Despite underperformance in the final quarter of 2025, accounts under our management outperformed their benchmarks for the full year. To add perspective, the S&P 500 returned 17.88% in 2025, overcoming the tariff fears which took the market down 14% year to date at the April lows. In our portfolios, fourth quarter strength in a memory chip producer was offset by weakness in the leading social media network and software stocks.
Turning to the 2026 economic outlook, we remain constructive based on the following tailwinds:
- Fiscal stimulus created by implementation of the One Big Beautiful Bill Act.
- Continuation of the AI capital expenditure cycle which extends across the economy including technology, power generation, and infrastructure.
- Potential for further corporate margin expansion as companies leverage moderating wage growth and seek the payback on initial AI deployment.
- Regulatory reform in the financial sector offering improved capital efficiency and lending capacity.
- Further Fed easing with the likely appointment of a dovish new Chair.
Of course, caveats are required when translating economics to capital markets. We have little doubt that much of 2025’s gains incorporate the tailwinds listed above. Further to this point, equities’ aggregate valuation is at the high end of historic ranges. However, we note that strategists have consistently underestimated corporate profits this cycle. If continued, valuation multiples will not look as onerous as currently calculated. Time will tell, but 2026 may represent the simultaneous combination of the secular (AI) with the cyclical push of broad economic improvement. Despite this potential, we realize that capital markets are never a straight line. (2025 is a recent example.)
Our portfolio contains exposure to both cyclical and secular segments. Concentrations include:
- Capital Market/Investment Banking-related financials
- Construction equipment manufacturers/lessors
- A real estate service provider
- Memory Chip (DRAM/HBM) manufacturers and equipment providers
- Semiconductors (GPU/ASIC) developers
Conversely, exposure to more defensive areas such as consumer staples, regulated utilities, and REITs is minimized.
Wishing a new year of health and prosperity to all,
Craig B. Steinberg Matt Ward Bob Ruland
Although the statements of fact and data in this report have been obtained from, and are based upon, sources that the Firm believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed. All opinions included in this report constitute the Firm’s judgment as of the date of this report and are subject to change without notice. This report is not intended as an offer or solicitation with respect to the purchase or sale of any security. This information is intended for informational purposes only. Actual portfolios may vary. Investing in securities carries a risk of loss. There is no assurance that the investment objectives will be achieved or that the strategies employed will be achieved or that the strategies employed will be successful. Past performance is no guarantee of future results. This presentation may contain forward looking statements or projections relating to future events or future performance. Such statements and projections are subject to a variety of risks, uncertainties and other factors, such as economic, political, and public health, that could cause actual events or results to differ materially from those anticipated in this presentation.
The S&P 500 Index measures the performance of large capitalization U.S stocks. The S&P 500 is a market-value-weighted index of 500 stocks that are traded on the NYSE, AMEX and NASDAQ. The weightings make each company’s influence on the Index’s performance directly proportional to the company’s value. The “500” is one of the most widely used benchmarks of US equity performance. The index does not reflect any initial or on-going expenses, but does reflect reinvestment of dividends and interest.
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Despite underperformance in the final quarter of 2025, accounts under our management outperformed their benchmarks for the full year. To add perspective, the S&P 500 returned 17.88% in 2025, overcoming the tariff fears which took the market down 14% year to date at the April lows. In our portfolios, fourth quarter strength in a memory chip producer was offset by weakness in the leading social media network and software stocks.
Turning to the 2026 economic outlook, we remain constructive based on the following tailwinds:
Of course, caveats are required when translating economics to capital markets. We have little doubt that much of 2025’s gains incorporate the tailwinds listed above. Further to this point, equities’ aggregate valuation is at the high end of historic ranges. However, we note that strategists have consistently underestimated corporate profits this cycle. If continued, valuation multiples will not look as onerous as currently calculated. Time will tell, but 2026 may represent the simultaneous combination of the secular (AI) with the cyclical push of broad economic improvement. Despite this potential, we realize that capital markets are never a straight line. (2025 is a recent example.)
Our portfolio contains exposure to both cyclical and secular segments. Concentrations include:
Conversely, exposure to more defensive areas such as consumer staples, regulated utilities, and REITs is minimized.
Wishing a new year of health and prosperity to all,
Craig B. Steinberg Matt Ward Bob Ruland
Although the statements of fact and data in this report have been obtained from, and are based upon, sources that the Firm believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed. All opinions included in this report constitute the Firm’s judgment as of the date of this report and are subject to change without notice. This report is not intended as an offer or solicitation with respect to the purchase or sale of any security. This information is intended for informational purposes only. Actual portfolios may vary. Investing in securities carries a risk of loss. There is no assurance that the investment objectives will be achieved or that the strategies employed will be achieved or that the strategies employed will be successful. Past performance is no guarantee of future results. This presentation may contain forward looking statements or projections relating to future events or future performance. Such statements and projections are subject to a variety of risks, uncertainties and other factors, such as economic, political, and public health, that could cause actual events or results to differ materially from those anticipated in this presentation.
The S&P 500 Index measures the performance of large capitalization U.S stocks. The S&P 500 is a market-value-weighted index of 500 stocks that are traded on the NYSE, AMEX and NASDAQ. The weightings make each company’s influence on the Index’s performance directly proportional to the company’s value. The “500” is one of the most widely used benchmarks of US equity performance. The index does not reflect any initial or on-going expenses, but does reflect reinvestment of dividends and interest.
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