Reasons for Investors to Be Grateful This Holiday Season

Sean Gross, CFP®, AIF® | Co-Founder & CEO

The arrival of the holiday season offers an opportune moment to reflect on our blessings, including those in our financial portfolios. Investors often concentrate on potential risks rather than celebrating successes. With markets showing positive performance, now is an excellent time to look back at the past year and gain valuable perspective before facing new challenges and opportunities ahead.

This year, the trend of strong market returns has continued. Year to date, the S&P 500 has posted double digit gains including dividends, and bonds have delivered roughly 7% returns as tracked by the Bloomberg U.S. Aggregate Bond Index. Notably, international stocks have surpassed U.S. stocks for the first time in several years. Diversified portfolios have generally benefited from this widespread strength across multiple asset classes. What considerations should investors keep in mind as they look toward the upcoming year?

The bull market has reached its fourth year

Investors have reason to celebrate that financial markets have delivered positive results this year despite periods of volatility. The current bull market cycle, which started following the October 2022 market low, has now entered its fourth year.

Historical patterns indicate that bull markets typically extend much longer than bear markets, frequently lasting five to ten years or beyond. Previous bull markets have generated cumulative gains that substantially exceed what this cycle has produced thus far, even amid significant challenges during those periods. Although legitimate concerns exist regarding valuations and market concentration, successful long-term investing requires weathering various market environments.

The bond market's favorable returns deserve special attention following several difficult years marked by rising interest rates and elevated inflation. With rates stabilizing and the Federal Reserve resuming monetary policy easing, bond prices have rebounded. This illustrates why maintaining exposure to both stocks and bonds continues to be vital for achieving portfolio balance and generating income.

The market’s strength reinforces a crucial lesson: attempting to time markets based on short-term developments is challenging and potentially harmful when not integrated into your comprehensive financial strategy. This proved true even in April when markets approached bear market territory following new tariff announcements. Markets quickly recovered and reached fresh all-time highs. Disciplined investors were compensated for their patience, whereas those who responded emotionally to news may have forfeited gains and could remain uninvested.

The Fed is reducing rates as inflation has moderated

Investors can also appreciate that inflation has moderated, despite the pace of improvement being slower than some forecasts anticipated. Annual price increases have been approximately 3%, which still presents difficulties for households and policymakers. However, from an investment perspective, inflation has become considerably more predictable, with concerns about accelerating inflation largely subsiding compared to previous years.

This improvement has enabled the Fed to initiate rate cuts after maintaining restrictive policy for much of the year. These adjustments also aim to bolster the job market, which has shown signs of softening since summer. Lower rates have historically supported both stocks and bonds by decreasing borrowing expenses for companies and consumers while enhancing the value of existing bonds carrying higher yields. While inflation and interest rates will continue influencing markets, the specter of perpetually rising inflation and rates seems to have passed.

Proper asset allocation balances risk and opportunity

Investors should also recognize the value of maintaining appropriate asset allocation and ongoing risk management. The coming year will undoubtedly present fresh sources of uncertainty, as every year does. These developments will naturally spark concerns about economic downturns, market corrections, and potential cycle endings. Instead of responding to each market event, long-term investors benefit from holding portfolios designed to adapt to various market and economic phases.

We can be grateful for access to diverse assets that help achieve risk-reward balance. Risk management matters throughout an investor's journey, particularly following a three-year market advance. The S&P 500 price-to-earnings ratio currently stands at 22.6x, exceeding historical averages and gradually approaching dot-com era peaks.

While valuations don't forecast near-term market direction, they do suggest future returns might be more moderate, particularly relative to less expensive asset classes and sectors. Therefore, maintaining realistic expectations and holding exposure to more attractively valued market segments remains important.

Uncertainty surrounding artificial intelligence will continue. Given this technology's transformative potential, predicting its impact on equity prices remains challenging, similar to the difficulty of forecasting the internet revolution's trajectory beginning in the mid-1990s. Political uncertainty is also expected to persist amid evolving tariff policies, geopolitical tensions, rising national debt, and other factors. Recent experience confirms that overreacting to these developments can be detrimental and disruptive to financial plans.

