IndiView: Market Update and Outlook (January 2026)

Below is a summarized transcript of our Market Update and Outlook Video. The video and slide deck are posted at the bottom of this page.

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2025 Retrospective: The Year of Diversification

The year 2025 was characterized by robust performance across nearly all asset classes in what we are calling “the year of diversification”.

• International Stocks (ACWX): The standout performer, rising 32.6%, which marked the best performance for international stocks since 2009.
• S&P 500: Delivered a strong 18% return, though it trailed international counterparts for the first time in several years.
• Fixed Income: Bonds returned 7.3%. While lower than stocks, this represents a very healthy year for the bond market.
• Balanced Portfolios: A 60/40 stock-to-bond allocation returned 16%, providing returns similar to the S&P 500 but with much lower risk.
• Alternatives: Gold and silver had phenomenal years, while Bitcoin struggled in the second half of 2025 after a strong start.

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Economic Snapshot: Growth and Labor Trends

The U.S. economy showed resilience in 2025, rebounding from a slow start to the year.

GDP and Jobs

• GDP Performance: After a negative Q1, growth accelerated to 3.8% in Q2 and 4.3% in Q3. The estimate for Q4 2025 stands at 2.7%.
• Unemployment: The rate has been rising and currently sits at 4.6%. While increasing, it remains below historical medians.
• Slowing Job Growth: Median monthly job growth in 2025 was approximately 68,000, a sharp decline from the 219,000 average seen over the previous decade.
• The “Low Hire, Low Fire” Environment: Companies are hesitant to hire as they assess how Artificial Intelligence can drive productivity, but they are not yet laying off workers in large numbers.

Inflation and Affordability

• Consumer Prices: Headline and core inflation remain above the Fed’s 2%–2.5% target.
• Stubborn Costs: Food and electricity prices remain high, continuing to strain mid-to-lower-tier households.
• Energy: While oil and gas were “tailwinds” in 2025, any price spikes in 2026 would act as a “tax” on consumers.

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Monetary Policy and Yields

The Federal Reserve issued three interest rate cuts in 2025. This was unusual because inflation remained above target during the cuts.

• Fed Leadership: Chair Jerome Powell’s term ends in May 2026, and consensus suggests he is likely done.
• 2026 Rate Outlook: We expect little activity in the first half of the year as the Fed assesses previous cuts. More cuts may follow in the second half under a new governor.
• Bond Yields: Current yields are considered “average” compared to long-term history. we recommend a conservative stance, looking for value without blindly chasing risk.

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2026 Outlook and Strategy

While 2025 was a year of all-time highs, we believe that current market valuations are expensive compared to history.

Strategic Positioning

• U.S. Stocks: Investors should expect sub-average returns over the medium-term due to high valuations. However, valuations are not a good predictor of one-year returns
• Opportunity in Mid-Caps: Mid-cap stocks could be a “discount bargain” heading into 2026; they have durable growth but lagged behind the broader market in 2025.
• Alternatives: We believe it is time to rebalance gold and silver to lock in profits after their recent “parabolic” move. Real estate may offer selective opportunities if rates continue to fall.

The Role of Politics

With the 2026 midterms approaching, political noise will be high. However, we believe that political rhetoric should not drive portfolio decisions and the market is driven by efficient, adaptable companies rather than political party lines.

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Final Word: Stick to the Plan

Market pullbacks are inevitable and normal; almost every year sees a 5% to 10% correction. Despite this, the market has ended the year in positive territory 78% of the time since 1980. Staying invested through these cycles is our preferred method to achieve your goals.