Winter 2026 Newsletter: 2025 Markets in Review, Investing at All-Time Highs, and Trump Accounts

The Super Bowl will be decided by split-second decisions, unexpected bounces, and a whole lot of things nobody can predict. Funny how that mirrors investing, except with fewer commercials and significantly less guacamole.

Welcome to the latest edition of our Swan Quarterly Update. Each quarter, we are committed to bringing you timely topics from recent conversations with clients and actionable strategies to help you navigate the ever-changing financial landscape. In this edition, we cover: 2025 Markets in Review, Investing at All-Time Highs, Trump Accounts, and a Swan Wealth firm update.

As always, our goal is to provide you with the tools and knowledge to make confident, informed decisions. We're here to help you stay ahead, no matter what the markets or life may bring. Thank you for allowing us to be part of your financial journey. Let's dive into this quarter's updates and opportunities!

2025 Markets in Review

On a micro level, this past year may have felt absolutely nuts. From our perspective, it was just another year in markets with a whole lot of background noise.

Amongst the noise was a new presidential administration, tariffs and global trade policies, AI investment galore, geopolitical tension in the Middle East, easing of global interest rate cuts, and even a new pope.

By the time we got to early April, the S&P 500 dropped -21% in a matter of weeks. If you're one of our clients who checks their portfolio values daily (which we do not encourage), this year was likely an emotional rollercoaster for you. It is easy to get caught up in the latest media headlines whose primary goal is to stir fear and drive more clicks. It's paramount to not let the recent news cycle derail your financial plan and investment strategy.

Themes Across Major Asset Classes

Foreign stocks are perking up. Developed and Emerging Market stocks have had a tough go at it this cycle relative to the S&P 500. 2025 was the first year since 2017 in which both asset classes outperformed the S&P 500. The 10 year returns are still lagging behind U.S. stocks but 2025 was a great year for international stocks, and the longer-term returns are respectable once again.

Commodities are doing better. Precious metals were the standout asset class in 2025, with gold and silver delivering exceptionally strong returns. On the other hand, oil prices struggled.

High-quality bonds were the worst performing asset class over the past 10 years. If you kept your money in T-bills for the past 10 years you would have marginally outperformed the Aggregate Bond Index, despite the fact that cash was yielding next-to-nothing for a decent chunk of the past decade. It's been a rough stretch for bonds. Luckily, yields are higher now so returns should be much more attractive from here.

Cash returns have been good for a few years. T-bills were up 4-5% in 2023, 2024, and 2025, a decent run considering cash yields were stuck on the floor for much of the 2010s and early-2020s. Will it continue? The Fed is already cutting rates, so don't get used to it. Enjoy it while it lasts.

Small Caps and Mid Caps have done fine. A lot of investors have been freaking out about small and mid cap stocks because they've underperformed in recent years, but the 10-year returns are right around 10% per year for both. Yes, large cap stocks have outperformed on a relative basis, but on an absolute basis smaller and mid-sized companies have been doing just fine. Everything can't perform well at the same time.

Higher rates hurt REITs. Slow activity in the real estate market is certainly having an impact, but higher interest rates have obviously led to lower returns for this rate-sensitive asset class.

Large cap stocks have been dominant. The S&P 500 is up almost 15% per year in the 10 years ending 2025. AI and tech leadership were major growth drivers through innovation-led earnings growth. It's hard to imagine this space slowing down in the next 12 months.

The US Dollar weakened, which contributed to the strong performance in international equities and commodities.

Investing at All-Time Highs

Is it a good idea to invest when the market is at an all-time high? If you've been hesitant to invest because the market seems "too high," you're not alone. For many investors, when stocks hit all-time highs, a looming market pull-back feels inevitable in the near future. It's a concern we hear regularly, and it feels intuitive, why buy stocks at the market peak when you could wait for a dip?

Here's the reality: strong market performance, like what we've been experiencing in the last few years, is not in and of itself a harbinger of doom. Historically, all-time highs have not been followed by significant selloffs. In fact, data shows stocks have experienced better than average returns after reaching an all-time high. New all-time highs have typically led to further all-time highs. Generally, stocks have made new all-time highs when the economy and earnings were supportive for solid growth, and those trends have often lasted a long time.

The Cost of Waiting

Consider this: if you had invested $10,000 in the S&P 500 in 1980, it would have grown to over $1 million by 2024, despite multiple crashes, recessions, and countless media headlines when the market felt "too high." The investors who succeeded weren't the ones who timed it perfectly, they were the ones who stayed invested.

Research from Fidelity analyzing returns from 1980 to 2020 found that money invested at market peaks generated an average annual return of about 9-10% over the following 20 years. Even the worst possible timing, investing right before major crashes like 2000 or 2008, still produced positive long-term returns for patient investors.

Let's look at a specific example. If you had invested $10,000 at the market peak in October 2007, right before the financial crisis, your investment would have dropped to roughly $5,000 by March 2009. Painful? No doubt about it. But if you held on, that same investment would have grown to approximately $45,000 by 2024, representing about a 9% annualized return despite starting at what seemed like the worst possible moment.

