SPX Strong 2025 Gains, Tougher Road Ahead
Learnings and conclusions from this week’s charts:
The S&P500 $S&P 500(.SPX)$ gained +16.4% in 2025 (+17.9% including dividends).
(yet it lagged behind global stocks, which saw 30%+ returns).
Investor sentiment is booming (yet economic confidence is glooming).
Tech sector earnings are going vertical, non-tech is going sideways.
Tech/mega cap valuations extreme expensive, non-tech/SMID cap cheap.
Overall, it turned out to be a good year for US stocks and a great year for global stocks. As such, sentiment is riding high as most everyone is patting themselves on the back following the gains of 2025. Keeping and building on those gains in 2026 is going to take a balance of optimism and trend following, as well as realism around some of the risks building up as the Stockmarket cycle progresses…
1. Annual Charts — The Trend is Your Friend:
The S&P 500 closed 2025 up a respectable +16.4% on the year (or +17.9% including dividends). The Gap between the daily closing high vs low for the year was larger than normal, thanks to the April tariff tantrum and subsequent recovery.
2. Annual Charts — Volatility Cycles:
Indeed, the average $Cboe Volatility Index(VIX)$ reading for 2025 was notably higher than 2024 and the daily closing high of the year was at the top end of the historical range. On first glance it looks like 2024 was the low point in what appear to be repeating multi-year cycles in volatility.
3. Major Asset Class Returns in 2025:
The total return for the S&P500 of +17.9% placed US large caps in the upper half of the asset class return tables, but materially lower vs global equities (with frontier markets boasting the best returns, and oddly enough even EM local currency government bonds outperforming vs US large caps).
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