2025 Recap & 2026 Outlook
With 2025 now fully in the rearview, I thought I’d take some time to summarize what our team at LVZ feels were the main themes of 2025 and what we are focusing on as we prepare to drive down the road of 2026. In the year ahead, I’m looking forward to writing more and being more accessible.
2025 – Lessons to be learned, caution to be taken, optimism to be had.
Q1: January – March
By most metrics, the market and economy were growing as we entered 2025. There was plenty of discussion around high valuations and concentration in the market’s most notable names. In times like this, analysts often reference historic averages, trends, rules of thumb, and comparisons to past market periods. While this kind of analysis can provide helpful context, it is always worth remembering that no one truly knows what will happen next in markets. Anyone claiming otherwise either profits from you believing them or is simply misguided.
Good economists are excellent at identifying and articulating the causes and effects of things that have already happened, but they are no better equipped to predict the future than the rest of us. At LVZ, we believe the best way to prepare for an unknown market is to build a financial plan around a core investment philosophy, one that assumes there will be both strong and weak markets, without trying to predict when they will occur or how long they will last.
The first quarter of 2025 also saw the beginning of what would become a dominant theme for much of the year: tariffs. There was far more talk about tariffs than I would have preferred to give commentary on. But unfortunately, much of what unfolded in the first half of the year revolved around tariffs, and they became a common talking point.
On a more positive note, Darlene Kuipers (Chief Strategy Officer) and I launched the LVZ Market Minutes Podcast. If you’re one of the early listeners, you are truly the 2025 MVP. We’d love for you to give it a listen, send us feedback, ask questions, and let us know what topics you’d like to hear more about. You just might earn yourself the title of 2026 MVP as we continue to expand both our written commentary and podcast content in the year ahead.
Q2: April – June
By April, tariff discussions turned into action as retaliatory tariffs were announced across many U.S. trading partners. In capital markets, we often talk about what is “priced in”. The idea that market prices reflect all known information as buyers and sellers determines what they believe an asset is worth. During prolonged periods of earnings growth, investors tend to pay higher prices under the assumption that strong performance will continue. When the Trump Administration announced sweeping tariffs that materially altered both macroeconomic and company-level expectations, that assumption changed. The result was a rapid market decline, with the S&P 500 falling nearly 20% from its all-time high to its low on April 9th [2025].
In hindsight, we know how the reciprocal tariff chapter ended. When tariffs were paused and renegotiated, much of the previously stripped-out future growth was once again priced back into markets. The S&P 500 experienced one of its largest single-day gains on record, rising over 9.50% following the announcement. Much of Q2 was spent bracing during declines, holding on through sharp rallies, and then reorienting as the market adjusted to a new, but still uncertain, environment.
Not long after the tariff scare, another scare emerged in the form of Liverpool clinching the Premier League title. Nate Baumann (Partner, Financial Planner) and I were devastated, but fear not; I think we will recover.
Q3: July – September
The third quarter of the year was largely about reacclimating to a market still grappling with tariff uncertainty. Questions emerged as Consumer Price Index (CPI) data showed inflation beginning to tick higher. Much of the debate centered on whether tariffs are structurally inflationary by altering supply dynamics or whether they pose only a short-term price increase that fades once year-over-year comparisons normalize.
Regardless of how that debate ultimately resolves, rising inflation readings reinforced the Federal Open Market Committee’s (FOMC) cautious approach to rate cuts. Complicating matters further was a weakening labor market, with hiring slowing and unemployment gradually increasing. Together, these factors contributed to a more measured and perhaps slightly reserved (pun intended) approach to policy easing.
Throughout the quarter, conversations around artificial intelligence capital expenditures also began to accelerate. Analysts increasingly focused on the sheer scale of investment flowing into AI development, as well as the interconnected and sometimes circular nature of partnerships and deals across the space. With many firms competing, often directly with one another, not every company can win, and not every dollar invested will generate the returns companies are hoping for. As always, LVZ remains firmly outside the business of making predictions. We operate according to a disciplined investment philosophy and remain committed to it, especially during periods of uncertainty.
