As we close out a busy 2025, we want to take a moment to thank you for trusting us to help you reach your long-term investment goals. It’s been a dynamic year in the markets, and we’re pleased to share some reflections and updates as we look forward to 2026 with optimism.
Throughout 2025, markets presented a mix of rewarding opportunities amid fluctuations, but overall, the environment remained favorable for investors. Strong corporate earnings drove much of the market’s core strength, resulting in the S&P 500’s impressive 16% gain so far this year, marking the third consecutive year of positive returns for U.S. stocks.
We remain attentive to current stock valuations and market concentration among mega-cap tech companies, which represent a significant portion of the S&P 500 index’s market value (approximately 37%). Still, we’re optimistic about a healthy broadening of market participation, with more companies beyond the large tech names joining the upward trend. This was evident in the strong rally in the latter part of November, driven by widespread gains across sectors. As we’ve seen this year, a well-diversified portfolio can help reduce concentration risk and deliver better risk-adjusted returns.
Shifting our focus overseas, European equity markets had a spectacular year. They outperformed their U.S. counterparts, driven by optimistic prospects for economic recovery and policy uncertainties in the U.S. What’s particularly exciting is that European equities across most sectors continue to trade at attractive discounts compared to U.S. stocks. This, along with their ability to serve as effective diversifiers in a portfolio, makes them a compelling choice for boosting resilience and potential returns.
Small- and mid-cap companies present another opportunity to diversify into firms with growing earnings and appealing valuations. Our targeted approach performs well in the small and mid-cap sectors because of the market’s inherent inefficiencies. With fewer analysts covering these stocks and a wider range of possible returns than large-cap stocks, there’s potential to find undervalued stocks, identify top performers, and avoid unprofitable companies. This is achieved through traditional bottom-up stock selection, where our investment method combines statistical screening and fundamental analysis to identify high-quality companies at attractive prices.
This year has highlighted the importance of focusing on attractive valuations across the market. Recent shifts in market dynamics have created new opportunities for investors. As valuation gaps have widened, we remain committed to identifying investments that offer compelling long-term potential.
By maintaining a diversified portfolio and focusing on value at the right price, we aim to help you capitalize on these opportunities while staying aligned with your long-term goals.
As we look ahead to the new year, we remain focused on proactive management and personalized advice. We’re actively seeking opportunities to add new high-quality equities and bonds to our portfolios. We will continue to monitor your allocations to ensure they remain aligned with your goals and will suggest adjustments as needed.
We are deeply grateful for the opportunity to work with you to achieve your financial goals. Your confidence in our process helps align our interests and work to deliver the best outcomes for you.
The new year brings fresh opportunities, and we’re excited to continue this journey together. If your goals or circumstances have shifted or if you have any questions, please don’t hesitate to reach out. We’re here to support you every step of the way.
Wishing you and your loved ones a joyful holiday season and a prosperous 2026.
