4th Quarter Report
Perspective 1. The Stock Market. As widely expected, Jerome Powell, the Federal Reserve Chairman, reduced the Federal funds rate another 0.25 percentage points. This marks the third cut this year, and the stock market liked it. It jump started the Santa Claus Rally. As of this writing, 12.11.25, the market as measured by the Dow Jones Industrial Average closed at 48,704 points. For the year, Dow Jones has appreciated 14.89%. The broader market measured by the S&P 500 is 17.59% for the year. While the tech heavy index, NASDAQ, experienced an increase of 22.37%. The Russell 2000, which tracts the smaller companies, had a year-to-date return of 16.08%. We should all be glad we are in the markets.
Perspective 2. Expectations. Going into 2026 I am optimistic. Barring any black swan event, I believe the economy, and the stock market, should do well. With a stronger and broader economy, and an economy with lower interest rates and less regulations, I anticipate another good year in the markets. I do, however, believe there will be a greater rotation next year of the various asset classes. The best performing asset class so far this year has been the international sector. I do believe this sector will fall short next year and give rise to the value and smaller cap companies. I also expect the large cap growth sector to retreat as well. With lower interest rates, value-oriented dividend paying stocks, along with smaller to mid-size companies, should do well.
Perspective 3. Past performance. Of course, past performance is not indicative of future results but let me share what I consider to be the nine major asset classes and how they performed year-to-date. Starting with International, this sector, as measured by MSCI World Index, was up 20.88%. The large cap blend category S&P 500 index was up 17.59%. Large Cap Growth came in at 20.0%, according to the Russell 1000 growth index. Using the Russell 1000 Value index to measure, the Large Cap Value asset class was up 15.97%. The preceding, followed by small caps at 16.08%, Commodities at 11.04%, and Mid-Caps at 11.04%. And we have Real Estate Investment Trust (REITS) at 5.15% and then Aggregate Bonds measured by the US AGG bond price, had a total return of 4.84%. A diversified portfolio of equally weighted asset classes would have increased 13.62% so far this year. Pretty impressive!
Perspective 4. Gratitude. Reflecting on the past 30 plus years in this business, I realize the world keeps turning, and how grateful I am that we are all part of it together. Wishing you a very Merry Christmas, and a joyful holiday season.
May the coming year bring peace, prosperity, and happiness for all of us.
Stay invested, stay diversified, and call me with any questions concerning your personal portfolio.
All my best,
Tim Vorpahl
President
Vorpahl Wing Securities, Inc.