2025 Wrapped From Spartan Planning Group
“I think it is much more interesting to live not knowing than to have answers which might be wrong.” – Richard Feynman
When uncertainty rises, investors often default to recent experience or familiar narratives, even when those approaches quietly accumulate risk.
The year 2025 has highlighted how quickly that can happen:
- A sharp, policy-driven sell-off early in the year was followed by a rapid recovery
- Market leadership remained concentrated in a small group of mega-cap and AI-related stocks
- Volatility appeared in short, intense bursts
- Global markets challenged assumptions formed over the prior decade
These were not developments that could be reliably predicted in advance. Attempting to do so would have required constant judgment calls at exactly the wrong moments. This is why at Spartan Planning Group, our focus is not on forecasting what comes next, but on maintaining a rules-based investing process that adapts as trends emerge.
This month’s Note reviews the defining market themes of 2025 and how our portfolios responded as conditions evolved. Think of it as our version of “Spotify Wrapped,” but for the markets.
But first, here’s a summary of what transpired in the markets in December.
Disclaimer: This note is for general update purposes related to the general strategy and approach of Spartan Planning portfolios. Every client’s situation including Risk Profile, Time Horizon, Contributions, and Distributions is different from other clients. Your exposure to any given asset class will depend on your goals, risk profile, and how tactical or static your risk profile calls for. Adjustments can vary across strategies depending on each strategy’s objectives. What’s illustrated above most clearly reflects allocation adjustments for the Growth Strategy. If there have been changes to your risk profile and/or goals or if you wish to discuss them in more depth, please contact your advisor.
Asset-Level Overview
Equities & Real Estate
The S&P 500 Index found a new all-time high in December, while also experiencing a brief decline to the 50-day moving average. Overall, U.S. equity trends are positive, though there was some retracement this month.
Emerging markets experienced a similar retracement to U.S. equities but have not rebounded as strongly yet. That said, uptrends persist.
Foreign developed markets had no such retracement and remained strong throughout December. As expected, trends are positive and the allocation is at its baseline allocation in our portfolios.
Real estate securities drifted lower in December but remain within the same trading range since April. Trends are down across all timeframes we monitor and as a result this allocation is set to its minimum. The vacated exposure continues to be handed off to stronger U.S. equities – a notable example of the benefits of our risk handoff process.
Fixed Income & Alternatives
U.S. fixed income performance was down in December, but the asset class still clings to uptrends for now. As a result, this segment remains overweight in our portfolios. If U.S. fixed income declines further in January, it could cause a large shift in exposure to ultra-short-term bonds.
For the first time in many months fixed income will not maintain the largest net exposure within the alternatives bucket. In fact, it will drop to third out of the four major asset classes, behind equities (net long) and currencies (net long international and short USD). Moreover, what was a growing net long position to bonds of intermediate duration will now revert to being net short. Commodities continue to be mixed with net long positions in precious metals nearly matching net shorts in the grain complex.
Sourcing for this section: Reuters, “S&P 500, Dow hit all-time closing highs; gold, silver touch records,” 12/24/2025
3 Potential Catalysts for Trend Changes
Weakening Sentiment: Domestic consumer sentiment declined for a fifth-consecutive month in December, from 92.9 in November to 89.1 now. “Despite an upward revision in November related to the end of the shutdown, consumer confidence fell again in December and remained well below this year’s January peak,” said a spokesperson for research firm The Conference Board. According to the firm’s survey, consumers’ views on current business conditions are negative for the first time since September 2024.
But Still Spending: Americans continue to spend, even as they have a negative outlook on the economy, are frustrated about high prices, and are experiencing a slowdown in the job market. AI investment and household consumption, especially by higher-income Americans, accounted for about 70% of growth in Q3. Overall, the economy has defied many of the dire predictions from earlier this year. However, the GDP report contains some troubling contradictions, such as Americans’ disposable personal income remaining flat after inflation and the savings rate falling to its lowest level since 2022.