What the Data Shows

When we examine the numbers objectively, the case for investing at all-time highs becomes surprisingly strong. Looking at average cumulative S&P 500 returns from investing at a new high versus investing on any given day (data from 1950 through 2024): in the short term of 3-month and 6-month periods, the future returns are fairly comparable. However, at longer timeframes of 1, 2, 3, and 5 years, investing at all-time highs has historically produced larger cumulative returns than investing on any given day. Trying to wait for the "right moment" is often the very behavior that costs investors the most.

The Real Risk

The biggest danger isn't investing at a peak, it's staying out of the market entirely. Missing just the 10 best days in the market over a 20-year period can cut your total returns nearly in half. And those best days often occur during the most volatile periods, when investors are most tempted to stay on the sidelines. We experienced one of these days on April 9th, 2025, when the S&P jumped 9.5% in a single day, the third biggest one-day percentage gain since 1950, which occurred during a time of crisis when stocks felt like they were in free fall earlier this year.

Inflation adds another dimension to this equation. Cash sitting in a savings account loses purchasing power over time. At a 3% inflation rate, money sitting idle loses about half its purchasing power in 24 years. Your "safe" choice to patiently wait becomes a guaranteed loss in real terms.

Moving Forward

All-time highs are normal, and investing at them has historically worked out well. There may be many valid reasons for you to dislike stocks at any given time, but the market "being at an all-time high" shouldn't stop you from investing. Bull markets do not die of old age. Markets tend to go up over time, which is precisely why they reach new highs in the first place. This upward trend in stock prices over the long-term rewards those who stay the course rather than those who try to out-guess it. The cost of waiting, both in missed returns and the stress of trying to identify the perfect moment, almost always exceeds the benefit.

If you're building wealth for the future, the best time to invest is usually now, not when things feel safer. For long-term investors, time in the market beats timing the market. Legendary investor Peter Lynch said it best: "Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves."

Trump Accounts

If you or anyone you know welcomed a child in 2025, then you need to know about the new Trump Accounts rolling out in the next few months. Here's what we know about them so far.

A Trump Account is a government-created investment account opened for children under 18 through the OBBBA passed in 2025. The accounts are set to launch on July 5, 2026. It's a tax-advantaged account, think of it like an IRA with no tax deduction. These accounts allow you to contribute funds after-tax that grow tax-deferred. Families can contribute up to $5,000 per year to each account. Once the child turns 18, the account converts to a Traditional IRA and withdrawals are taxed as ordinary income. And for kids born between January 1, 2025, and December 31, 2028, you get an initial $1,000 from the federal government if you claim it. That additional contribution does not count toward the maximum $5,000 annual limit.

Here's how to claim it. You currently have two options: visit trumpaccounts.gov and enter your email, and you'll receive instructions on how to set up the account and claim the $1,000 once funding becomes available; or file Form 4547 with your tax return this April. For most families, the website option is probably the better route, especially if you plan to file your 2025 tax return before July 4th, 2026.

Trump Accounts are expected to be funded no earlier than July 4th. If you file your 2025 return before then without signing up through the website, the account may not be funded until you file your 2026 return. Signing up through the website puts you first in line once funding opens.

As with any new program, there are still details to sort through. We don't know if the funds will be able to be converted to a Roth IRA (which would be huge), and we do not know if it can be used for college, a house, etc. We're continuing to review the pros and cons and will share more guidance as we learn more, especially around how this fits alongside existing planning tools. It's a no-brainer to get this set up and get the free $1,000, but adding more is not certain yet. Stay tuned!

Swan Wealth 2025 Recap

We had many highlights as a firm last year, but want to mention two here.

Without a doubt, the single best thing to come from 2025 was the addition of Don Stewart as a partner of Swan Wealth. Don brings a wealth of financial planning knowledge, and our capacity for delivering excellent service only expanded. Most of you have met him by now, and it doesn't take long to understand why we're so excited about having him as a teammate.

You'll notice we've officially changed the name of our firm from Financial Strategies Group to Swan Wealth. We chose SWAN as it's both an acronym and credo meaning "Sleep Well at Night." Our relentless pursuit of excellent financial planning, communication, and service are all for the sake of helping our clients sleep well at night when it comes to their finances. We hope you felt that from us during 2025, and we will undoubtedly execute as best we can into the future as well.

Looking forward to 2026, we are confident it will be a year full of value delivered to you, our beloved clients. From deliverables like educational pieces to synchronized meeting cadences, our aim is to provide as much value as we possibly can for you and your families. We are looking to have one or two more events added for clients on top of our annual Pie Day (over 50 pies were ordered for clients last year). Lastly, we have some enhancements on the horizon that will make our service even more efficient for you. But more to come on that later.

If You're Still Reading...

Tax documents like Form 1099-R's and 1099-DIV's will be mailed out and uploaded to the client portal within the next couple of weeks. Please give us a call if you need a spare copy. As a reminder, we offer in-house tax preparation services for client efficiency!

We value your opinion and are constantly looking for ways to improve our services. Your feedback is essential in helping us better meet your needs and expectations. Whether it's a suggestion, concern, or something you loved, we'd greatly appreciate hearing from you!

Don Stewart, Mike Mahalich, TJ Bruce, Paul Klein