2025 Market Review

Staying Balanced Through the Turns

At Slalom Wealth Management, we believe successful investing is rarely about reacting to the loudest headline.

Like skiing a slalom course, progress comes from staying balanced, looking ahead, and making thoughtful adjustments as obstacles appear - not from chasing every turn at full speed.

2025 provided no shortage of distractions: inflation concerns, interest-rate uncertainty, geopolitical noise, and constant predictions about what might happen next.

But when we step back and focus on the fundamentals, the picture becomes much clearer.

Households remain financially strong.
Companies continue to adapt and innovate.
Disciplined investors were rewarded once again.

Here’s our perspective on what mattered most in 2025 and why long-term planning still matters far more than short-term noise.

Market Results: A Strong Year, Broadly Speaking

Despite widespread skepticism throughout the year, markets delivered solid results across a wide range of investments.

Equities

• S&P 500: +17.9%
• Dow Jones Industrial Average: +14.9%
• U.S. Small-Cap Stocks: +11.6%
• International Developed Markets: +34.2%
• Emerging Markets: +24.6%

Fixed Income

• U.S. Aggregate Bond Index: +7.1%
• U.S. Government Bond Index: +6.0%

For many investors, these results felt surprising not because markets were calm, but because uncertainty never fully went away.

That’s an important reminder: markets don’t wait for clarity. They move forward while uncertainty remains.

The Consumer: A Position of Strength

Household Wealth Reached New Highs

By mid-2025, U.S. household net worth reached an all-time high of $167 trillion, and rising asset values in the second half of the year likely pushed that number even higher.

Even more telling is what happened beneath the surface.

Since 2020:

• Household assets increased by roughly $60 trillion
• Household liabilities rose by only $4 trillion

That means households added approximately $15 of assets for every $1 of new debt - a level of financial strength rarely acknowledged in daily news coverage.

Cash Flow and Debt Remain Manageable

While higher living costs remain a concern, consumers continue to show resilience on a month-to-month basis.

Across income levels:

• Inflation-adjusted cash balances remain above pre-pandemic levels
• ​Debt payments as a percentage of income are lower than at any point from 1980 to 2020

This combination provides flexibility, an important buffer during periods of uncertainty.

Inflation and Rates: More Waiting Than Worry

Much of 2025 was defined by anticipation rather than disruption.

​Inflation fears resurfaced but never materialized meaningfully. The most recent reading came in below late-2024 levels, and the Federal Reserve ultimately resumed rate cuts later in the year.

Rates declined by 0.75% overall, later and slower than many expected, but without destabilizing the broader economy.

The Companies: Resilient by Design

Economic Growth Held Steady

Despite early concerns surrounding tariffs and trade policy, economic growth proved durable.

Real GDP is estimated to have grown by approximately 2.6% in 2025, a reminder that strong businesses tend to adjust faster than forecasts anticipate.

Profits Reached Multi-Year Highs

Corporate profitability once again exceeded expectations.

S&P 500 profit margins climbed to their highest level in more than 15 years, helping drive 39 new all-time highs for the index during the year.

For long-term investors, this reinforces an important principle: well-run companies tend to find ways to adapt, even in challenging environments.

Investing in 2025: Discipline Was Rewarded

Diversification Worked

This wasn’t a year where returns were concentrated in a single corner of the market.

International stocks, bonds, real estate, precious metals, and even cash delivered positive returns — reinforcing the value of diversified portfolios built with intention, not prediction.

Perspective on Gold and Long-Term Growth

Gold finally reached a new inflation-adjusted high in 2025; something it hadn’t done in more than four decades.

That milestone offers useful perspective.

Over the same period, a long-term investment in equities would have grown dramatically more. This underscores why productive assets play such a central role in long-term wealth planning.

Artificial Intelligence: A Familiar Pattern

Artificial intelligence dominated headlines and investor conversations throughout the year.

Is there enthusiasm? Absolutely. Could there be volatility ahead? Also possible.

History suggests that transformative technologies often arrive with excess excitement before delivering lasting gains. Railroads, electricity, and the internet followed similar paths — and each reshaped productivity and economic growth over time.

AI already appears to be doing the same.

Reasons for Long-Term Confidence

While markets will always face short-term uncertainty, several long-term trends continue to move in the right direction:

• Global youth literacy has reached record levels
• Advances in medical research are extending both lifespan and quality of life
• Global access to food, clean water, electricity, and sanitation continues to expand
• Innovation and productivity remain powerful forces worldwide

Progress rarely makes headlines — but it compounds quietly over time.

Staying the Course

At Slalom Wealth Management, our role isn’t to predict the next turn — it’s to help you navigate the entire course.

That means:

• Staying disciplined during volatility
• Avoiding emotional decisions driven by headlines
• Focusing on long-term outcomes that support your lifestyle, goals, and legacy

2025 rewarded investors who stayed balanced, diversified, and patient — principles we believe will continue to matter far more than any single market forecast.

As always, if you’d like to talk through how these trends connect to your personal plan, we’re here to help.

It’s a privilege to guide you through every stage of the journey.