On a more local note, LVZ was thrilled to welcome many of our investment adviser representatives (IAR) and promoters to the Holland office for our annual LVZ Summit. We discussed economic conditions, cryptocurrencies, and best-practice case studies, and shared open conversations about how we can continue to grow, develop, and refine our craft. Bringing our advisor partners together from across the country always feels a bit like a family reunion, and this year was no exception.
Q4: October – December
The fourth quarter of 2025 began with one of the longest U.S. Government shutdowns in history. Hundreds of thousands of workers were furloughed without pay, while essential employees were required to continue working without compensation, and programs like SNAP came under threat. All the while elected officials continued to receive their pay. It was, to say the least, a stark example of government inefficiency.
As callous a reality as it is, it is important to remember that government dysfunction is not a market story. Our financial plans remain unchanged when the government shuts down. Markets continue to function, and it is markets, not governments, that we invest in.
As the year came to a close, markets continued to reach new all-time highs without a single dominant theme of driving performance. The FOMC continued cutting interest rates in 0.25% increments and announced an end to quantitative tightening (QT). Put simply, QT occurs when the Federal Reserve reduces its balance sheet by allowing bonds or securities to reach maturity without renewing the position, effectively slowing the expansion of the money supply.
Ending QT while cutting rates is an expansionary signal; one intended to support economic activity and stimulate the labor market. However, it can also contribute to sustained inflation pressures due to an increasing money supply. Balancing these outcomes is at the heart of the Fed’s dual mandate, and while risks remain, many analysts and economists ended the year feeling cautiously optimistic about the near-term economic outlook.
2026: Looking Ahead
As I’ve mentioned throughout this letter, LVZ stays far away from the prediction business. That said, we do pay close attention to themes and trends so we can remain informed and prepared to guide clients through any market environment. As we look ahead to 2026, here are a few areas we’re watching closely:
Market Valuations vs. Fundamentals
This remains an ongoing focus as we monitor how market growth compares to underlying fundamentals. Encouragingly, much of the S&P 500’s growth in 2025 was driven by actual earnings growth rather than valuation expansion alone.
Market Concentration
By year-end, only two of the so-called “Magnificent Seven” outperformed the broader S&P 500. This broadening of performance is a healthy sign, although we continue to watch for excessive concentration in companies dependent on the same narrow set of variables.
Rates & Housing Markets
The Fed appears positioned to continue cutting rates in 2026, which could ease short-term borrowing costs. However, a meaningful thaw in the housing market will likely require longer-term rates to come down as well. Those rates are market-driven and depend largely on expectations for future inflation and risk.
CPI & Tariffs
After declining early in 2025, inflation ended the year roughly flat. November CPI) data showed signs of cooling, though those figures were somewhat clouded by disruptions from the extended government shutdown. A key question looking ahead is whether tariff-driven price increases will fade out of the data after a year, or whether supply-side changes have created more persistent inflation. We likely won’t have much clarity on that until the second half of 2026.
What’s Important
At LVZ, 2025 was a year focused on refining our processes and systems while continuing to grow our team with additional talent and a new wave of interns. We’ve been working to expand the content and commentary we provide so you can stay more connected to our thinking and research. We were also thrilled to welcome Josh Franken, CPA, to our financial planning team, and it has been a pleasure working with him and all of you who are strategizing financial plans with him. Caleb Bylsma, Client Tax & Strategy Manager and Robyne Magee, Client Relations Coordinator also joined our team to further serve our clients. Welcome!
As I reflected on the year, I asked myself what were the things that ended up being more important to me than I expected. Two things stood out: phone calls with my dad and playing chess. These are the intangibles, the moments that no spreadsheet, forecast, or financial model can fully capture. I’d encourage you to think about what mattered more to you this year than you anticipated, and what moments you hope will define the year ahead.
At LVZ, we believe financial planning should be built with those intangible moments in mind. We are deeply grateful for the trust you place in us and for the opportunity to help plan for your future.
Let’s have a great year.