Quarterly Commentary, Q4 2025

2025 Year-in-Review: Staying the Course Amidst the Noise

As we look back on 2025, we are pleased to report a highly productive fourth quarter and an excellent year for global equity and fixed income markets. The year reinforced a core tenet of long-term investing: ignore the noise, stay the course, and view selloffs as rebalancing opportunities.

Q4 & Full-Year 2025 Market Performance

• Equities finished healthy for 2025, reaching record territories despite a notable mid-year test of investor resolve. The market demonstrated remarkable resilience after an April 2 trade tariff announcement, inducing a nearly 20% selloff (a technical bear market). This volatility quickly reversed once markets priced in the temporary nature of the policy uncertainty.
• International equities were the biggest outperformer, soaring over 30%. This performance was supported by a combination of attractive low valuations, low interest rates, stimulative packages from Germany, Japan, and China, and a lower U.S. dollar.
• Bonds were positive for the quarter and the year. The Federal Reserve’s shift into an easing cycle supported modestly lower rates across the yield curve.
• REITs underperformed this quarter, primarily due to rising insurance and maintenance costs and the lingering impact of higher interest rates on refinancing.

The Resilient U.S. Consumer

The consumer narrative for 2025 was fascinating. Despite strong pessimism reflected in consumer confidence surveys (historically a good time to buy stocks), consumers continued to spend at a healthy rate. The fourth quarter was an excellent example, with spending up in the 4% range during the holiday season. Despite consumers continuing to feel squeezed by higher prices, the old adage holds true: “Never bet against the U.S. consumer; their spending will surprise on the upside.”

Your Portfolio: Positioned for Quality and Resilience

Your portfolio is strategically designed with quality and risk management in mind:

• Equities are focused on companies with tangible sales and earnings, providing lower volatility and a more favorable valuation relative to the broader market. The portfolio is intentionally underweight minimally profitable and unprofitable companies.
• Fixed income reflects a Treasury and short-term bias, which serves the portfolio well, particularly during equity market selloffs.
• Holdings are well diversified, encompassing approximately 18,000 underlying companies and 7,000 bonds globally.

Economic and Market Outlook for 2026

The backdrop for financial assets remains solid:

• The Fed is in easing mode, with two more interest rate cuts expected this year.
• Inflation is trending downwards. In other words, the speed at which prices are rising has decreased.
• Earnings expectations are robust, with an anticipated 8.3% for Q4 2025 (FactSet as of 1/8/2026) and a positive 14.9% range for 2026. (JP Morgan as of 12/31/2025)
• The U.S. economy is growing strongly.

Volatility will surely show itself again; it is an inherent part of markets. Our message remains consistent: tune out the noise and focus on your long-term objectives.

As always, we are here to help you navigate these markets. Please reach out to your Resource Consulting Group advisor if you have any questions or would like to discuss your investments further.