Controversial Inflation Report: In a surprise, data showed inflation eased in November. However, economists warned against reading too much into the report due to gaps in data collection during the government shutdown. The closure meant Labor Department workers could not collect some of the data they normally compile to produce the consumer price index report. Even prior to the official data release, some economists were warning that the agency’s technical workarounds to address the collection issues may have biased the November figure downward. For example, missing October data may have made November housing-cost increases look milder than they were because the government estimates housing inflation by examining how rents have changed over the previous month, and missing data led the formula to assume that housing prices did not increase at all in October.
Sourcing for this section: The Wall Street Journal, “Consumer Confidence Falls as Jobs, Economic Worries Persist,” 12/23/2025; The Wall Street Journal, “The U.S. Economy Keeps Powering Ahead, Defying Dire Predictions,” 12/23/2025; and The Wall Street Journal, “Inflation Eased to 2.7% in Report Distorted by Government Shutdown,” 12/18/2025
2025 Recap: How We Responded
“Lack of intentionality leads to repetition of what is easiest.” – Unknown
Transparency is a key tenet of the Spartan Planning Group philosophy, and it has been since we published our original investment strategy rules to our website years ago. As a believer in the value of systematic asset management, we recognize one of the first concerns investors have is the risk of a “blackbox” process producing unexpected results. By focusing on extreme transparency, our goal is to:
- Achieve trust
- Cut down on uncertain outcomes
- Create radical certainty — not of investment returns (because no one can), but of portfolio positioning and our investing process
As 2025 draws to a close and investors evaluate the year while setting a course for 2026, we thought it would be helpful to review some of the key themes that made the year unique — and how our portfolios responded.
A Sharp Correction Followed by a Rapid Recovery
Early in 2025, U.S. equity markets experienced a sudden and severe sell-off triggered by unexpected trade and tariff policy announcements. The speed and depth of the decline rivaled some of the largest drawdowns since 2020. By mid-year, major indexes had regained losses and moved to new highs, creating a rare “crash and rebound within the same calendar year” pattern.
Our portfolios responded as designed, by briefly decreasing equity exposure to reduce the risk of greater damage in the event of a prolonged decline. With the benefit of hindsight, a sustained fall did not occur, but investors were protected, nevertheless. Within a short span of time, our portfolios not only adjusted back to “risk on” but were overweight with the best performers.
Extreme Concentration in Mega-Cap and AI Stocks
Market leadership in 2025 continued a run of high concentration in a small group of mega-cap technology companies, many tied to artificial intelligence infrastructure and applications. A disproportionate share of index returns came from a handful of firms, echoing dynamics last seen during the late-1990s tech boom. This level of concentration continued to raise concerns about diversification, valuation risk, and index fragility.
Rather than run from this phenomenon, our portfolios leaned into it, knowing that rules designed to exit assets in downtrends provide a measure of protection from concentration risk. The adage, “the markets can stay irrational longer than investors can stay solvent” applies. The beauty of a systematic investing process is the potential ability to not only sidestep risk, but also participate in positive trends for longer than others may be able to stomach with discretion alone.
Elevated and Episodic Volatility
Volatility in 2025 was higher than long-term averages, driven largely by policy announcements, geopolitical concerns, and shifting expectations for interest rates. Rather than remaining persistently high, volatility appeared in sharp bursts, reinforcing a market environment that was reactive and headline-driven.
In the moments when volatility was at its highest in 2025, our portfolios had either reduced or were reducing exposure to the most volatile assets. We have repeatedly written about the clustering effect of volatility during drawdowns. Having a simple set of rules to sidestep declines is the easiest and most effective way to miss out on volatility, in our opinion.
Unusual Global Performance Dispersion
Despite reaching record highs, U.S. equities underperformed several international markets during parts of 2025. This was notable given the historical dominance of U.S. stocks during the past decade. The dispersion highlighted changing regional dynamics, currency effects, and differences in valuation starting points.
