Sarsi, LLC

Sarsi LLC, an independent, fee only, Registered Investment Advisor offers clients with investment and financial planning services.

01/06/2026

http://www.sarsillc.com/wp-content/uploads/2026/01/4Q-2025-Newsletter.pdf

EXECUTIVE SUMMARY

- US stocks performed well in 2025, helped by large technology companies, though performance broadened modestly toward the end of the year.

- Foreign stocks outperformed US stocks significantly, helped by a declining dollar, corporate reforms and improved profitability in Japan as well as fiscal stimulus in Europe.

- Fixed income delivered a solid recovery after several challenging years, helped both by higher coupon income and declining interest rates as monetary policy gradually eased.

- The U.S. economy continued to expand in 2025, though at a slower pace than in prior years.

- The Federal Reserve cut its benchmark federal funds rate during the second half of the year.

- Political developments played a visible role in shaping market sentiment during 2025.

- Corporate earnings continued to be strong as companies navigated the uncertain and unstable environment.

- US stocks are more expensive than foreign stocks in absolute and relative terms.

- There are elements of investor behavior and market pricing currently that rhyme with previous bubbles but there are key differences that seem to suggest we are not yet in a bubble.

- Investors should continue to focus on diversification to create resilient portfolios.