2025 Year in Review

As we close out 2025, I want to share a broader reflection on what this year taught us about investing— and more importantly, about maintaining a long-term mindset in a world filled with noise, predictions, and uncertainty. Markets transitioned through interest-rate debates, election year volatility, AI-driven growth, inflation improvements, and media headlines that seemed to contradict one another week after week. In April, we saw tremendous volatility when Tariffs were announced. By April 8 , 2025, we saw each index hit their low-point of the year. From the peak, the Dow Jones fell 16.54%, S&P 500 fell 18.9%, while the Nasdaq fell 23.87%. With the anxiety of the future, many investors were unsure how to position themselves and rightfully so. 

From the low of April 8th, 2025 to June 8th, 2025—just a two-month span—the markets rebounded

at an extraordinary pace. This kind of rapid recovery can easily catch investors off guard, especially

those who sold during the month of April, hoping to “wait until things calm down.” Sometimes, the

market just doesn’t give you a chance to get “back in”.

Panic in the market is nothing new. In fact, it’s quite normal to see intra-year drawdowns. The

image below provided by J.P. Morgan provides us annual S&P 500 returns in the gray bars, but

also highlights intra-year declines in red. Pretty fascinating!

This chart is a powerful reminder that market volatility is a normal part of every year—and that navigating those inevitable ups and downs is simply part of the investing experience. 

This chart highlights how missing just a few of the best days in the market, can have severe long term consequences. Most investors are diversified more than just the S&P 500, however this is a great illustration of how human behavior can affect your own personal returns. Some of the best days in the market proceed directly after some of the worst days in the market as well. **See next page. (Chart below shows $100,000 invested into S&P 500 on 6/30/2000 to 11/24/2025) 

As we close out the year, we once again find markets hovering near all-time highs. While none of us

can predict the future, history has consistently shown that maintaining a long-term strategy is

what ultimately drives results. Looking back over the past 30+ years, there have been many

moments when markets felt “uninvestable” or “too high,” yet those fears rarely aligned with longterm

outcomes. When we zoom out and consider where markets may be 10 years from now, it

becomes easier to stay calm, stay invested, and stay focused on the bigger picture.

How to Stay Committed to a Long Term Strategy

Here are three practical steps to take to help avoid short term emotional situations, allowing for

long term investing.

1. Emergency Fund: Establishing an emergency fund of 3–6 months of expenses provides a

crucial financial cushion. With adequate cash reserves, you can handle unexpected costs

without needing to sell investments at inopportune times. This buffer helps protect your longterm

strategy by allowing your portfolio to stay invested through short-term market

fluctuations.

2. Pay Down Debts: Reducing or eliminating debt strengthens your financial foundation and

improves your resilience during market downturns. When markets are strong, carrying extra

debt can feel manageable. But during a correction, that same debt can amplify stress and

pressure you into making poor investment decisions. Keeping debt low not only provides peace

of mind—it also gives you more flexibility to stay the course when it matters most.

3. Diversify Investments: A well-diversified portfolio helps ensure that when certain areas of the

market zig, others zag. It’s nearly impossible to predict which segment will lead in any given

year—Domestic vs. International, Large Cap vs. Small Cap, Energy vs. Financials, and so on.

Owning a mix of everything reduces the impact of any single area underperforming and helps

protect against large drawdowns. Concentration risk is one of the biggest threats to long-term

wealth, which is why long-term investors benefit from broad, thoughtful diversification.

Wishing you a Merry Christmas and a Happy New Year from the FWM team.

Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. This communication is strictly intended for individuals residing in the states of MI, IN, OH. Cambridge and Foundation Wealth Management are not affiliated.