Good Day, Well this is the last blog of 2025. Was it a better year? Well the returns were better but you had to work harder to get them as well. Overall, it was a volatile year with the Fed interest rate/ Inflation issue, tariffs, the AI trade and the government shut down dominating the trading. For the most part you were about as well off just holding the C, S, or I fund or a combination of these equity based funds as you were trading in and out of them. That’s this year. The herky jerky personality of this market made for difficult trading to say the least. It was dominated by heavy sector rotation in and out of the tech sector. Currently, the rotation is into cyclical stocks like industrials as the rally broadens out from tech. While this is the case now, I certainly don’t think the tech AI/Tech trade is done. We need to keep those charts on the back burner. If we keep an eye on then we’ll know for sure when that trade is coming back. Right now, if anything it’s drifting sideways with an overall negative bias. When we do see it come back we will need to go heavy in S Fund. We tried ardently to do that this year to take advantage of the a lower interest rate environment and AI trade but with only limited success due to the markets almost constant inconsistency. One thing though, is almost a certainty moving forward. This market is overdue for a correction. I would fully expect at the minimum a ten percent or more correction coming in the next three months. I my honest opinion this market needs a reset if it is going to continue the current rally which is getting a little long in the tooth. Congressional budget negotiations which will come to a vote again in February could and will probably be the catalyst that brings this about. Once that is finished, the market should be able to find the next leg up with support from favorable tax, regulatory and environmental policies from the current administration. Of course, all this will be dependent on inflation staying in check. There are those that insist that it is going higher and those that insist that if will move lower. Inflation, is most certainly the wild card in 2026. Putting it all together, I would say that those that are able to sidestep this correction when it comes will have the best returns. However missing this trade could most certainly lock in some under performance as it did this for many this year. I had a few folks that missed trades this year and underperformed as a result. If that is the case then you are better off just holding a combination of TSP’s equity based funds. The S&P 500 should end 2026 with returns in the neighborhood of 10-13%. So holding might be the best thing for you folks that don’t want to keep up with the changes. Let me throw one word of caution out here at this point in our conversation. Most if not all bear markets start with an unassuming correction. In other words, they don’t come announced. One day you look up and the correction that you thought would be over has now turned into a bear market with an overall drop of 20% or more. That is the reason that we try not to hold during downturns. That is the risk when using the buy and hold strategy. As I have said here many times before, we view any perf0rmance lost during a turn in the market as an insurance policy against being trapped in a bear market. Yes, you will eventually make your money back if you get trapped in a bear market as long as you hold, but what y0u won’t get back is the time that you lost. That ladies and gentlemen is gone forever and if you don’t get any thing else out of this website then get this, understand and grasp this concept. Money is time and time is money!
Finishing out this year we have one final report for the market to consider and that is the release of the Fed minutes from December’s meeting. Beyond that, we are done with 2025. Out with the old and in with the new!! I would throw out one more word of caution to you less experience investors. The old hands know this already. You can’t read much into holiday trading due to the low volume. So making a major trading decision based on current trading should be considered a risky proposition. Add to that end of the year tax selling and portfolio rebalancing and you have a market that is not behaving the way that it will behave in another week or so. For instance, a lot of traders are taking profit of the AI trades that led the market in 2025. So those stocks are dipping somewhat unnaturally as result which can be misleading. The question about all that is when and where will those investors redeploy that capital? My experience has been that it is best to wait and see…..
The current days trading so far has left us with the following results. Our TSP allotment is trading lower at -0.75%. For comparison, the Dow is off -0.56%, the Nasdaq -0.65%, and the S&P 500 -0.50%. Don’t forget, this action can be misleading due to tax selling and window dressing! So you can’t take too much from it!
S&P 500 falls as investors take profit on tech stocks into final stretch of 2025: Live updates
Last weeks action left us with the following signals: C-Hold, S-Sell, I-Hold, F-Buy. We are currently invested at 100/S, but have entered an interfund transfer request to move to 100/C at todays closing bell. Our allocation is now +19.11% for the year not including the days results. This will be the final record of our returns in 2025! Here are the latest posted results:
| 12/26/25 | Prior Prices | ||||
| Fund | G Fund | F Fund | C Fund | S Fund | I Fund |
| Price | 19.5765 | 20.9051 | 110.8513 | 102.4499 | 55.6020 |
| $ Change | 0.0044 | 0.0077 | -0.0233 | -0.2615 | 0.0734 |
| % Change day | +0.02% | +0.04% | -0.02% | -0.25% | +0.13% |
| % Change week | +0.08% | +0.21% | +1.41% | +0.53% | +1.52% |
| % Change month | +0.30% | -0.15% | +1.28% | +1.49% | +3.25% |
| % Change year | +4.38% | +7.33% | +19.29% | +13.64% | +32.71% |
