As we close out 2025, I want to thank you for your continued trust and take a moment to look back on the year. It seemed as if we had a constant stream of confusing and alarming headlines. News stories about tariffs, elections, global tensions, interest rates, and the future of artificial intelligence created the sense that markets were constantly on edge. Despite all that noise, long-term investors who stayed patient were rewarded.

This year was a clear reminder that markets can be jolted by headlines, but the effects are temporary. Instead, they respond to fundamentals, and in my opinion, especially the direction of interest rates. When expectations shift toward lower rates, most investments tend to perform well. When rates are rising, the path is more difficult. Throughout 2025, expectations gradually shifted toward lower rates ahead, and the market followed that signal rather than the worry-filled stories that appeared each day.

This year's market also looks very different from the environment that led to the 2022 market decline. Research analyzing market "breadth", a measure of how many stocks are participating in the advance, shows that the conditions leading up to the 2022 downturn had already been deteriorating for months. At that time, only a handful of large companies were still rising while mid-sized companies had been falling for two months, and small companies had been weakening for more than half a year. That kind of narrowing participation is one of the classic warning signs of an unhealthy market. In contrast, this year's data show broad strength rather than weakness. Large-, mid-, and small-cap stocks all reached new highs as recently as late October, and all three groups have remained in steady expansion. This broad participation is an important reason why today's market backdrop is far healthier than what we saw going into 2022.

As we close out 2025, some concerns are simmering, but that is not unusual. Markets don't need all the stars to align to move upward. Historically, prolonged downturns are preceded by markets topping out over weeks or months; it is a process, not an event. These conditions will need to be monitored, but for now, no significant changes are warranted.

Looking toward 2026, it's also important to recognize that mid-term election years often bring a bit more market volatility than other years in the presidential cycle. Historically, these periods have seen greater swings because control of Congress frequently shifts, creating uncertainty that investors must navigate. Although markets can experience deeper pullbacks during these election-driven phases, they have also shown a strong tendency to recover once the uncertainty clears. The year following a mid-term election has consistently delivered positive returns as markets settle and look forward again.