Carlson Quarterly – Q4 2025

U.S. stocks finished the year positively in Q4 bringing the total YTD S&P 500 gains of +17.86%. It was a year of surprises in both directions with the Tariff sell-off and the subsequent rally, but steadfast investors that remained benefitted from a third year in a row of double-digit returns. The one constant of 2025 was change. The market saw major shifts in commodities, AI, technology and health care to name a few. Leadership shifted from mega-cap tech dominance to broader participation, with value, health care, and small caps gaining ground late in the year. These shifts were supported by Fed easing and credit markets that remain healthy and strong with spreads notably tight. The most notable shift was the fade in relative leadership by the Mag-7 starting in the summer. Concerns about concentration risk in the market were assuaged as investors rotated out of AI leaders into more reasonably valued health care and small cap stocks in the second half of the year.

Gold was the standout asset of 2025, posting historic gains as a premier safe-haven amid geopolitical risks, central bank buying, ETF inflows, trade uncertainties, and a softer U.S. dollar. Spot gold surged powerfully in Q4, starting around $3859/oz and hitting multiple all-time highs and peaking at $4,549/oz in December before ending the year at $4319/oz with a full year gain of 64.58%. Digital gold, or Bitcoin, did not fare as well, ending the fourth quarter down 23.56%.

Bonds transitioned from a source of volatility after the zero-interest rate fiasco to a reliable diversifier last year, with credit spreads remaining tight and investment-grade providing solid total returns. The Bloomberg U.S. Aggregate Bond Index posted modest positive returns in Q4 1.10% and full-year gains of 7.3%.

After years of AI-dominated investment concentrated within mega-cap tech, the focus is now shifting toward the utilization of that infrastructure. The hope for 2026 is that the massive AI capital expenditures of the “Mag-7” will finally begin to yield tangible productivity gains for the broader economy, benefiting sectors far beyond the tech landscape. We plan to find them.

Carlson’s 4^th quarter articles include information on tax law changes, jobs in the trades, understanding Roth conversions, a great winter read, your financial quarterback, and prenuptial and postnuptial agreements.

• Tax Law Changes in 2025: What the OBBBA Means for You – On July 4, 2025 the One Big Beautiful Bill Act (OBBBA) became law. While the bill covers a wide range of provisions, we’ve highlighted some of the most notable changes for individuals, families, and businesses.

• Where the Jobs Are: Why the Trades Deserve a Fresh Look From Young Adults – If you’re wondering where the opportunities are for today’s young adults, the answer just might be in our article!

• Understanding Roth Conversions: When and Why They May Make Sense – A Roth conversion is the process of moving assets from a pre-tax retirement account into a Roth IRA. While the converted funds are treated as taxable income in the year of conversion, the long-term advantage lies in the Roth IRA’s ability to grow tax-free and allow for tax-free withdrawals in the future. Find out if a Roth conversion might be a good fit for you.

• Investing 101: A Winter Read Worth Your Time – If you’re looking for a book that will both engage and enrich your perspective on money, The Psychology of Money, by Morgan Housel, is a worthwhile choice. See why we find ourselves returning to the timeless insights in this book time and time again.

• The Role of Your Financial Quarterback: How an Investment Advisor Helps Coordinate Your Wealth Strategy – You have living expenses to pay daily, weekly, and monthly, investments to oversee, taxes to plan for, retirement goals to track, and a legacy to build. At Carlson we coordinate every part of your financial life so that your strategy, your priorities, and your future are all aligned. Learn about the role of a financial quarterback in our article.

• Understanding Prenuptial and Postnuptial Agreements – For many, entering into marriage brings questions about how best to manage assets, liabilities, income, and responsibilities. Find out why you might want to consider a prenuptial or postnuptial agreement here.

Carlson Investments does not provide tax, legal, or accounting advice. This content has been written for informational purposes only. Always consult your individual tax, legal, or financial professionals for advice tailored to your situation.