The bottom line? The holiday season provides an excellent opportunity to appreciate positive developments and evaluate your portfolio structure. A flexible, well-designed portfolio harmonizes various asset classes consistent with financial objectives. This approach remains essential for successfully managing both challenges and opportunities in the months ahead.

Guest Article: The United States outgrows all its major peers.

We are delighted to share, with permission, the following article from highly esteemed economist Daniel Lacalle, PhD.1

Daniel Lacalle 

November 2, 2025

Never trust experts who criticise the U.S. economy and have argued for years that it should follow the policies of France, Germany, or Canada.

Statism never works, and France, Germany, Canada, the UK, and Japan are in stagnation, with bloated public sectors that hinder economic growth and excessive regulations and taxes that hurt jobs and investment.

The United States will deliver stronger economic growth than all its major advanced peers in 2025, with inflation, real wage growth, and unemployment figures that also outperform countries like Japan, the UK, Canada, France, and Germany.

In the United States, it is common to read negative remarks about the economy from the same mainstream economists who defended the implementation of European-style Keynesian policies. The results are evident. The United States is growing faster and in a healthier way than all its peers that followed Keynesian spending and tax policies.

Official figures indicate that the US published the fastest economic growth rate among advanced peers for 2025. The economy is growing at 3.8% annualised; the IMF estimates US real GDP growth at 2.0% for 2025, compared to only 0.2% for Germany, 0.7% for France, 1.1% for the UK, 1.2% for Canada, and 1.1% for Japan. Furthermore, the Federal Reserve of Atlanta expects 3.9% annualised growth in the US’s third quarter.

It is important to highlight the quality of this economic growth. The US economic development in 2025 is driven by strong consumer demand, technological strength, and continued investment and, more importantly, with a decline in government spending. In contrast, Japan, Germany, Canada, the UK, and France see weak investment, poor consumption growth, and sluggish external demand, whereas government spending is one of the key factors in “growth.”. Big government and high taxes are limiting their growth to less than 1%.

The US inflation rate is stable, while Japan and the UK see rising and accelerating figures in their consumer price index.

Annual US inflation settled at 3% in September and is expected to ease further in October. However, inflation in the UK remains at 3.8%, the highest in thirteen months. In Japan, consumer prices have risen to the highest level in a year and are expected to accelerate into 2026, according to Bloomberg Economics.​ While the US sees inflation stability and Truflation figures show an annualised rate of 2.25%, both the UK and Japan are suffering rising inflation and economic stagnation.​

The US labour market remains strong and is showing real wage growth, considering the decrease in government and immigration jobs. Federal employment in the US has declined through 2025, with government jobs dropping by 97,000 since January, but the average monthly increase in private sector jobs remains positive. Compared to its European peers and Japan, the US registers lower unemployment and a healthier mix of private sector job growth. Understanding the significant impact of lower immigration and government jobs is essential to analysing the US labour market’s strength correctly.

US real wage growth in 2025, at 1.5%, is almost double that of France, Germany, and the UK and much higher than in Japan, where the figure is negative.

If we compare the United States’ employment, real wage growth, inflation and GDP growth with Canada’s, the difference is striking. Government interventionism, massive regulation and high taxes, as well as a misguided immigration policy, have made Canada slump to stagnation and loss of jobs. Canada’s unemployment rate is twice the US rate, and its growth is less than half.

The combination of strong US GDP growth, improved inflation control, and strong domestic private labour market performance, reducing government spending and immigration jobs, put the United States significantly ahead of all its peers, proving that supply-side measures, tax reductions, and deregulation, as well as a reduction in government spending, drive economic growth and prosperity, while big government and high taxes only bring stagnation and a debt crisis.

