Greetings from all of us at Integrity. We hope you had an enjoyable holiday season as 2025 came to an end. It was great to see some of you last month at our annual Christmas Open House. We will have several events in 2026 and hope to see you at one or more of them.
Acknowledging the remarkable season so far for the Colorado Avalanche, we thought it fitting to borrow a hockey reference to frame the past three years of stock market returns. Following robust gains in 2023 and 2024, 2025 proved to be another historically strong year for equity markets—despite the many developments along the way. It was a year defined by no shortage of headlines. The events outlined below help illustrate the resilience of both stock and bond markets amid a constantly evolving global backdrop.
January 20th: President Trump was inaugurated and became only the second U.S. President to serve nonconsecutive terms. He has advanced an aggressive agenda.
January 27th: Stocks heavily dependent on the business of artificial intelligence (AI) fell deeply on news that Chinese AI lab DeepSeek released a powerful, low-cost, open-source AI model. Those stocks recovered by varying degrees, some dramatically, throughout the rest of the year.
April 2nd: President Trump designated “Liberation Day” when announcing a series of significant tariffs on imported goods. Global equity markets initially declined in response, but not only recovered by year-end—they moved meaningfully higher, surpassing pre-announcement levels. Inflationary pressures that many had anticipated as a result of the tariffs ultimately did not materialize.
July 4th: The “One Big Beautiful Bill Act” (OBBBA) was signed into law, extending many of the provisions from the Tax Cuts and Jobs Act (TCJA) of 2017. The potential loss of tax revenue plus continued government overspending has heightened the concern for our level of national debt.
September 17th: The Fed restarted the Fed Funds rate reduction cycle that had been on pause since November 2024. By year-end, there were three .25% rate cuts taking the targeted rate down to 3.50% – 3.75%. They continue to try to balance their dual mandate of maximum employment and low inflation with independence from outside influences like Congress and the White House.
October 1st: The government shutdown began for what would end up being 43 days – the longest on record.
December 16th: Per the Bureau of Labor Statistics (BLS), the U.S. unemployment rate rose to 4.6% in November which is a four-year high.
Given everything that unfolded last year – including the events outlined above – it would have been understandable to question whether global markets could continue the advance that began in March 2020. Instead, markets once again demonstrated staying power. U.S. stocks reached new highs, international equities outpaced U.S. markets, and bonds extended their rebound. The S&P 500 has now produced double-digit returns in six of the past seven years.
Key Market Returns in 2025
- The S&P 500 (U.S. Large Company stocks) gained 17.9% with dividends (“total return”) in 2025, achieving thirty-nine new all-time highs. The Dow Jones Industrial Average rose 14.9% and the Nasdaq returned 21.2%.
- International stocks (both developed markets and emerging markets) gained over 30% in U.S. dollar terms based on the MSCI EAFE Index and MSCI EM Index, respectively.
- The Bloomberg U.S. Aggregate Bond Index (U.S. investment-grade bonds) gained 7.3%, its best performance since 2020. The 10-year Treasury yield ended the year lower at 4.17%, down from 4.57% at the start of the year.
- The VIX, a measure of stock market volatility, remains low by historical standards (lower is better), finishing at 14.95 after climbing as high as 52.33 in April.
- Bitcoin (one example of cryptocurrency) experienced a decline of about 6.5% from $93,714 to $87,647, after rising as high as $125,260 in October.
- The U.S. dollar index ended the year at 98.32, falling 9.3% from 108.49 at the beginning of the year. The dollar reached a low of 96.63 in September. A falling dollar improves international investment returns for U.S. investors.
- Gold prices rallied throughout the year, finishing at $4,341 per ounce for a 64% gain. Silver prices also rose to $70.60 per ounce from $29.24 at the start of the year.
A question we often hear in moments like this is where markets might go from here. When a major index reaches a new all-time high, it’s natural to wonder whether a pullback is around the corner. Historically, that has not typically been the case. While past performance does not guarantee future results, market history shows that the S&P 500 has been higher roughly two-thirds of the time one year after reaching a new high. The chart below provides additional context.
A second question we often hear is what to do if markets experience a meaningful pullback in 2026. The priority is to remain disciplined. Periodic pullbacks are a normal—and even healthy—part of market cycles, serving as a reminder that risk and return are inherently linked. For some investors, these moments can also present opportunities. When appropriate for an individual’s circumstances, market pullbacks may allow for thoughtful portfolio rebalancing – including adding to equities at lower prices – as well as the opportunity to harvest tax losses.
Venezuela and the Impact of Geopolitical Events on Portfolios
On January 3rd, the U.S. military conducted an operation that resulted in Venezuelan President Nicolás Maduro being taken into U.S. custody on criminal charges related to drug trafficking and corruption. While this is a complex development, the humanitarian, economic, and governance implications for the Venezuelan people remain to be seen. We are hopeful that it ultimately leads to the dismantling of the country’s narcotics trade, the restoration of democratic processes, and meaningful improvements in living standards. From a global perspective, developments in Venezuela could influence energy markets and broader geopolitical relationships, including the possibility of diminished support for Iran and China over time.
The impact on portfolios has been and will most likely continue to be minimal. Geopolitical events can create short-term market volatility but tend to have limited long-term impact on the markets. See the data in the chart below. In most cases, markets recovered within weeks or months.
Stepping back more broadly, periods like this are a reminder that uncertainty is not unique to markets. While the Avalanche’s record this season may suggest a path toward lifting the Stanley Cup, we know there are no guarantees. The same is true in markets: robust performance over the past several years does not ensure another year of double-digit returns in 2026. As markets reach new highs, “known unknowns” – such as inevitable market pullbacks, evolving tax policy, and geopolitical developments – will continue to introduce uncertainty. Our conviction remains that proper planning, supported by a well-constructed portfolio managed with discipline, positions us to navigate short-term cold streaks while staying focused on long-term financial success.
We look forward to working with you this year. Thank you for being part of our journey as we step into a promising 2026.
The Integrity Team
