2025 - A Resilient Market After four straight losing sessions that have dimmed hopes for a "Santa Claus rally," Wall Street is nevertheless ready to celebrate its gains for the year. But the biggest story of 2025 wasn’t the growth — it was the comeback.
Following the administration’s decision to impose broad-based tariffs in early April, markets briefly flirted with economic Armageddon. The narrative shifted almost overnight to fears of a standalone, “decoupled” U.S. economy. Risk assets sold off hard. Volatility spiked. In just two days, the S&P 500 dropped 10.5%. The Nasdaq entered bear market territory (down over 20% from its peak).
Following the administration’s decision to impose broad-based tariffs in early April, markets briefly flirted with economic Armageddon. The narrative shifted almost overnight to fears of a standalone, “decoupled” U.S. economy. Risk assets sold off hard. Volatility spiked. In just two days, the S&P 500 dropped 10.5%. The Nasdaq entered bear market territory (down over 20% from its peak).
And then — just as quickly — it was over, as the President largely backtracked.
From the April lows, the S&P 500 launched into a near-vertical recovery, vaulting out of its hole and closing the year up 16% and change. The episode was a blunt reminder of how modern markets work: policy shocks tend to get priced in far faster than the real economy can absorb them. Panic, in this cycle, proved fleeting.
That pattern defined 2025 more broadly. Tariffs, political noise, delayed rate cuts — all produced moments of genuine stress. None produced lasting damage. Markets bent, recalibrated, and moved on.
A Quick Word on the Strategies
For the subscription strategies and the new WealthDAC Portfolios, 2025 was green across the board, with Lean Muscle and The 12% Solution off their game but still positive, and the Aggressive Portfolio, Five Stocks, and Global Trader providing solid returns at 24%, 22%, and 21% respectively. That said, all gains were rarely smooth. April’s selloff tested discipline. The recovery that followed tested patience.
What mattered most is what didn’t happen. Risk stayed contained. Drawdowns remained within design parameters. Correlations behaved when stress arrived. In a year where markets punished emotional reactions more than incorrect forecasts, discipline did its job.
That matters heading into 2026, because the next year is unlikely to offer the same forgiveness.
Expectations for 2026: Gains, With Friction
Wall Street enters 2026 optimistic — but with more qualifiers than a year ago. Strategist forecasts cluster around ~10% upside for the S&P 500, a clear deceleration after three consecutive years of double-digit gains.
The Bull Case: Analysts are pointing to several high-octane "fuel sources" for 2026:
The Bear Case: It’s not all clear skies. There are two major yellow flags investors are watching:
That may be the cleanest base case: acceptable returns earned the hard way.
Bottom Line: 2025 proved that the U.S. economy can absorb a lot of "political upheaval" as long as earnings and innovation stay on track. For 2026, the question is no longer "Will we grow?" but "How much of that growth have we already paid for?"
And For What It’s Worth…
As reported by The Week, the public launch of a Russian AI-powered robot took an embarrassing turn when the android faceplanted. The firm Aidol premiered the humanoid robot for dozens of journalists at a Moscow technology conference. But as the robot staggered across the stage to the theme song from Rocky, it collapsed in a heap – parts flying. [NY Times Instagram video]
The frantic staff tried to shield the scene with a black curtain as they dragged it off stage. “It’s the first robot with alcoholism,” cracked a defense analyst. Aidol head Vladimir Vitukhin called the debacle an opportunity for “real-time learning.”
Even in artificial intelligence, progress is rarely linear — and resilience still requires a reboot or two.
_____
As noted before, long term, the strategies will get the trends right. Short term, there may be a miss or two as the market juggles conflicting signals. So keep allocations of strategies reasonable within your portfolio, and remember that protection remains paramount.
--David
From the April lows, the S&P 500 launched into a near-vertical recovery, vaulting out of its hole and closing the year up 16% and change. The episode was a blunt reminder of how modern markets work: policy shocks tend to get priced in far faster than the real economy can absorb them. Panic, in this cycle, proved fleeting.
That pattern defined 2025 more broadly. Tariffs, political noise, delayed rate cuts — all produced moments of genuine stress. None produced lasting damage. Markets bent, recalibrated, and moved on.
A Quick Word on the Strategies
For the subscription strategies and the new WealthDAC Portfolios, 2025 was green across the board, with Lean Muscle and The 12% Solution off their game but still positive, and the Aggressive Portfolio, Five Stocks, and Global Trader providing solid returns at 24%, 22%, and 21% respectively. That said, all gains were rarely smooth. April’s selloff tested discipline. The recovery that followed tested patience.
What mattered most is what didn’t happen. Risk stayed contained. Drawdowns remained within design parameters. Correlations behaved when stress arrived. In a year where markets punished emotional reactions more than incorrect forecasts, discipline did its job.
That matters heading into 2026, because the next year is unlikely to offer the same forgiveness.
Expectations for 2026: Gains, With Friction
Wall Street enters 2026 optimistic — but with more qualifiers than a year ago. Strategist forecasts cluster around ~10% upside for the S&P 500, a clear deceleration after three consecutive years of double-digit gains.
The Bull Case: Analysts are pointing to several high-octane "fuel sources" for 2026:
- Strong Corporate Earnings: Analysts widely anticipate a third consecutive year of double-digit S&P 500 earnings growth in 2026, with smaller and mid-cap stocks participating.
- AI Revolution Continues: The artificial intelligence theme is expected to drive significant productivity gains across various industries.
- The IPO Renaissance: Potential trillion-dollar public debuts from SpaceX and OpenAI could trigger a massive wave of fresh capital and excitement.
- The "Refund" Effect: Tax legislation in 2026 is expected by some analysts to provide substantial tax refunds to consumers and a liquidity boost for retail investors.
The Bear Case: It’s not all clear skies. There are two major yellow flags investors are watching:
- The Fed Transition: Jerome Powell’s term ends in May 2026. History shows that the first six months of a new Fed Chair’s tenure can be rocky, often seeing a market correction of around 15% as the newcomer finds their footing (according to historical averages cited by Ned Davis Research).
- Valuation Froth: The Shiller P/E ratio, a measure of stock market valuation, is sitting at roughly double its long-term average. Some analysts, like those at Ned Davis Research, warn we are on a "sugar high" that leaves stocks vulnerable to any unexpected bad news.
That may be the cleanest base case: acceptable returns earned the hard way.
Bottom Line: 2025 proved that the U.S. economy can absorb a lot of "political upheaval" as long as earnings and innovation stay on track. For 2026, the question is no longer "Will we grow?" but "How much of that growth have we already paid for?"
And For What It’s Worth…
As reported by The Week, the public launch of a Russian AI-powered robot took an embarrassing turn when the android faceplanted. The firm Aidol premiered the humanoid robot for dozens of journalists at a Moscow technology conference. But as the robot staggered across the stage to the theme song from Rocky, it collapsed in a heap – parts flying. [NY Times Instagram video]
The frantic staff tried to shield the scene with a black curtain as they dragged it off stage. “It’s the first robot with alcoholism,” cracked a defense analyst. Aidol head Vladimir Vitukhin called the debacle an opportunity for “real-time learning.”
Even in artificial intelligence, progress is rarely linear — and resilience still requires a reboot or two.
_____
As noted before, long term, the strategies will get the trends right. Short term, there may be a miss or two as the market juggles conflicting signals. So keep allocations of strategies reasonable within your portfolio, and remember that protection remains paramount.
--David
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