Quarterly Investment Foundations Fourth Quarter 2025

Mastering The Subject

Managing Investment Cycles Confidently

As the days grow shorter and the leaves begin to change, it’s a natural time to reflect on cycles — seasonal and economic alike. At Grand Wealth, we see this as a reminder that markets, too, go through ups and downs. Although what happens next in a cycle is unpredictable, studying past investment cycles helps us navigate the road ahead with confidence.

Let’s take a look at what happened this quarter, what we expect going forward, and how to stay grounded in long-term investment principles — no matter where we are in the cycle.

Market Recap: Strong Results Across the Board

Stocks and bonds, both in the U.S. and internationally, posted strong gains in the third quarter of 2025. This continues a stretch of healthy returns that began back in September 2022. The Federal Reserve cut short-term interest rates during the September meeting and this, along with continued corporate earnings growth, has fueled results. Emerging markets led the way last quarter, although all asset classes had relatively strong performance.

_{Data as of 6/30/2025. Past Performance is no guarantee of future results. U.S. Stocks, International Developed Stocks, Emerging Market Stocks, Real Estate Stocks represented by Russell 3000, MSCI World ex USA, MSCI Emerging Markets, and Dow Jones US Select REIT indices. U.S. bonds and Global bonds represented by the Bloomberg U.S and Global Aggregate indices. The 60/40 Portfolio refers to a portfolio that holds 60% stocks and 40% bonds and is a calculated representation of the categories and their performance noted above.}

While U.S. stock prices remain high, international equities continue to look attractive from a valuation standpoint. Adding to their appeal is a weakening U.S. dollar, which boosts the returns of overseas investments when converted back into dollars.

Consumer and business spending in the U.S. are still solid, but economic growth is expected to slow through the remainder of 2025 and into 2026. That’s why we’re paying close attention to asset class weights and global diversification as we plan for the future.

Managing Emotions During Market Cycles

Just like the seasons, investment markets go through cycles — bull and bear markets, rising and falling interest rates. This year, we have seen tremendous positive returns in stocks and it is natural to think, “we must be due for a pullback, now is the time to make a change.” Knowing that the stock market is volatile, it can be uncomfortable to be at the top! Each phase brings its own set of emotions and challenges. But remembering why you're invested and sticking to sound principles is what keeps investors on course.

All-time highs are a normal part of investing. In fact, bull markets typically last for many months and even years. Since the beginning of 2024, the S&P 500 has recorded 85 all-time highs. The next direction of the stock market is unpredictable, but history shows that following new highs, US stocks have average annualized returns of 13.7% after 1 year, 10.6% after 3 years, and 10.3% after 5 years. It is reassuring to know that even if there is a pullback, not too long from now there will be significant positive returns.

Similarly, it might not be intuitive that stocks are relatively indifferent to periods where interest rates are rising or falling. Since 2022, interest rates have slowly been decreasing, which might suggest that stocks should have higher returns. Yet, when we look at the data, stocks generally return an average of 1% a month in both rising and falling interest rate cycles. It is extremely difficult to say definitively, “now is the right time to own stocks” or “now is the right time to sell.”

We are fortunate to be in a bull market cycle — but managing it well requires discipline. It's easy to want to change course when fear creeps in, especially after a sharp drop like we saw in April when stocks fell by nearly 20%. Emotions can be powerful, but reacting emotionally is rarely the right move.

3 Strategies to Manage Risk and Build Confidence

Investing is not just about numbers; it’s also about behavior. Here are a few strategies that help reduce the risks of bad timing and emotional decision-making:

1. Dollar Cost Averaging In: Contributing regularly to your investment accounts monthly or with each paycheck as with a 401(k) account, helps smooth out your cost per share and lowers the stress of buying near market highs.

2. Dollar Cost Averaging Out: If you’re planning a withdrawal, taking smaller amounts over time can help reduce the risk of pulling money out during a drop in prices. Creating a steady monthly “paycheck” in retirement is one of the best ways to maintain consistency and peace of mind.

3. Only Invest Long-Term Funds: If you need money within the next 12 months, keeping it in stocks may not be the best idea. Investing in stocks or bonds is better suited for goals that are at least 12 months in the future.

Whether we’re at the peak or the trough of a cycle, the fundamentals don’t change: stay diversified, avoid market timing, invest with purpose, and rebalance when opportunities arise. Our mission is to help families use their wealth as a tool instead of it being a source of stress, which is why we are committed to helping clients successfully navigate all economic and market seasons.

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_{Disclosure:
The opinions expressed herein are those of Grand Wealth Management (“GWM”) and are subject to change without notice. This material is not financial advice or an offer to sell any product. This article is for informational purposes only and does not constitute investment, legal or tax advice and should not be used as a substitute for the advice of a professional legal or tax advisor. GWM reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. This is not a recommendation to buy or sell a particular security. Past performance does not indicate future results. GWM is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about GWM including our investment strategies, fees and objectives can be found in our Form ADV Part 2 and Form CRS, which are available upon request.}