1Daniel Lacalle (Madrid, 1967). PhD Economist and Fund Manager. Author of bestsellers "Life In The Financial Markets" and "The Energy World Is Flat" as well as "Escape From the Central Bank Trap". Daniel Lacalle (Madrid, 1967). PhD Economist and Fund Manager. Frequent collaborator with CNBC, Bloomberg, CNN, Hedgeye, Epoch Times, Mises Institute, BBN Times, Wall Street Journal, El Español, A3 Media and 13TV. Holds the CIIA (Certified International Investment Analyst) and masters in Economic Investigation and IESE.

October Market Chartbook

Sean Gross, CFP®, AIF® | Co-Founder & CEO

November 4, 2025

Click here to view our October Market Chartbook.

October Market Review: Trade Policy, Government Operations, and Retirement Planning

Sean Gross, CFP®, AIF® | Co-Founder & CEO

Major stock indices posted solid gains in October and reached fresh record highs, even as investors navigated uncertainty surrounding government operations and evolving trade policy with China. Fixed income assets also delivered positive returns as yields fell, supported in part by the Federal Reserve's continued monetary easing.

The month presented notable challenges alongside these gains. Ongoing disruptions in government operations dominated news cycles and sparked concerns about economic growth, while tensions over rare earth minerals triggered the sharpest daily market retreat since April. Yet the swift recovery demonstrated why investors benefit from avoiding reactive decisions based on headlines. Gold surged to unprecedented levels during this period before moderating as the month concluded.

The Social Security Administration revealed a 2.8% benefit adjustment for 2026, representing a more moderate increase than recent years that may fall short of covering actual expense growth for many beneficiaries. When considered alongside declining yields on cash investments, this development highlights why portfolios need to balance current income needs with long-term appreciation potential.

October's results demonstrate that staying committed to a strategy designed for long-term objectives continues to be the most effective way to manage market uncertainty.

Key Market and Economic Drivers

• The S&P 500 rose 2.3% in October, the Dow Jones Industrial Average 2.5%, and the Nasdaq 4.7%. Year-to-date, the S&P 500 is up 16.3%, the Dow is up 11.8%, and the Nasdaq is up 22.9%.
• The Bloomberg U.S. Aggregate Bond Index gained 0.6% in October. The 10-year Treasury yield ended the month lower at 4.08%.
• International developed markets gained 1.1% in U.S. dollar terms using the MSCI EAFE index, while emerging markets jumped 4.1% based on the MSCI EM index. Year-to-date, the MSCI EAFE index has gained 23.7% and the MSCI EM index 30.3%.
• The U.S. dollar index stabilized and rose slightly to 99.8.
• Bitcoin fell somewhat in October, ending the month at $109,428.
• Gold prices ended the month lower at $3,997, after reaching a new all-time high of $4,336 earlier in the month.
• The Consumer Price Index was reported late due to the government shutdown but showed that prices rose 3.0% on a year-over-year basis in September. This report is used to calculate the Social Security cost-of-living adjustment (COLA), which will be 2.8% in 2026.
• Other economic data, such as the monthly jobs report, has been delayed due to the government shutdown.

Government operations disruption had limited market impact

The month opened with disruptions to government operations now nearing historic duration records. This situation arises when Congress cannot reach agreement on budget legislation or deadline extensions. Numerous agencies, including those responsible for releasing key economic indicators, have maintained only skeleton staffing since then.

These disruptions create genuine hardships for affected workers and their families, yet it's crucial to maintain appropriate context regarding portfolio implications. Past episodes have typically not produced lasting effects on financial markets, as government expenditures tend to be deferred rather than eliminated. The longest previous episode spanned 35 days during 2018 to 2019, after which the S&P 500 proceeded to advance 31.5% in 2019. While past results don't guarantee future outcomes, this history suggests markets frequently move beyond these events.

Workforce reductions have also generated concern. Federal employment constitutes just 1.8% of total U.S. employment, and recent reduction notices represent merely 0.002% of the national workforce. Though these disruptions create real challenges for affected individuals and interrupt services, their broader economic influence remains constrained.

