Q4 2025 Market Outlook

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Ascending A Wall of Worry
Q4 2025 Market Outlook

“The voyage of the best ship is a zigzag line of a hundred tacks. See the line from a sufficient distance, and it straightens itself to the average tendency.” – Ralph Waldo Emerson, Self Reliance and Other Essays

Any rational human may look at the state of the economy along with the multitude of simmering geopolitical events and assume this means it’s time to bunker in and prepare for a recession, or worse. The world feels on the brink of falling apart at the seams- either another Middle Eastern crisis, or Russia going after NATO, or the USA ripping itself apart as rhetoric continues to enflame differences and makes coming together harder. While we are not minimizing multiple tragic and difficult circumstances both at home and abroad, the market does not care. The stock market is cold and calculating, unencumbered by fear and doubt, powered ever higher by data, earnings growth, capex, new technologies and expanding profit margins. The litany of what-ifs and all that can go wrong is a long list, and there is always a reason to doubt the markets, just make sure you check your emotions and base your decisions on facts and not fear of what could happen. Our emotions are often the largest blockade to a successful investment strategy, and it is hard to stay the course when bombarded by bad news. However, we feel if you peel back the talking points and take a look at the data and drivers of this bull market- there is a lot to like.

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September 2025 Brief – A Fall Fall?

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With Labor Day officially wrapping up summer, and our attention turning to fall activities such as football and cooler weather, so too the market may be looking to turn. Many US markets are trading at, or near, record highs leaving little wiggle room for bad news or disruption of any sort. Historically, September is the weakest seasonal month of the year. But before you start pulling the eject lever on the bull market, take a step back and realize any sell-off we have is likely to be short lived. However, I would be prepared for a -5% to -7% pullback. Seasonality tells us to be ready for a drop. The last 5 years, the S&P 500 has averaged a -4.17% return in September – by far the weakest month on record with it being negative 4 of the last 5 years. Over 10 years, September has returned -1.96% with 6 out of 10 years negative, and over 20 years it’s -0.65%. But if you look ahead at what the winter may bring, November is the strongest month of the year and historically we have rallied out the year. Over the last 20 years, October, November, and December all average positive returns, and November-April is the strongest 6-month period in the year.

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August 2025 Brief – The Subway Sandwich Economy

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When travelling the choice of where to eat lunch is often driven by convenience and availability. The sandwich chain Subway is often a satisfactory stop – typically clean, quick, and you know what you will get. The food is not inspiring but it’s acceptable. But does anyone really feel excited about stopping at Subway for lunch? Not particularly. It’s an easy and fast choice, one that everyone is ok with but, honestly, nobody is writing home about. That is the way we feel about this economy. The data is fine, overall health is acceptable and palatable, but nothing really pops out as exciting or strong about it. Broad based, the economy feels ok but uninspired, weathering tariffs but not taking off either. The quintessential Subway sandwich economy – unremarkable.

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