Year End Report:  Q4 & 2025 Recap 

What’s below?

1. Economic Cycle Update
   In a structured fashion, conducted on a quarterly basis, we undertake an in-depth examination of the economy’s performance. This rigorous analysis extends beyond the immediate horizon and focuses on the strategic outlook for the longer term. This systematic approach, we believe, helps us formulate more informed and forward-looking strategies that align with our clients’ financial goals and objectives.
2. Market Cycle Update
   On a regular basis, we conduct a comprehensive evaluation of market performance, along with strategic analysis geared towards the short-term outlook. This ongoing assessment forms a crucial part of our investment strategy and decision-making process, as we seek to remain agile and well-informed in the dynamic financial landscape.
3. Market Update
   At the conclusion of each quarter, we provide a comprehensive recap of various critical elements within the financial landscape. This recap encompasses an in-depth analysis of financial markets, interest rates, Federal Reserve actions and policy shifts, corporate earnings reports, and pertinent geopolitical events that transpired during the quarter. Our aim is to furnish our clients with a holistic understanding of the broader economic context, enabling them to make well-informed financial decisions in a complex and ever-evolving environment.

1. Economic Cycle Update

Welcome to our quarterly analysis of the market’s performance and our strategic outlook, based on the primary drivers of the market – interest rates, inflation, the Federal Reserve, corporate earnings, and geopolitical events.

Every quarter, our team analyzes a list of qualitative and quantitative factors of the economy, as we assess what part of the cycle, we find ourselves in. This process allows us to adopt longer-term views on the economy and markets, which ultimately inform our portfolio positioning.

Following the end of Q4 2025, there were 37.5 bullish factors and 11.5 bearish factors, resulting in a 76.5% bullish and 23.5% bearish score. Our view remains largely unchanged from last quarter, as a reading around 75% bullish suggests a healthy level of optimism. This indicates that the U.S. economy’s momentum could continue in the near term, though the risk of a slowdown remains given the extended period of growth the U.S. has experienced.

Based on current data, our view is that the economy appears to be skirting a cyclical bottom. Real GDP for Q3 came in stronger than expected at 4.3%, and most models indicate a relatively low probability of recession over the next 12 months, suggesting the economy could transition into a new period of growth. Inflation remained in a manageable range and ended the year on a downward trajectory, another constructive economic signal. Corporate earnings have been robust and are expected to remain strong, while several Federal Reserve rate cuts in 2025 supported both the economy and markets.

Expectations for further easing in 2026 continue to bolster sentiment regarding central bank action. One uncertainty is the next Federal Reserve president, who may be more dovish than the current Chair Powell, influencing monetary policy in the coming years. A more accommodative Fed could support stronger economic growth, though it also carries the risk of higher inflation.

Some risks remain, particularly in the labor market. Employment growth slowed significantly over the past year, with payrolls increasing by 584,000 in 2025, averaging 49,000 new jobs per month, a notable deceleration from the 2.0 million jobs added in 2024, or 168,000 per month. Nevertheless, many other metrics of economic fundamentals remain intact as we enter the new year.

We have integrated this longer-term, strategic score into our portfolio construction process. By factoring in these market insights, we believe that our portfolios are strategically aligned to take advantage of the prevailing market sentiment and optimize returns.

Below is a brief overview of some of the leading bull and bear indicators as of quarter end:

Economic Cycle Bulls:

Yield Curve

The yield curve has improved notably this quarter, remaining upward sloping and gradually steepening throughout 2025. In contrast to an inverted curve, which is often interpreted as a recession indicator, an upward sloping curve suggests stability and a lower probability of recession being priced into fixed income markets.

Corporate Earnings

One of the strongest bullish fundamental drivers at the end of 2025 is earnings growth. After a robust year for corporate profits, strong performance in service industries and productivity gains driven by new technologies are expected to support another above-average year of earnings in 2026. Earnings remain a critical driver for both economic growth and equity markets, underscoring the strength of large US companies.

Monetary Policy

In Q4 and throughout 2025, the Federal Reserve gradually lowered interest rates and signaled the potential for additional easing over the next 12 months. This accommodative stance, when paired with moderating inflation, supports economic growth by reducing borrowing costs and encouraging investment.

Consensus Expectations

Market expectations for both the economy and equity performance are constructive heading into 2026. Many strategists forecast high single-digit to low double-digit returns for major indices like the S&P 500. While forecasts are never guarantees, these projections reflect positive market and economic sentiment, building on several years of above-average performance.