Trade policy developments sparked temporary market reaction

Markets experienced their most significant single-day retreat since April amid heightened tensions between the U.S. and China concerning rare earth minerals, with the possibility of 100% tariffs on Chinese goods. These minerals represent a critical leverage point in trade negotiations. China accounts for roughly 70% of worldwide rare earth production and nearly 90% of refining capacity, creating substantial supply chain dependencies.

Markets rebounded swiftly after more measured communication from the White House. A late-month meeting between Presidents Trump and Xi led to reduced tensions and a 10% reduction in tariffs applied to China.

This dynamic has occurred repeatedly throughout the year, with trade-related uncertainties causing brief declines before markets regained ground. The S&P 500 has climbed 37% from its April trough and established 36 fresh record highs this year through October. Markets never advance in a linear fashion, so these episodes remind us that temporary periods of volatility represent normal market behavior.

Federal Reserve continues accommodative policy shift

The Federal Reserve reduced interest rates by 0.25% to a range of 3.75% to 4.00% at its October gathering, representing the second consecutive reduction. This action reflects efforts to sustain economic expansion while balancing inflation considerations and softening employment conditions. The Fed's statement acknowledged that "uncertainty about the economic outlook remains elevated" and that "downside risks to employment rose in recent months."

Market pricing indicates another reduction appears probable by January, with one or two additional reductions possible in 2026. Beyond rate policy, the Fed announced it would conclude its balance sheet reduction in December. This means continued bond purchases, effectively maintaining accommodative conditions. After three years of policy tightening that reduced the balance sheet by $2.2 trillion, halting this process provides further economic support. Declining rates and supportive monetary conditions have historically created favorable environments across asset classes.

Retirement income considerations amid modest benefit increases and declining yields

The Social Security Administration announced a 2.8% benefit adjustment for 2026, indicating continued but moderating inflation. For typical beneficiaries, monthly payments will reach approximately $2,064, representing an increase of just $56. Though helpful, this adjustment appears modest compared to the 8.7% increase in 2023, which marked the largest since 1981.

The difficulty for beneficiaries is that the adjustment calculation uses an index that may not accurately capture their actual cost experience. Healthcare expenses, housing costs, and other categories representing significant portions of retiree budgets frequently increase faster than the overall measure. Medical care services rose 3.9% over the past year, health insurance advanced 4.2%, and home insurance climbed 7.5%. Food prices increased 3.1%, though meat, poultry, and fish rose 6.0%.

With longevity continuing to extend—many beneficiaries will reach their 90s—preparing for multi-decade retirement periods requires portfolios capable of generating both current income and long-term growth. Understanding how to construct portfolios for these extended timeframes, while managing distribution rates and adjusting to evolving market environments, emphasizes the importance of thorough financial planning.

The bottom line? Markets delivered strong October results despite disruptions in government operations, trade policy developments, and other uncertainties. Staying committed to a flexible portfolio designed for long-term goals remains the most effective approach as the year draws to a close.

Understanding Gold's Recent Surge and Currency Concerns

Sean Gross, CFP®, AIF® | Co-Founder & CEO

Gold prices have surged more than 60% this year, climbing above $4,300 per ounce alongside gains in numerous other asset classes. This remarkable advance has generated significant attention and raised questions among investors about whether this rally differs from previous episodes.

The current environment has been characterized by some as a "debasement trade," reflecting concerns that governments may be inclined to diminish currency values through expansive fiscal spending and supportive monetary policies. These factors, combined with a softer dollar, have drawn certain investors toward assets like gold, which are perceived as preserving value, particularly as equity market volatility has increased once more.

Although fiscal deficit concerns are valid, historical evidence demonstrates that forecasting gold's trajectory is challenging. Additionally, multiple factors beyond currencies and interest rates are contributing to broader market strength. For investors with long-term horizons, the key question isn't whether to choose between stocks and bonds versus gold but rather determining the appropriate allocation to each asset class within a well-balanced portfolio.

Most crucially, investors must recognize the distinction between short-term trading opportunities and long-term financial objectives such as generating income and achieving growth, particularly when an asset has already experienced substantial appreciation.

