January 16, 2026 – As we look back on 2025 and ahead to 2026, one thing stands out: the market feels very familiar. This time last year, investors were focused on the Federal Reserve’s interest rate policy, government policy, and global conflicts. A year later, those topics still dominate the headlines, but markets seem largely unmoved by them. From today’s perspective, 2026 looks much the same as 2025: steady growth, known risks, and few significant surprises. That sense of sameness is a sign that much of what we are seeing is already understood and is a continuation of what has produced double-digit gains in recent years.
| Market Total Returns (including dividends) | Oct. – Dec. | 2025 | |
| Large Co. U.S. Stocks | S&P 500 |
+2.65 |
+17.88% |
| Small Co. U.S. Stocks |
Russell 2000 |
+2.19% |
+12.81% |
|
Foreign Stocks |
DJ Global ex. US |
+4.29% |
+28.20% |
| U.S. Taxable Bonds | Bloomberg U.S. Agg. Bond |
+1.10% |
+7.30% |
| Tax-Free Bonds | Bloomberg Municipal Bond |
+1.56% |
+4.25% |
| Commodities | Bloomberg Commodity Index |
+5.85% |
+15.77% |
Every quarter brings a new wave of headlines. Political developments, geopolitical risks, and speculation about Fed policy all grab attention. Yet markets have continued to move forward without much reaction. Markets tend to respond to new information, not ongoing dialogue and analysis. When risks are widely discussed and expected, they tend to be already priced in. Right now, markets are comfortable with the current positive environment until something meaningfully changes.
Noise vs. Signal
It may seem paradoxical that headlines get louder, yet the markets stay calm. But markets do not react to everything—they quickly focus on what matters. Noise changes every day: headlines featuring political rhetoric and debate, geopolitical events and market speculation. Signals, in contrast, change slowly. Signals can be found in economic growth, inflation rates, and corporate profitability. At the moment, longer-term signals remain steady. Companies are still growing earnings. Economic expansion continues. Interest rates, while higher than a few years ago, are not restrictive. Markets, much like seasoned travelers, notice turbulence but do not change course unless the destination itself has been changed.
Every quarter, there are events that feel important, but, in the long run, do not end up creating significant change for investors. In the recent quarter, much attention was centered on the timing of interest rate cuts. Each new economic report sparked fresh speculation about when the Federal Reserve might act. Markets moved briefly, then quickly settled back down. The reasoning is simple: whether rates are cut a few months earlier or later does not change the long-term outlook for growth or corporate profits. That scenario was already expected. It serves as a reminder that not every headline leads to a meaningful investment action.
What We’re Watching
Calm markets do not mean we stop paying attention. We continue to watch the following areas closely:
- Economic growth and inflation
- Whether company profits continue to grow in a sustainable way
- Areas of the market that have become very expensive or more attractive over time
- How broad the market leadership remains beyond a handful of large companies
Often, watching confirms that patience, paired with a long-term strategy, remains the right approach.
Asset Class Outlook
U.S. Stocks
We remain optimistic about U.S. equities. The fundamental backdrop is supportive, with earnings growth and reasonable interest rates providing tailwinds. Key themes from 2025 appear likely to continue into 2026 and estimates are for 12 to 15% earnings (profit) growth this year.
Foreign Stocks
Global growth, increased spending among European countries, and a favorable interest rate environment support a constructive outlook for international markets. We continue to allocate a portion of equity portfolios to developed markets and emerging markets foreign stocks.
Fixed Income
As long as inflation trends lower and the Federal Reserve remains inclined toward easier rate policy, bonds should continue to play a contributing role in portfolios. Our preference remains for high-quality bonds with maturities of two to seven years. For taxable accounts, we emphasize tax-exempt municipal bonds, while taxable securities are favored in retirement and lower-tax accounts.
Closing Thoughts: Steady Is a Strategy
Quiet periods like this can feel uncomfortable. There is no clear catalyst, no dramatic turning point, and no immediate action to take. However, historically, these are often the periods when long-term results are built. As we head into 2026, markets appear comfortable with the current backdrop of moderate growth, familiar risks, and reasonable expectations. That does not mean volatility will not return, but it does suggest that discipline and patience remain valuable.
Our focus continues to be on long-term goals, thoughtful diversification, and avoiding unnecessary reactions to short-term noise. If your situation or objectives have changed, we are always here to talk. Otherwise, we will continue doing what tends to work best over time: staying the course.