December 2025 KWP Newsletter

2025 opened with a surprisingly cheerful image. Early in January, a lone cyclist in Manhattan became a familiar face. Every morning, he rolled past Wall Street with a cardboard sign on his backpack that read, “Don’t worry. Markets always wobble before they dance.” It started as a simple joke, yet the words turned out to be unexpectedly wise. After a calm beginning, markets didn’t just wobble — they swooned, sprinted, and somersaulted, and now, in true market fashion, look ready to finish the year standing tall.

2025 in Review

First-quarter volatility arrived out of the gates, as tariffs were announced with little warning, pushing equity markets into correction territory. Headlines often sounded dramatic, yet underlying fundamentals remained stronger than sentiment. Consumers kept spending, employment stayed solid, and earnings held up well.



By mid-year, clarity around trade policy and continued strength in technology and AI helped fuel a robust rebound. Equity indices not only regained lost ground but set new highs. During the second half, market participation broadened as value, dividend strategies, and international equities contributed alongside mega-cap technology. A process driven investment approach that remained disciplined was ultimately rewarded. 

A Year of Resilience

2025 reinforced two clear lessons: markets can decline quickly, but can also recover just as fast, and the economy often proves stronger than the headlines suggest. From tariff tremors to a broad rebound powered by innovation, the year has showcased volatility, opportunity, and ultimately, resilience.

Themes That Drove Performance

• Technology and AI: Continued adoption and capital investment powered much of the year’s gains.
• Infrastructure & Semiconductors: Investments in data centers and semiconductors supported both tech growth and broader market confidence.
• Value and Dividends: Value and dividend-oriented stocks offered stability and contributed to diversified portfolios.
• Global Exposure: International equities, particularly in Asia and emerging markets, performed strongly in local currency terms, highlighting the benefits of global diversification.

What did not work as well

     •     Chasing last year’s performance leaders

     •     Short-term market timing strategies

     •     Momentum without fundamentals

Looking Ahead to 2026

Markets enter 2026 with cautious optimism. Inflation shows signs of easing, interest rates may stabilize, and investment in technology and productivity remains robust. Short-term headline shocks are possible, but fundamentals remain relatively healthy.

In other words, markets continue to reward balance: patience, diversification, and disciplined investment. Strong gains in 2025 highlight opportunity, but concentration risk and valuations remind investors to remain vigilant.

^{https://www.reuters.com/markets/us/global-demand-us-stocks-isnt-waning-its-increasing-2025-12-02/?utm_sourceS&P Global, “US Stocks Soar to New Highs,” July 2025.} 

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