The more things change, the more they are the same.
— Alphonse Karr
I am pleased to report on another successful year in the pursuit of your most cherished financial goals. Your Plan—and therefore your portfolio continues to be guided by these goals rather than by anyone’s predictions about the economy or the markets. That has always been the Spartan Way, and it will remain so in the year ahead and beyond. Before turning to a few observations about 2025 and the year to come, allow me to restate the core beliefs that shape our planning and investment discipline:
Core Beliefs
- We are long‑term, goal‑focused, Plan‑driven investors.
- We believe low‑cost, tax‑efficient, evidence-based, globally diversified
equity portfolios give us the highest probability of achieving those goals. - We see no evidence that the economy can be reliably forecast or that
markets can be consistently timed. Nor is there any dependable pattern in how markets respond—or fail to respond—to economic developments. - Therefore, the only way to be reasonably confident of capturing the full return that equities offer is to endure their frequent, unpredictable, and sometimes significant—but historically always temporary—declines.
- We do not react to, much less anticipate, economic or market events. As long as your long‑term goals remain unchanged, so will our Plan for achieving them and your portfolio (with periodic rebalancing).
- Because long‑term compounding of quality equities is the most powerful force working in your favor, we remain obedient to Charlie Munger’s dictum: “The first law of compounding is to never interrupt it unnecessarily.”
- We follow a disciplined Plan that gives you the highest probability of achieving your most cherished goals. We never accept that “this time is different,” and we refuse to alter our strategy to accommodate the fads or fears of the moment.
Current Commentary:
- The broad U.S. equity market rose more than 17% in 2025, supported by a strong economy, rising corporate earnings, and low inflation. But the real
surprise of the year was the powerful resurgence of international equities, which advanced more than 30%. - The one soft spot in the U.S. economy has been employment, which has continued to ease. Yet even this has a bright side as strong economic
growth combined with a stable labor market has produced a meaningful rise in per‑capita productivity. - After six consecutive rate cuts, Federal Reserve policy is now 175 basis points looser than a year ago. It seems reasonable to expect the lagged effects of this easing to begin showing up in 2026.
- The middle class is expected to receive roughly $150 billion in tax refunds this filing season, driven by a higher standard deduction and the restoration of the SALT deduction cap to $40,000 from $10,000. This could provide a helpful near‑term economic tailwind.
- The U.S. equity market is more concentrated in a handful of enormous tech companies than at any point in our investing lifetimes. Not all of them can win the AI race, yet valuations for U.S. large‑cap growth stocks now sit near historic peaks.
- Our response is twofold: (1) Valuation has never been a reliable market‑timing tool, and (2) Our upcoming rebalancing across value, small, international, and emerging markets equities will address this
concentration in a disciplined way. - The next significant market shock—and rest assured, there will be one—will almost certainly come from an unexpected direction. As with past shocks, it will have little to do with us except as an opportunity: for accumulators, a chance to buy bargains; for retirees, a moment to draw from our Bear Market Reserves as designed.
We wish all our friends and clients—because to us, you are both—a healthy, happy, and prosperous 2026. It remains a privilege to serve as your family’s Trusted Advisor, and we look forward to your updates at our annual reviews.
Happy New Year!
