2025 marked the third straight year of strong market performance, with investors seeing double-digit gains.

Most of that momentum was driven by continued optimism around technology stocks.¹

So where does that leave us today? Are stocks stretched or does this rally still have room to run? 

Let’s look at how 2025 finished and what the early signals of 2026 are telling us.

2025 was a year for the record books. The U.S. stock market pulled off something rare: three straight years of double-digit gains, a streak that’s only happened a handful of times in history.²

2025 was not a smooth ride. Markets slid big in spring after Trump's sweeping tariff announcements, then rebounded when the most severe proposals were rolled back, pushed through a government shutdown, and mostly ignored ongoing concerns around AI valuations.²

2025 reinforced an important lesson for long-term investors: staying invested through uncertainty often pays off.

Still, after three exceptional years, it’s fair to ask what comes next... What does history say about year four? Not much. This kind of streak has only occurred six times since the 1940s.⁵

Maybe the rally continues for another year or two, like it did in the late 1990s. Maybe it doesn’t. As always, the past doesn’t predict the future and that's why we invest based on our goals and time horizon. 

There are reasons for optimism heading into 2026. Corporate earnings stayed strong throughout 2025, the Fed has been cutting interest rates, and AI continues to drive innovation. Many Wall Street analysts expect another positive year, though we know market forecasts are far from reliable.⁶

There are also challenges to keep in mind. After such strong gains, stock valuations are elevated, and some worry about bubble-like conditions.⁶ The labor market may be cooling, inflation remains stubborn, and tariff uncertainty has not gone away. When clouds gather, markets can change direction quickly.

That’s why we’re focused on the data, staying balanced, diversified, and positioning our client's portfolios based on their risk tolerance, time horizon, and mentally (and emotionally) preparing for what could be a bumpier year ahead.

If you have questions about your portfolio as we head into 2026, let’s talk!