Historical context on currency debasement

Although currency debasement is an ancient concept dating back thousands of years, it remains a recurring concern that reemerges periodically. The traditional meaning of "debasement" describes governments reducing the precious metal content within coins. Historically, this practice enabled governments to produce more coins from identical quantities of precious metal, though it simultaneously diminished each coin's purchasing power.

Today, most currencies operate as "fiat currencies," deriving their value from confidence in the issuing governments rather than backing by gold or other precious metals. Contemporary debasement concerns therefore focus on whether governments might tolerate elevated inflation levels and currency weakness, as this approach would facilitate management of outstanding debt obligations.

This concept relates closely to theories that gained prominence following the 2008 financial crisis. Economists Reinhart and Rogoff, for example, described "financial repression" - policies maintaining artificially suppressed interest rates to diminish the real burden of government debt. Such policies disadvantage savers when interest rates fail to match inflation, eroding cash values. Given the national debt's continued expansion, investor concerns about these policies and the resulting search for value-preserving assets are understandable.

Despite these long-term concerns, current evidence regarding whether this is occurring today remains mixed. First, inflation measures remain persistent but not extreme. The Consumer Price Index, Personal Consumption Expenditures Index, and Producer Price Index all register at 3% or below. Second, bond markets aren't pricing in significant inflation expectations. The 10-year Treasury yield has recently declined to 4% or less, while Treasury Inflation-Protected Securities (TIPS) imply inflation expectations of just 2.3%.

Two additional factors merit consideration. First, central banks globally have been accumulating gold to strengthen their reserves. This trend has intensified amid geopolitical uncertainty and dollar weakness. Second, although the dollar has declined approximately 10% this year, it remains near the upper end of its twenty-year range. From a long-term perspective, the dollar maintains considerable strength relative to historical levels.

Forecasting gold rallies presents challenges

As a speculative investment, gold naturally attracts investor attention. Throughout recent decades, gold has experienced dramatic rallies with varying outcomes. During the late 1970s, gold surged amid concerns about stagflation and Federal Reserve independence. Prices peaked above $800 in 1980 - a level not revisited until 2007.

A comparable pattern emerged following the 2008 financial crisis as central banks implemented substantial stimulus programs. Many investors understandably feared runaway inflation and dollar collapse, neither of which materialized. Gold doubled between 2009 and 2011, reaching approximately $1,900 per ounce, before declining toward $1,000 over subsequent years. This occurred despite the Fed not beginning to reduce stimulus until 2013 or raising rates from zero until 2015.

The accompanying chart compares gold's performance to the S&P 500 since the 2007 market peak. Although gold has delivered strong performance during certain periods, providing diversification benefits, the S&P 500 has delivered superior returns over the complete timeframe. For investors focused on daily market movements, this outcome may seem unexpected. This underscores the importance of evaluating all asset classes from a comprehensive portfolio perspective.

Multiple asset classes have enhanced portfolio performance this year

The present gold rally, which commenced in 2024, has coincided with robust performance across numerous assets, including artificial intelligence-related stocks like the Magnificent 7, international equities, bonds, and cryptocurrencies. The accompanying chart illustrates how various asset classes have contributed to portfolio gains this year. While gold has certainly delivered strong results, individual stocks and other assets consistently outperform in any given year.

For numerous investors, gold serves as part of a broader commodities allocation, potentially connected to other alternative asset classes. The Bloomberg Commodity Index, for instance, initiated the year with a 14.3% target allocation to gold. Combined with other commodities including silver, industrial metals, energy, grains, and additional components, this index has appreciated 10.6% year-to-date.

Additional rationales support maintaining diversified asset class exposure aligned with long-term financial objectives. One fundamental consideration is that gold produces no income, unlike bonds or dividend-distributing stocks. Consequently, portfolios with excessive gold exposure sacrifice the longer-term appreciation potential of equities and the income generation of bonds.

The bottom line? Certain investors are troubled by dollar debasement concerns, especially given gold's continued rally. Investors should consider gold as one element within a flexible, diversified portfolio constructed to support long-term financial objectives.