2025 Market Wrap-Up

Perspective, Discipline, and a Little Humility

As we close the books on 2025, one thing is clear: markets once again reminded us that progress rarely travels in a straight line.

Despite a steady stream of unsettling headlines, tariffs, rate uncertainty, government shutdowns, and the occasional bout of investor indigestion, disciplined investors were rewarded. Both U.S. and non-U.S. markets delivered strong results, bonds rejoined the conversation in a meaningful way, and diversification did exactly what it’s supposed to do.

If there’s a single theme for the year, it’s this: staying invested matters more than staying informed.

2025 by the Numbers (A Calm Look Back)

U.S. Equities: The S&P 500 finished the year up nearly 18%, marking its third consecutive year of double‑digit returns. That headline number, however, masks a far more dramatic journey. 2025 included a sharp drawdown in the spring and a fast recovery that rewarded investors who stayed disciplined.

Non‑U.S. Equities: If 2025 had a plot twist, it was international stocks. Non‑U.S. markets outperformed U.S. equities by roughly 14.5%, the widest margin in more than a decade. Developed and emerging markets alike contributed—an unglamorous reminder that global diversification often feels least compelling right before it matters most.

Fixed Income: After several challenging years, bonds delivered welcome relief. With the Federal Reserve cutting rates during the year, broad bond markets posted their strongest showing since 2020, bonds once again behaving like ballast in diversified portfolios.

Figure 1: S&P 500’s 2025 Journey — Resilience Amid Headlines and Volatility

Data from 1/1/2025–12/31/2025. Source: FactSet, Avantis Investors. Past performance is no guarantee of future results.

What We Think Actually Mattered

• Volatility was the price of admission. The strongest outcomes required sitting through uncomfortable drawdowns.
• Diversification paid rent. Non‑U.S. equities and bonds both played meaningful roles.
• Valuation and profitability mattered. Markets rewarded durable earnings and reasonable prices, particularly outside the U.S.

None of this required prediction. All of it required patience.

Figure 2: S&P 500 Index by the Numbers in 2025

Data from 1/1/2025–12/31/2025. Source: Bloomberg, Avantis Investors. Past performance is no guarantee of future results.

A Brief Academic Aside (We’ll Keep It Short)

Research in neuroeconomics suggests that while investors’ core preferences remain largely stable over time, our ability to process new financial information can change as we age. Learning from feedback becomes harder during regime shifts, and susceptibility to mistakes, or worse, fraud can increase.

The practical takeaway is simple: clear structure, disciplined portfolios, and thoughtful guidance matter more as complexity rises. Experience is an asset, but it works best when paired with sound decision environments.

Looking Ahead to 2026

A new calendar year doesn’t eliminate uncertainty, it simply refreshes it. Inflation, labor markets, interest rates, artificial intelligence, and geopolitical risks will all continue to compete for attention. There will also be risks no one is talking about yet.

Fortunately, 2025 reinforced a lesson we’ve seen many times before: uncertainty does not preclude progress.

As we move into 2026, our focus remains exactly where it belongs: on you. The past year served as a reminder that thoughtful planning and disciplined portfolios tend to matter far more than short‑term market calls.

At LA Wealth, our approach remains unchanged, building globally diversified portfolios, grounded in evidence, designed to compound patiently through environments both friendly and unfriendly. Not flashy. Not reactive. And, historically, not a bad way to invest.

If your life has changed, or is about to, we’d welcome a conversation to ensure your plan continues to reflect what matters most. And if you know someone navigating complexity, transitions, or simply looking for steadier guidance, we’re always happy to be a resource.

Thank you for your continued trust, your thoughtful conversations, and your long‑term perspective. We look forward to navigating the year ahead together.

— LA Wealth

Other Interesting Market Trends in 2025…

Figure 3: Non‑U.S. Stocks Stole the Show in 2025

Data from 1/1/2025–12/31/2025. Source: Bloomberg, Avantis Investors. Past performance is no guarantee of future results.

Figure 4: Many Non‑U.S. Market Asset Classes Outperformed U.S. Stocks in 2025

Data from 1/1/2025–12/31/2025. Source: Bloomberg, Avantis Investors. Past performance is no guarantee of future results.