Coming into the year, we were overweight U.S. equities and underweight foreign due to entrenched uptrends domestically, as well as their relative strength. As foreign equities performed well early in the year, we brought our exposure up, through our systems increased exposure at a measured speed. Despite this headwind, our portfolios delivered above-average performance and continued to close the gap on passive benchmarks as 2025 neared a close.
Conflicting Economic Signals
The economic backdrop in 2025 was mixed. Strong corporate earnings and resilient consumer spending supported equity prices. However, concerns about inflation persistence, trade policy, and labor market cooling created ongoing uncertainty. This tension between solid fundamentals and elevated risk made investor sentiment unusually fragile.
As always, our portfolios ignored the news. Instead, our investing system focused on the only thing we believe matters: price. If there’s anything we hope investors appreciate, it is this: reacting to what IS, rather than trying to predict what is to come, is the best process for helping investors achieve their goals.
Conclusion
What made 2025 unique was not any single event, but the combination of a sharp policy-driven sell-off, rapid recovery, extreme market concentration, elevated volatility, and shifting global leadership — all occurring within one year. The result was a market environment that challenged traditional diversification assumptions and reinforced the difficulty of short-term market prediction.
The peace of mind we gain from 2025 is that despite its uniqueness, our investing systems reacted the same way they always do and produced a result that we believe can keep most investors on target for reaching their goals. In other words, we had no more foreknowledge than we ever do — or ever will have — and still produced a positive outcome. Moreover, we believe the investing processes that have served us well in 2025 will continue to do so in the year ahead.
Disclaimer: this note is for general update purposes related to the strategy and approach of Spartan Planning portfolios. Every client’s situation including Risk Profile, Time Horizon, Contributions, and Distributions is different from other clients. Your particular exposure to any given asset class will depend on your goals, risk profile, and how tactical or passive your risk profile calls for. If there have been changes to your risk profile and/or goals or if you wish to discuss them in more depth please contact your advisor. This email and the data herein is not a solicitation to invest in any investment product nor is it intended to provide investment advice. It is intended for information purposes only and should be used by investment professionals and investors who are knowledgeable of the risks involved. No representation is made that any investment will or is likely to achieve results comparable to those shown or will make any profit at all or will be able to avoid incurring substantial losses. While every effort has been made to provide data from sources considered to be reliable, no guarantee of accuracy is given. Historical data are presented for informational purposes only. Investment programs described herein contain significant risks. A secondary market may not exist or develop for some investments portrayed. Past performance is not indicative of future performance. Investment decisions should be made based on the investors specific financial needs and objectives, goals, time horizon, tax liability, risk tolerance and other relevant factors. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Investors should consider the underlying funds’ investment objectives, risks, charges and expenses carefully before investing. The Advisor’s ADV, which contains this and other important information, should be read carefully before investing. ETFs trade like stocks and may trade for less than their net asset value. Spartan Planning Group, LLC (“Spartan” or the “Advisor”) is registered as an investment adviser with the United States Securities and Exchange Commission (SEC). Registration does not constitute an endorsement of the firm by the SEC nor does it indicate that the Adviser has attained a particular level of skill or ability. Indexes are unmanaged and do not incur management fees, costs, and expenses. Spartan’s risk-management process includes an effort to monitor and manage risk, but should not be confused with and does not imply low risk or the ability to control risk. There are risks associated with any investment approach, and Spartan strategies have their own set of risks to be aware of. First, there are the risks associated with the long-term strategic holdings for each of the strategies. The more aggressive the Spartan strategy selected, the more likely the strategy will contain larger weights in riskier asset classes, such as equities. Second, there are distinct risks associated with Spartan Strategies’ shorter-term tactical allocations, which can result in more concentration towards a certain asset class or classes. This introduces the risk that Spartan could be on the wrong side of a tactical overweight, thus resulting in a drag on overall performance or loss of principal. International investments may involve additional risks, which could include differences in financial accounting standards, currency fluctuations, political instability, foreign taxes and regulations, and the potential for illiquid markets. Investing in emerging markets may accentuate these risks. Diversification strategies do not ensure a profit and do not protect against losses in declining markets.