Economic Cycle Bears:

Leading Indicators

Leading indicators have remained persistently bearish over the past year, oscillating between signals of a slowdown or recession. While historically reliable in signaling caution, their effectiveness in predicting downturns may be diminishing in today’s economic environment. Nevertheless, they currently represent a negative factor in our economic model.

Labor Markets

The U.S. labor market showed signs of softening in 2025. The unemployment rate edged higher, rising from 4.0% at the start of the year to as high as 4.5% in November, before finishing the year at 4.4%. Combined with slower payroll growth, these trends are bearish for the economy and help explain the central bank’s shift toward a more accommodative stance.

Manufacturing

Despite trade policy efforts to reshore manufacturing, rebuilding U.S. capacity is expected to be a multi-year endeavor requiring substantial investment. Key indicators, such as the ISM Manufacturing Index, remain weak, signaling caution for this sector within the broader economy.

Housing Starts & Residential Real Estate

Even as mortgage rates trended lower in 2025, housing starts and home sales remained subdued compared to recent years. Persistent affordability challenges and supply constraints continue to weigh on the housing market, representing a negative factor for economic growth.

2. Market Cycle Update

Welcome to our comprehensive analysis of the market’s performance and short-term outlook. At Synergy, we pride ourselves on our data-driven approach, utilizing sophisticated analysis that encompasses 65 technical, fundamental, and economic factors, that attempt to provide a well-rounded assessment of the market’s current state. Our dynamic methodology empowers us to gauge the market outlook as either bullish or bearish, aiding in our process to make strategic portfolio decisions and tactical allocation adjustments.

As of quarter-end, our model reflected 50 bullish factors and 15 bearish factors, resulting in a 76.9% bullish score and a 23.1% bearish score. Looking back over 2025, the most notable pullback in both our model and the broader market stemmed from heightened geopolitical risk following President Trump’s unexpected announcement of higher-than-anticipated tariffs in April. As tariff rates were subsequently adjusted lower and concerns eased, markets generally trended higher, experiencing minor periods of volatility along the way. The fourth quarter was steadily positive, and despite a slight pullback in our market cycle model, market conditions remained resilient. Economic data stabilized, inflation continued to moderate, and third-quarter GDP growth exceeded expectations, supporting year-end strength.

Looking ahead, market conditions appear constructive entering the new year, though some volatility may lie ahead. As the upcoming earnings season approaches, markets have the potential to respond favorably if results exceed expectations. However, with major indexes trading at elevated P/E multiples, markets appear priced for near perfection, introducing downside risk and the potential for a healthy pullback should earnings or guidance fall short. Geopolitical developments remain an additional wildcard, as evidenced early in the new year by the United States’ capture of Venezuela’s president. Lastly, the anticipated nomination of the next Federal Reserve Chair in the coming months, expected to adopt a more dovish stance than current Chair Powell, could provide additional near-term support for markets.

Market Cycle Bulls

Monetary Policy

With an interest rate cut in December and expectations for further easing, along with the anticipated nomination of a more dovish Federal Reserve Chair in the coming months, monetary policy represents a bullish factor for equities in the near term. Rate cuts occurring alongside a stable economic backdrop have historically been constructive for equity markets.

% from All Time Highs

Major equity indices ended the year near all-time highs, signaling strong investor confidence and persistent upward momentum. When markets stay near their highs, they often keep moving upward, suggesting that bullish conditions may continue in the near term.

Buying Power

Several indicators tracking short-term demand for U.S. equities continue to signal strong buying interest. This stable demand for the asset class is a bullish factor for near-term market conditions.

Financial Conditions and Sentiment

Measures of both financial conditions and investor sentiment improved into year-end and remain in positive territory. A stable financial backdrop combined with improving investor sentiment provides a supportive foundation for continued near-term gains.

Market Cycle Bears

Selectivity

Market breadth has improved but remains incomplete. In the near term, the market continues to be selective, with leadership concentrated in fewer stocks while others lag. The percentage of stocks trading above major moving averages has risen above 50%, a constructive sign, but remains below the 70 to 80% range typically associated with a broad, durable rally.

Risk-Off Behavior

Gold has delivered strong performance in recent months and throughout 2025. While gold often acts as a hedge during periods of uncertainty, its strength alongside equities may signal that portions of the market are seeking safe-haven exposure, which we view as a cautious near-term indicator.

Bond Yields vs. Equity Yield

The yield on the 10-year U.S. Treasury exceeds the S&P 500 earnings yield, suggesting relative value may favor bonds in the short term. This dynamic can act as a headwind for equities, as fixed income offers competitive risk-adjusted returns.

Point and Figure Charting

Several point and figure charting measures indicate the S&P 500 ended the year in a still slightly bearish technical position. Selectivity remains a key theme as we start the new year, with fewer stocks driving performance and overall market breadth not yet fully constructive.

3. Market Update

Financial Markets

Major Indexes

Major U.S. indexes delivered impressive performance in 2025, with both stocks and bonds posting above-average returns as U.S. equities ended the year on a strong note. The Nasdaq Composite led the way with a nearly 21% total return, supported by AI-driven growth enthusiasm and resilient corporate earnings, followed by the S&P 500 at 17.75% and the Dow Jones Industrial Average at 14.73%.

Markets experienced notable drawdowns in March and April amid heightened tariff uncertainty, however volatility proved short-lived. As trade tensions eased and tariff concerns cooled, investor confidence rebounded quickly, helping propel equities to new highs in the second half of the year. Bonds also had a strong year, as the Bloomberg U.S. Aggregate Bond Index returned 7.19%, benefiting from a combination of coupon income and price appreciation as the Federal Reserve shifted toward a more accommodative policy stance with multiple rate cuts.

The fourth quarter capped off the year on a positive note, with blue chip stocks taking the lead. The Dow Jones Industrial Average rose 3.98% during the quarter, while the Nasdaq Composite returned 2.73% and the S&P 500 returned 2.63%. Bonds continued their steady climb, with the AGG returning 1% in Q4. Overall, 2025 was broadly positive across the major U.S. indexes, outperforming many analysts’ expectations at the start of the year.

Gains Were Concentrated

The 2025 market was marked by extreme concentration, with just five mega-cap technology names, Nvidia, Alphabet, Broadcom, Microsoft, and Apple, accounting for a significant portion of the S&P 500’s gains. This highlights how the most innovative and efficient tech companies led the market last year, a trend that defined 2025 and may continue into the new year.

Source: Bloomberg

A Year-End Perspective on Stock Picking in 2025

2025 was a difficult year for traditional stock picking across much of the market. As highlighted in the recent Bloomberg analysis above, a very small group of mega-cap technology companies accounted for a disproportionate share of the S&P 500’s gains. In fact, keeping pace with the index often required owning just a handful of names, while many diversified and equal-weighted approaches lagged. This extreme concentration created a challenging environment for active managers.

Source: Bloomberg

Importantly, this was not a failure of active management, but a reflection of how returns were delivered. When index gains are driven by a narrow group of stocks, diversified portfolios will not mirror index performance by design. While uncomfortable in the short term, this trade-off is intentional and risk-aware.

At Synergy, 2025 reinforced why we do not view active management as a single category. Several of our stock-picking strategies performed well, particularly those focused on valuation, cash flow, and real-asset exposure. Our Focused Dividend, Focused Value, and Focused Metals-oriented strategies benefited from areas of the market where earnings strength and tangible demand mattered more than index concentration.

Within core equities, our Focused Tactical Equity strategy was deliberately not overly concentrated in the small group of stocks that dominated S&P 500 returns. This reflected our risk discipline and our belief that portfolios should not be built solely to chase what drives index performance in any single year. A key part of that discipline is the active use of cash as a risk-management tool rather than a permanent drag on returns.

During periods of heightened uncertainty, cash provides optionality and downside protection. In April of last year, amid escalating tariff concerns and a sharp market selloff, we raised and maintained cash levels to preserve capital and flexibility. While the subsequent rebound was unusually swift and highly concentrated, elevated cash levels detracted from short-term relative performance, not due to poor security selection, but because we prioritized risk control over participation in the most crowded trades.

Over full market cycles, we believe this disciplined approach helps manage drawdowns, reduce reliance on narrow leadership, and preserve flexibility as market leadership evolves. While it can lead to temporary tracking differences in momentum-driven markets, it is designed to support more durable, risk-adjusted outcomes over time.

The key takeaway from 2025 is not that diversification is broken or that stock picking no longer works. Rather, markets periodically reward concentration, and just as periodically reverse course. Our role is to balance opportunity with risk and construct portfolios that are resilient across cycles, not optimized for the most crowded trades of the moment.

Asset Classes

Precious metals dominated performance for the year, led by silver, which surged an exceptional 147.86%, followed by gold at 64.37% and broad metals at 50.72%. Equity markets also delivered robust gains, with emerging markets leading at 33.34%, supported by a weaker U.S. dollar and improving macroeconomic fundamentals. Developed international equities followed closely, returning 31.38%, while major U.S. equity indexes also posted solid advances.

At the lower end of the return spectrum, international bonds, real estate, and preferred stocks lagged, each generating returns slightly above 3% for the year. Short-term U.S. Treasuries returned 4.16%, underscoring how an overweight cash allocation would have detracted from overall performance during a year characterized by broad risk-on behavior. Notably, no asset class posted a negative return for the year, an uncommon occurrence.

In Q4, silver similarly led performance, up more than 55% in the quarter, followed by diversified metals and gold, which were also up double-digit percentages. International and emerging market equities also delivered strong quarterly gains.

On the other hand, several asset classes finished the year on a weaker note, with real estate, preferred stocks, long-term U.S. Treasuries, and convertible bonds recording negative returns for the quarter. Even with some mixed Q4 results, full-year performance remained broadly positive across asset classes, marking a standout year for global financial markets.

Sectors

In 2025, three sectors outperformed the S&P 500: technology, which delivered a total return of 24.60%; communication services, returning 23.11%; and industrials, with a gain of 19.31%. Together, these sectors account for more than 50% of the S&P 500’s total market capitalization and were the primary drivers of the U.S. equity market’s strong rally during the year. These three sectors are more cyclical in nature, reinforcing the characterization of 2025 as a resilient, risk-on market environment.

Utilities, financials, and health care followed slightly behind the S&P 500 overall, each posting solid double-digit returns. No S&P 500 sector recorded a negative total return for the year, however, consumer staples and real estate lagged, returning 1.56% and 2.58%, respectively, significantly underperforming the broader market.

In the fourth quarter, sector performance became more dispersed, with five sectors posting negative total returns and six sectors posting positive returns. Real estate experienced the largest decline, returning -3.24% during the quarter, while health care stood out as the strongest performer, delivering an 11.64% gain. Most other sectors posted moderate returns, reflecting a more selective market environment late in the year.

Growth vs. Value

In 2025, both growth and value stocks delivered strong performance, with growth modestly outperforming. The Russell 1000 Growth Index gained 17.86% for the year, while the Russell 1000 Value Index rose 13.62%, reflecting continued investor preference for risk-on companies during much of the year.

In the fourth quarter, however, market leadership shifted toward quality and valuation discipline. Value stocks regained momentum, returning 3.32% for the quarter compared with a 1.04% gain for growth. This rotation reinforced a more selective tone late in the year, as investors expressed greater skepticism around elevated technology valuations and the pace of AI monetization.

Source: Y-Charts

Domestic vs. International

While U.S. equities delivered a strong performance in 2025, they lagged behind several other major regions. In Q4, Latin America and Europe led the way, gaining 8.2% and 6.2% respectively. Over the full year, Latin America surged 54.81%, with Europe up 35.41%. Emerging markets and global equities followed closely, while Asian markets also posted strong gains, finishing the year up 28%. U.S. stocks, represented by the Russell 3000, delivered a solid 17.15% return for the year, reflecting strength but relatively lower performance compared to many international regions.

Fixed Income

Fixed income regained relevance in 2025 as relatively high yields offered income potential alongside price returns, with most core bond sectors delivering mid- to high single-digit total returns by year-end. However, the year reinforced that bonds no longer serve as an automatic safe haven. Volatility remained elevated, and returns were uneven as markets reacted to shifting inflation expectations, labor market data, and trade policy uncertainty.

Between March and May, renewed tariff uncertainty coincided with a temporary drawdown across fixed income, particularly in credit-sensitive sectors like High Yield, as investors reassessed both inflation and growth risks. This period was further complicated by Moody’s downgrade of U.S. sovereign credit in May, which added pressure to Treasury markets and contributed to higher term premiums. Rather than triggering an immediate flight to safety, the combination of trade policy risk and fiscal concerns initially weighed on bond prices before rate expectations adjusted.

Source: Y-Charts

As tariff implementation timelines were later softened and growth concerns subsided, yields declined and fixed income performance stabilized. Overall, 2025 demonstrated that higher income alone does not eliminate rate or policy risk. Fixed income outcomes became increasingly regime-dependent, underscoring the importance of duration management and sector allocation in navigating a more complex bond market environment.

Inflation

Inflation Trends in 2025

Inflation cooled meaningfully in 2025, with headline CPI easing from around 3% at the start of the year to 2.7% by November. The improvement was driven in part by moderating grocery prices, which rose 2.6%, below the headline CPI rate. In contrast, energy prices increased 4.2% over the year, the fastest among the major categories, creating intermittent upward pressure on inflation.

Source: U.S. Bureau of Labor Statistics, November CPI

Core CPI (excluding food and energy) increased 2.6% over the past year, slightly below expectations but remained services led. Shelter costs rose 3.0% annually as the dominant contributor, alongside increases in medical care costs (+2.9%), household furnishings and operations (+4.6%), and used cars and trucks (+3.6%). Overall, the persistence of services inflation, alongside prices in several goods categories, underscored ongoing structural pressures, even as broader disinflation trends allowed policymakers greater flexibility in easing monetary policy.

Against this backdrop, trade policy re-emerged as a key inflation wildcard. The reintroduction of significant tariffs in March and April reignited concerns that disinflation could stall, and both headline and core CPI showed renewed upward pressure between June and August as markets anticipated cost pass-through from higher import prices.

Source: Y-Charts

Inflation pressures began to ease later in the year as tariff implementation timelines were delayed, China-related measures were softened, new trade agreements were announced, and headline tariff rates were adjusted lower for many nations. While the inflationary impact ultimately proved more episodic than structural, the period underscored how quickly trade policy can reintroduce upside risks to inflation and complicate the path toward durable price stability.

Source: Y-Charts

In addition, throughout the year, the market witnessed how the Fed’s 2% inflation target was challenged by labor market dynamics. Even with inflation still above target, policymakers moved to cut rates as labor market conditions began to soften. As headline and core CPI remained in the mid-2% range, rising unemployment signaled cooling labor demand, giving the Fed room to ease despite incomplete disinflation. This shift reflected a growing emphasis on balancing labor market risks alongside inflation control during the quarter and the year.

Interest Rates

Bullish Steepening of the Yield Curve

One of the defining trends of 2025, which continued into Q4, was a bullish steepening of the yield curve. A bullish steepening occurs when short-term interest rates fall while long-term rates remain relatively stable, a dynamic often associated with easing monetary policy. This is typically a positive signal for risk assets, as lower short-term rates reduce borrowing costs, supporting private investment and economic activity. Over the past year, short-term rates declined as a result of multiple Federal Reserve rate cuts, intermediate-term rates also moved lower, and long-term rates remained relatively steady.

Historically, the yield curve, particularly the spread between the 10-year Treasury and 3-month Treasury, has served as a reliable recession indicator. From October 2022 through December 2024, the curve was deeply inverted, a signal that has often preceded economic downturns. This period was unusual not only because of the depth of the inversion, but also because it did not lead to a recession, despite some slow softening in labor markets. In fact, key measures such as third-quarter GDP showed that the U.S. economy actually accelerated in 2025, defying the expectations implied by the inverted curve.

Source: FRED

This unique environment suggests that the yield curve, while historically a reliable leading indicator, may no longer provide an accurate signal under current market conditions. The ongoing bullish steepening reinforces this view, indicating that the curve may not signal downturns as it once did. For investors, a steepening yield curve remains a positive economic signal, but its significance should be interpreted with caution and in the context of all available data, rather than relied on in isolation.

The Federal Reserve

2025 Monetary Policy Recap

Throughout 2025, the Federal Reserve maintained a disciplined, data-dependent approach to monetary policy, balancing its dual mandate of maximum employment and price stability. Following a series of rate cuts in late 2024, the Fed paused in early 2025, holding the federal funds rate at 4.25% to 4.50% through much of the first half of the year. Policymakers emphasized patience as they monitored labor market conditions, inflation trends, and the potential economic effects of unexpectedly high tariff rates, which raised concerns about renewed inflationary pressures.

By mid-year, uncertainty surrounding tariffs prompted a more cautious tone in the Fed’s outlook, reflected in its Summary of Economic Projections. Inflation expectations were revised modestly higher, growth forecasts were trimmed, and unemployment projections edged upward, signaling increased sensitivity to evolving economic risks.

Source: Y-Charts

Policy direction shifted later in the year as inflation continued to moderate, and growth remained resilient. The Fed delivered its first rate cut of 2025 in September, lowering rates by 25 basis points and signaling the potential for additional easing. This was followed by a second 25-basis-point cut in October, alongside the announcement that quantitative tightening would conclude in December, further reinforcing a move toward a more accommodative stance.

The year concluded with a third rate cut in December, bringing the federal funds target range to 3.5% to 3.75%. The Fed’s final Summary of Economic Projections showed modest upward revisions to growth, stable unemployment expectations, and slightly lower inflation forecasts, reinforcing a cautiously optimistic outlook. With policy rates ending the year 75 basis points lower and inflation continuing to trend in the right direction, the Fed entered the new year positioned for the possibility of further easing ahead.

Corporate Earnings

Earnings Mattered More Than Multiples

In 2025, earnings mattered more than multiples. While AI-related bubble risks and elevated valuation multiples remained a concern, investors consistently rewarded companies delivering outsized earnings growth. Forward 12-month EPS exhibited a notably steeper upward slope in 2025, signaling accelerating profit expectations even as price gains at times ran ahead of fundamentals, widening the gap between price changes and EPS growth. Rather than derailing the rally, this divergence was sustained by strong earnings execution, resilient margins, and operating leverage, particularly among the large, cash-generative market leaders.

Source: FactSet

2025 Earnings Recap & Q4 Outlook

Corporate earnings were a major fundamental tailwind for markets in 2025, reinforcing the resilience of the U.S. economy. Consensus expectations indicate that the S&P 500 is on track to deliver approximately 7% revenue growth for full year 2025, alongside a stronger 12.4% increase in earnings.

Earnings leadership in 2025 has been concentrated in information technology, communication services, and financials, which are expected to post the strongest year-over-year growth. In contrast, energy, consumer staples, and real estate are forecast to deliver the weakest earnings growth for the year, reflecting sector-specific headwinds and normalization following prior outperformance. Importantly, many of these full-year outcomes remain dependent on fourth-quarter results, which will finalize the earnings picture for 2025.

Source: FactSet, as of 1/9/26

Looking ahead to Q4, earnings growth is expected to remain solid, though slightly below the pace of the full year. Consensus forecasts call for S&P 500 earnings growth of approximately 8.3% year over year in the fourth quarter, alongside revenue growth of roughly 7.7%. Much of the earnings strength is expected to be driven by information technology, where earnings are projected to rise nearly 26% year over year, and materials, with earnings growth forecasted near 9%.

On the other hand, consumer discretionary, energy, and industrials are expected to weigh on aggregate earnings growth in the quarter. With expectations elevated, fourth-quarter earnings results will be an important near-term catalyst for markets. Corporate earnings have the potential to remain a strength of the U.S. economy, presenting upside opportunities if results exceed expectations, but also downside risk should earnings or guidance fall short of optimistic forecasts.

Source: FactSet, as of 1/9/26

Geopolitical Events

The Year of Tariffs

Tariffs were a major theme throughout 2025 and played a meaningful role in shaping market conditions. In early April, tariff concerns triggered a sharp market reaction, with equities falling nearly 10% in just two days as tariff rates, announced by President Trump, came in far higher than expected. As the spring and summer progressed, the U.S. negotiated with trading partners, and many tariff rates were reduced from their April highs. Even with these adjustments, effective tariff levels remained well above historical norms, continuing to have a notable impact on businesses and contributing to higher federal revenue.

By the fourth quarter, the effects of tariffs began to show more clearly in the data. The trade deficit improved meaningfully, with the U.S. goods and services trade deficit narrowing to $29.4 billion in October, the lowest monthly level since mid-2009. Tariffs were critical to understanding market dynamics in 2025 and are likely to remain an important theme to monitor in 2026.

Source: US Bureau of Economic Analysis, US Census Bureau

Gold & Silver: Rates, Risk, and Record Highs

Gold and silver delivered strong gains in 2025 (+70.26% and +166.27%, respectively, based on spot prices), reaching new all-time highs in Q4 as declining real yields, expectations of monetary easing, and ongoing demand for portfolio hedges amid elevated geopolitical risk supported prices. After peaking, both metals saw consolidation as year-end profit-taking emerged. Despite near-term volatility, investor interest remained firm, reinforcing gold and silver’s role as effective defensive assets sensitive to interest rates, currency movements, and shifts in risk sentiment heading into 2026.

Source: APMEX

Digital Assets: Consolidation Amid Long-Term Conviction

Digital assets experienced heightened volatility throughout 2025, with sharp rallies due to the GENIUS Act in July and pullbacks driven by shifting liquidity conditions and ongoing regulatory uncertainty. Even though Q4 saw periods of consolidation following earlier drawdowns, investor interest remained intact, particularly around long-term adoption themes and institutional infrastructure. The asset class continued to trade as a high-beta risk asset, sensitive to rates, liquidity, and sentiment. Bitcoin ended the year at around the $88,000 range, down approximately 6% for the year after reaching a new all-time high above $126,000 in October.

Source: Y-Charts

Persistent Tensions, Latent Risk

Geopolitical risks remained elevated, with the Russia–Ukraine war and conflicts in the Middle East (Israel, Iran, and Lebanon) continuing to shape energy markets, defense spending, and global risk premiums in Q4 and throughout 2025.

In early January 2026, the United States launched military strikes in Venezuela and captured President Nicolás Maduro and his wife in “Operation Absolute Resolve,” a dramatic and controversial action that added a new layer of uncertainty for oil prices and risk sentiment. Despite this backdrop, markets largely priced in a continuation rather than full escalation of geopolitical tensions, leaving assets exposed to abrupt repricing should these conflicts intensify heading into 2026.

Summary

2025 was a broadly positive year for financial markets, marked by resilient economic growth, strong corporate earnings, and moderating inflation. Equities rallied, led by technology, communication services, and industrials, while international markets, particularly in Latin America and Europe, outperformed. Earnings were a key driver, with large-cap, high-quality companies generating outsized growth, while value stocks regained momentum late in the year. Fixed income benefited from multiple Federal Reserve rate cuts and declining short-term yields. Precious metals, particularly gold and silver, posted exceptional gains, rallying alongside equities.

Tariffs were a persistent theme throughout 2025, driving short-term volatility early in the year before easing later, and contributing to a narrower U.S. trade deficit. The labor market slowed, with payroll growth decelerating compared with 2024, but overall employment and economic fundamentals remained stable. The Federal Reserve’s accommodative stance, combined with expectations for further easing and a potentially more dovish incoming Chair, created a supportive backdrop for markets. Overall sentiment remained cautiously optimistic, and entering 2026, strong earnings, manageable inflation, and more accommodative monetary conditions support the case for continued, though potentially more selective, market strength.

Don’t forget to watch our 2025 Review and Market Outlook video below!

Thank you for your trust.

Sincerely,

Joe Maas

CIO, SPG Advisors

& Your SPG Team

Important Disclosures: The information contained herein has been prepared without regard to any particular investor’s investment objectives, financial situation, or needs. Accordingly, investors should not act on any recommendation (express or implied) or information in this material without obtaining specific advice from their financial advisors and should not rely on information herein as the primary basis for their investment decisions.

Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources believed to be reliable (“information providers”).  However, such information has not been verified by Synergy Asset Management, LLC (SAM) or the information provider and SAM and the information providers make no represent actions or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein.  SAM and the information provider accept no liability to the recipient whatsoever whether in contract, in tort, for negligence, or otherwise for any direct, indirect, consequential, or special loss of any kind arising out of the use of this document or its contents or of the recipient relying on any such recommendation or information (except insofar as any statutory liability cannot be excluded). Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice. Neither the information nor any opinion expressed shall constitute an offer to sell or a solicitation or an offer to buy any securities, commodities or exchange traded products. This document does not purport to be a complete description of the securities, commodities, markets or developments to which reference is made.

Unless otherwise stated, performance numbers are based on pure price returns, not inclusive of dividends, fees, or other expenses. Past performance is not indicative of future results. Potential for profits is accompanied by possibility of loss. You should consider this strategy’s investment objectives, risks, charges and expenses before investing.  The examples and information presented do not take into consideration commissions, tax implications, or other transaction costs.

The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy.

Some performance information presented is the result of back-tested performance.  Back-tested performance is hypothetical (it does not reflect trading in actual accounts) and is provided for informational purposes to illustrate the effects of SAM strategies during a specific period. The Focused Tactical Allocation (FTA) strategy and other SAM strategies are NOT a guarantee.  There may be times where all investments and strategies are unfavorable and depreciate in value.  Relative Strength and other technical indicators are a measure of price momentum based on historical price activity. Technical indicators are not predictive and there is no assurance that portfolios based on relative strength or other technical indicators can be relied upon.

Back-tested performance results have certain limitations. Such results do not represent the impact that material economic and/or market factors might have on an investment advisor’s decision making process if the advisor were actually managing client money.  Back-tested performance also differs from actual performance because it is achieved through retroactive application of a model investment methodology designed with the benefit of hindsight. Synergy Asset Management, LLC believes the data used in the testing to be from credible, reliable sources, however; Synergy Asset Management, LLC  makes no representation or warranties of any kind as to the accuracy of such data.

Hypothetical Portfolio Results Disclosure: PERFORMANCE DATA PRESENTED REPRESENTS HYPOTHETICAL PERFORMANCE OF A PORTFOLIO BASED ON THE RETROACTIVE APPLICATION OF AN INVESTMENT STRATEGY, GENERATED FROM HISTORICAL FINANCIAL DATA.  UNLIKE AN ACTUAL ACCOUNT PERFORMANCE RECORD, THESE RESULTS DO NOT REPRESENT RETURNS THAT ANY INVESTOR ACTUALLY ATTAINED.  THE ADVERTISED PERFORMANCE RESULTS DO NOT REPRESENT THE TRADING RESULTS OF AN ACTUAL PORTFOLIO, BUT WERE ACHIEVED BY MEANS OF THE RETROACTIVE APPLICATION OF A MODEL DESIGNED WITH THE BENEFIT OF HINDSIGHT. THESE PERFORMANCE RESULTS ARE HYPOTHETICAL AND HAVE INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW.  NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT OR STRATEGY WILL OR IS LIKELY TO ACHIEVE A PERFORMANCE RECORD SIMILAR TO THE RETURNS PRESENTED HEREIN.  IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN A HYPOTHETICAL PERFORMANCE RECORD AND THE ACTUAL RECORD SUBSEQUENTLY ACHIEVED. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE IS THAT DECISIONS RELATING TO THE COMBINING OF VARIOUS FUNDS (AND THE SELECTION OF UNDERLYING INVESTMENT ADVISORS AND THE ALLOCATION OF ASSETS AMONG THOSE ADVISORS) DID NOT ACTUALLY OCCUR.  FURTHERMORE, THE HYPOTHETICAL PERFORMANCE MAY BE DISTORTED BECAUSE THE ALLOCATION OF ASSETS CHANGES FROM TIME TO TIME AND THESE ADJUSTMENTS ARE NOT REFLECTED.

Hypothetical performance results do not represent the actual management of investor assets and actual returns could differ significantly from the hypothetical returns presented. As such, performance does not represent the profit or loss resulting from actual trading. The results show investment decisions that theoretically would have been made had the strategy been employed during the period reflected. Hypothetical performance presentations are subject to the fact that they are designed with the benefit of hindsight and subject to significant limitations. These returns may not reflect actual adjustments that Synergy Asset Management, LLC may have made in response to material economic or market factors or any other considerations had the portfolio(s) actually been investing during the period. There are numerous other factors related to the implementation of any specific strategy that cannot be fully accounted for in the preparation of hypothetical performance results and all of which may adversely affect actual results. These hypothetical returns are set forth for illustrative purposes only and are not necessarily indicative of future performance.

Return Estimates

This disclosure statement is provided by Synergy Asset Management, LLC, an SEC Registered Investment Advisor, to inform clients and potential investors about our estimates of the 2025 S&P 500 returns. Please read this disclosure statement carefully before considering any investment decisions. The estimates of 2025 S&P 500 returns provided herein are based on our best judgment and analysis at the time of publication. However, it is essential to recognize that market conditions are inherently unpredictable, and these estimates are subject to change based on evolving economic, financial, and geopolitical factors. Our estimates of 2025 S&P 500 returns are for informational purposes only and should not be construed as guarantees, promises, or assurances of future performance. Past performance is not indicative of future results, and there are no assurances that the S&P 500 will achieve the estimated returns or any specific level of performance. Investing in securities, including those linked to the S&P 500, carries inherent risks. Market volatility, economic events, interest rate changes, and geopolitical factors can all impact investment outcomes. We strongly recommend that clients and investors assess their risk tolerance and consult with their financial advisors before making any investment decisions. Diversification and asset allocation are essential principles of investment management. We encourage clients and investors to maintain a diversified portfolio that aligns with their financial goals and risk tolerance. Relying solely on the estimated returns of the S&P 500 may not be prudent. We recommend that clients and investors consult with their financial advisors to develop a comprehensive investment strategy that considers their individual financial circumstances, goals, and risk tolerance. Investment decisions should be made with a full understanding of potential risks and rewards. This disclosure statement is for informational purposes and does not constitute personalized investment advice. Individual investment needs vary, and clients and investors should seek personalized advice tailored to their specific situations. We strive to provide accurate and relevant information to our clients and investors. However, the future performance of financial markets, including the S&P 500, is uncertain. We encourage prudence, due diligence, and consultation with financial professionals when making investment decisions. By acknowledging this disclosure statement, you confirm that you have read, understood, and accepted the terms and considerations outlined herein regarding our estimates of 2025 S&P 500 returns.

Black-Litterman

The Black-Litterman model is an analytical tool used by portfolio managers to optimize asset allocation within an investor’s risk tolerance and market views. The Black-Litterman model starts from a neutral position using modern portfolio theory (MPT), and takes additional input from investors’ views to determine how the ultimate asset allocation should deviate from the initial portfolio weights. It then undergoes the process of mean-variance optimization (MVO) to maximize the expected return given one’s objective risk tolerance.

Monte Carlo Simulation

A Monte Carlo simulation is a way to model the probability of different outcomes in a process that cannot easily be predicted due to the intervention of random variables. It is a technique used to understand the impact of risk and uncertainty. Monte Carlo simulations can be applied to a range of problems in many fields, including investing, business, physics, and engineering. It is also referred to as a multiple probability simulation.