Surviving the Noise: Markets Close the Book on 2025

David Halseth
4 days ago
2 min read

For week ended 1/3/2026.

Welcome to 2026.

After a year that felt like playing financial whack-a-mole, investors can officially declare victory. Fires were everywhere, yet portfolios largely survived – and in many cases, thrived. Before we look ahead, though, let’s clean up one last piece of unfinished business from 2025.

Yes, the long-delayed GDP report finally arrived. And it was worth the wait.

We now know that Q3 GDP grew at a blistering 4.3% annualized rate – the strongest pace in two years and well above the already-solid Q2 reading of 3.8%. Economists, per the Wall Street Journal’s poll, were looking for something closer to 3.2%. Once again, the “dismal science” lived up to its nickname.

What drove the upside surprise? In a word: consumers. Robust household spending – particularly on healthcare – did the heavy lifting. Add in a rebound in international travel, higher demand for legal services, and increased spending on personal computers and software, and you get an economy that refused to cool off on schedule. AI-related investment also helped, though the pace moderated somewhat from Q2.

So yes, credit where credit is due. The U.S. consumer – your friends, neighbors, family, and yes, this author – showed up and swiped the card.

Now, on to the markets.

The performance figures in this week’s MMM reflect year-end 2025, not last Friday. I wanted to provide a clean, final snapshot – and frankly, one trading day in early January isn’t moving the needle. If that bothers you, my apologies. If not, carry on.

The headline story of 2025 was foreign equities. Helped along by a weakening U.S. dollar, international stocks surged an impressive 33.3% for the year. U.S. stocks also had a solid showing, rising 17.7% - nothing to sneeze at.

Even the much-maligned domestic bond market managed a respectable 7.1% gain. Cash – if managed thoughtfully – actually outpaced inflation. The lone true laggard? Crypto, down 10.2% on the year, with volatility that bordered on comical. Its one-year standard deviation approached 60%, compared to roughly 25% for domestic equities – the next most volatile major asset class.

Translation: excitement is not the same thing as returns.

And with that, we close the book on 2025.

Welcome to 2026. May your portfolio remain diversified, your expectations realistic, and your coffee strong – with room for many ingredients.

Good morning.