and corporate America is thriving. Overall, third quarter corporate earnings were fantastic. More than 82% of S&P 500 companies beat consensus earnings targets, the highest rate since at least 2009. Earnings grew 13%, extending the streak of double-digit increases to four quarters.
Profit margins unexpectedly expanded despite increased tariff costs, supported by disciplined cost management and productivity gains. Management teams signaled confidence in demand, causing analysts to lift earnings estimates for 2026.
As I have mentioned in past notes -consistent earnings per share growth coupled with steady and/or margin expansion is the true driver of long-term equity share price appreciation.
As we prepare for 2026, several factors warrant our close attention. The Fed’s interest rate policy trajectory remains a central focus, with inflation trends and the labor market guiding the central bank. While we fully expect another .25% interest rate cut next Wednesday (Dec. 10th), the number of cuts beyond that will hinge on incoming data.
Other factors to consider as investor attention shifts to the year ahead include increasing scrutiny around the AI infrastructure build out and it’s ROI, midterm elections, weakening of the U.S. dollar, and ongoing geopolitical threats.
Against this backdrop, we are prioritizing increased equity diversification and risk mitigation for 2026. Specifically, keeping a watchful eye on valuations within the AI space and to our highly appreciated individual stock positions -trimming where needed to keep these positions in check.
We still firmly believe we are in the early innings of the AI revolution but maintaining discipline in position size and exposure is very much at the top of our priorities list.
In closing, cheers to another great year and we look forward to working with you in 2026!
Have a wonderful Holiday season and upcoming New Year!
Please reach out to us with any questions or comments you may have regarding your specific situation.
Jaran C. Day, Chief Investment Officer
Griffin Dalrymple, CFP®, Chief Strategy Officer
Past performance is not indicative of future performance.
The views expressed represent the opinion of Opinicus and are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and Opinicus’s view as of the time of these statements. Market performance cited is not indicative of portfolio performance experienced by portfolios Opinicus manages. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties.