As we move deeper into earnings season, investors are shifting their attention away from big geopolitical headlines and toward the actual “report cards” companies are releasing. And with the market sitting near all time highs, understanding what these earnings reports really mean is more important than ever.
The year 2025 turned out to be remarkably successful for financial markets, even though many major events happened throughout the year. For the third consecutive year – and sixth among the past seven – the S&P 500 tallied double-digit gains – a remarkable run.
The stock market is poised to deliver double-digit returns for the sixth time in seven years, marking an impressive period interrupted only by the inflation-driven decline of 2022. This sustained strength has positioned many investors favorably as they look ahead. Looking toward 2026, investors face questions about midterm elections, Federal Reserve leadership changes, AI's trajectory, and the dollar's path. Success depends less on predicting each development than on maintaining a well-positioned portfolio. Here are seven themes to guide investment thinking for the year ahead.
For long-term investors, managing cash is increasingly difficult as short-term interest rates fall. Although cash seems safe, holding too much can undermine long-term financial goals. Right now, there’s a record $7.3 trillion sitting in money market funds, reflecting a shift toward cash as investors wait out market uncertainty.
As we begin the final quarter of the year, investors are facing conflicting signals. The S&P 500 reached new all-time highs in the third quarter as markets continued to be supported by strong corporate earnings and enthusiasm for artificial intelligence. At the same time, the labor market has weakened considerably since the beginning of the summer, raising concerns over the underlying economy and the financial health of consumers. Despite this, GDP growth has been strong, and inflation has largely stayed in check.
The investing adage “don’t fight the Fed,” coined in the 1970s, remains highly relevant today. It reflects a core principle: the Federal Reserve’s monetary policy decisions can significantly influence markets and the economy, and investors should pay attention. However, it’s just as important to maintain perspective; what matters most is the broader trajectory of interest rates, not any one policy meeting.