Whether you have market fever or the Bee Gees “Stayin’ Alive” soundtrack stuck in your head, you may be able to guess where this 2025 market wrap up is going! Every time we enter a new market cycle or change in administration, the consensus is that something “must break.” Every bull market “must die,” and so the cycle begins of bulls and bears arguing on tv about which market is yet to come. Who will be right? How can we know? What do we do?
Between commercial breaks or your systematic scrolling of news articles, the argument of who will ultimately call the next “recession” or the next “golden opportunity” leaves a large gap of time in between those so-called “predictions.” We all want to see the turn and avoid the crash but avoiding the race all together leaves zero chance for winning.
This is why as an Investment Committee, we have maintained a broad view of the market, and a targeted focus on where we are in the race. We have maintained our convictions: inflation is moderating, the tax cuts will be stimulative, deregulation will reduce the cost of doing business, and U.S. equities and growth sectors (like energy) remain a vertical trade that will benefit from AI.
We also work with you and your plan to ensure future incomes are protected, through fixed options, reserves, and the DHT Income Planning cycle. These tools reduce the risk of major distributions in down markets because no matter how “smart the prediction” very few are ever right. And, just like the end-of-the-world predictions, even fewer predictions are ever on time.
Like the market in 2020, 2022-2023, and 2025, we have seen major corrections, and none were predicted in their entirety. And although those periods are hard to tolerate, the key focus is to remain disciplined. Because the recovery and the “Stayin’ Alive” vibe is what makes a long-term plan stay on track. Below is a simple illustration of the S&P 500 Index from 2/20/20 to 2026 YTD. 1
This is not a performance statement; this is a clear picture of the journey for which investors must prepare.
To add context to this bullishness, we are seeing both policy and market forces working together. Volatility has remained elevated, and yet the market continues to push forward. We believe this centers on the good data that continues to be overshadowed by more political based headlines.
We have included just a few examples:
- Tax Cuts 2.0 – not only did it make the tax brackets permanent, it also lowered the corporate tax through expensing changes for business, and it directly cut taxes for 88% of all seniors receiving Social Security income.2 We have provided a link to our 2025 Tax Update for more details, but we will see the positive impacts of these tax cuts within this next year. 2025 Tax Updates: DHT Insights Tailored to You
- Interest Rates – we are starting to see the positive impacts of lower rates. The misunderstanding of interest rate cuts is that they are immediate. Most rate cuts take up to 6 months to kick in. The Fed began cutting 25bps in September, October, and December 2025. The September rate cut is reaching that 6 month-mark this month. And we can see the loosening within capital markets. The expectation is for more cuts in 2026, with the new Fed chair being focused on growth, not just inflation.
- GDP in the 3rd quarter grew at an annual rate of 4.4%. Many expect this to continue through Q4 and into 2026.3 Growth is not only a factor for the market, but also a key solution criteria for the national debt. Paying down the national debt must be a long-term priority. With a Fed that is focused on lower rates with growth, the expectation is that Kevin Warsh will accept higher GDP growth and lower rates to tackle both inflation and the debt. Can this be done without over-heating an already hot market? That remains to be seen.
- Lower Inflation – we can all pick our inflation basket, but when you look at Truflation US CPI, we can see inflation cooling, even as the BLS CPI statistics lag by about 45 days. Truflation US CPI is reading roughly .68% vs. the BLS at 2.7%.4 Couple this with wage growth expected to be around 4.2-4.86% for 2025, and we are seeing the initial recipe for greater purchasing power in 2026.
- Earnings Growth and the S&P 500 – Q4 2025 earnings showed over 79% of reporting companies beat their earnings estimates. And the median outperformance of those companies that beat estimates did so by over 5% or more.5
Even with increased volatility on the VIX, we are still seeing broad-based economic expansion as these tail winds begin to push the market forward. As we wait for these positive-growth factors to fully impact the economy, we continue to harvest gains as needed for income. We are also looking to rebalance the portfolios to ensure position weights are within range.
The bond market remains just as interesting as the stock market. The 10 Year Treasury remains above 4%, and money market yields remain over 3.5% in most cases. We continue to utilize both the DHT Annual Dividend bond portfolio and VUSXX6 to achieve interest/ income on cash assets that have shorter time horizons and lower risk profiles. We have also maintained a longer duration, as we continue to expect interest rates to come down. We have seen some positive performance within our bond holdings due to this position decision. We expect this to continue.
Looking ahead to 2026, we are actively looking at sectors that can benefit from the vertical AI trades like energy, utilities, raw materials, and other support industries that are not at the top of the AI pyramid. We continue to maintain concentrated tech exposure through our growth positions, but we are looking at alternatives to ensure we grow with this next phase of AI.
We are actively engaged in the tax planning process and looking at tax returns as they are completed over the next few months. Please remember your DHT Portfolio Accounts at AXOS will generate 1099s between February 15th to March 15th (March being the last date for possible corrections). The online accounts should have tax documents ready by February 15th!
As we noted above, to “stay alive” we must be ready to live. We are committed to helping you live your dreams and working to make sure your Personal Financial plan is set to maximize your life. Whether your dreams are large or small, our goal is to make sure this firm, and our team remains committed to serving your needs and looking out for your best interests. No matter what the market brings, or the world predicts, we are here to fulfill our mission and provide hope!
John C. Donohue, III CFP ®
Gregory B. Hart
Michael J. Thomson Sr. MBA, CLU, ChFC, RHU, REBC
Brooks D. Shertzer Sr.
Office: 410-803-0160
Fax: 410-803-0167
john@dhtfg.com
greg@dhtfg.com
mike@dhtfg.com
brooks@dhtfg.com
1S&P 500 (^GSPC) Charts, Data & News - Yahoo Finance
5FundstratEarnings Daily 2/9/2026
6VUSXX-Vanguard Treasury Money Market Fund | Vanguard