This past year was good for most investors, particularly those owning stocks and precious metals. This also fits with the historical averages in being the first year of a new presidential term. Today we will look back to see the best and worst performances along with some new trends that have developed.
By the primary equity indices, the S&P 500 rose by 17.88, the Dow Jones Industrials 30 by 12.97, and the Nasdaq 100 by 20.16 percentages. Barclay’s Aggregate Bond Index scored a 7.2 percent total return, first good year since the rate hikes began in 2021.
A recession, even though expected to be mild, did not develop, although unemployment has risen during the fourth quarter from the government workers laid off or at least not working during the federal government closure. Inflation is still running about 3 percent annualized. It still angers me that the Federal Reserve Board steadfastly believes that devaluing our dollars and purchasing power by at least 2 percent per year is absolutely necessary for financial health! This principle is just plain stupidity. But I digress.
Continuing inflation is perhaps the main reason why the Materials sector rose over 32 percent in 2025. The value of silver itself was 145 percent higher followed by gold at almost 64 percent. Healthcare came in second, scoring a 30 percent rise. Biotech stocks finally reversed a downtrend that began in early 2021. Technology came in third place, marking the third year of outstanding performance. Those gained over 24 percent.
Worst performance was found in Real Estate, up 1.46 percent, Consumer Defensive, up just 4 percent and Communication Services, up about 6.5 percent. REITs seem to have stabilized and currently offer some high dividend payments.
What is the outlook for 2026? History predicts that the stock market prices will drop during the middle months, the worst of the four year cycle, just because for decades that occurs 8 or 9 times out of 10.
Late in a bullish cycle, healthcare and smaller companies usually perform well. The giant tech stocks seem to be traveling sideways or down in value. Even though Artificial Intelligence will bring tremendous productivity gains, prices for those companies have gotten ahead of themselves and will likely be taking a breather.
It is time to remember that every index is comprised of individual companies. Even though last year’s big winners may falter, this does not mean other companies, particularly bread and butter industrials or financials, will not get recognized and keep gaining value. This would be a normal rotation between these broad sectors and industries of the economy.
Never a dull moment!
(Statistics from Morningstar and Worden Brothers, Inc. TC2000 software, 2026.)
(Past performance is no guarantee of future results. The advice is general in nature and not intended for specific situations)