MARKET WATCH
The S&P 500* seemed as if it was destined to achieve a feat that doesn’t happen often historically, that being a return of 20% or more per year for three years in a row. The index fell short, but certainly had a wonderful year returning 16.39%, racking up three consecutive years of double-digit returns through 2025, also a historically significant feat, and extending the current bull market. Furthermore, the index regained 39.5% from its “not quite a bear market” drop during April’s “Liberation Day” hiccup. The S&P 500* finished the year at 6,845.50, slightly below its all-time high.
The NASDAQ* ended the year at 23,241.99 which was a 20.36% year to date (YTD) return. The tech heavy index was the highest performing index as the efforts to build out infrastructure to support the development of artificial intelligence continued through 2025 with more investment slated for the new year. A positive development in the overall performance of the various indexes was the fact that the Dow Jones Industrial Average (DJIA)* and the Russell 2000* also had double digit returns for the year.
The DJIA* closed at 48,063.29 for a 12.97% YTD performance, while the Russell 2000*, the index of small company stocks, closed at 2,481.91 for an 11.29% YTD gain. While it is true the markets are primarily being driven by a handful of technology companies, it is encouraging to see the number of companies participating in the rally expanding and encompassing older established leaders and smaller newcomers. A continuation of these trends would be welcome in the new year, as each of the indexes are hovering near their all-time highs.
As we enter the new year, the government has once again begun generating economic statistics which were mostly unavailable during the shutdown. The overall economic picture hasn’t deteriorated too much from the end of September, but the employment numbers are a cause for concern as companies have slowed their hiring and layoffs have increased. Unemployment has edged up to 4.6%, the Labor Participation Rate has inched up to 62.5% and productivity has increased 3.3%. The inflation rate has been between 2.4% to 2.9% depending on the index used and if food and fuel prices are included.
Real gross domestic product (GDP) increased at an annual rate of 4.3 percent in the third quarter of 2025 according to the initial estimate released by the U.S. Bureau of Economic Analysis in December. In the second quarter, real GDP increased 3.8 percent. Economic growth is extremely important because it helps to lessen the overall percentage of debt to GDP and if we could grow the economy and trim government spending, we might begin to get our debt levels and deficit spending under control.
The Federal Reserve cut the federal funds rate to between 3.5% - 3.75% at its December meeting. Unfortunately, the lowering of the federal funds rate only goes so far helping to reduce longer term rates. Government spending and borrowing is financed by investors of all stripes who purchase debt to make money. So, interest rates on longer term debt, such as the 10-year note, is determined by the interest rate acceptable to individual investors for purchasing US government debt.
Currently, the cumulative effect of several years of inflation is having an effect on the mood of consumers as polls indicate the perception of a lackluster economy. This is in stark contrast to statistics that indicate strong economic growth. Since inflation was elevated for several years, the cumulative effect of those price increases eroded the spending power of most families. I’ve read it was comparable to a pay cut of between 20% - 25% from some sources. There have also been wage gains during the last several years, but overall, it takes time for families to adjust to new income and price levels. As tax code changes are felt in 2026, and gas prices, which affect all prices, continue to abate, perhaps the consumer’s mood will improve.
FOR TEXT MESSAGES PLEASE REMEMBER TO USE THIS NUMBER
As I mentioned previously, the use of text messaging has been an issue of concern for the financial services industry for several years. The reason for the concern was the inability of text messages to be retrieved for review & compliance by broker/dealers. This is no longer an issue and text messages for business purposes should be sent to (609) 225-4505. The good news is this number can also be used for voice calls, as any calls or texts to the new number are simply forwarded to my regular cell phone number. So, you can utilize my regular number for telephone calls, or you can use the text number for all business purposes, whichever you prefer.
The reason for the broker/dealer needing to have access to the content of text messages has to do with client protection and making sure no inappropriate sales tactics are being used, like pitching low priced securities, the sale of unregistered products or the use of other dubious sales practices. Unfortunately, due to a few bad actors, everyone must take extra precautions. The precautions are worth it, as the protection of client assets is extremely important to the folks at Osaic Wealth, Inc. and of course, very important to me.
Once again, the new business number to reach me is (609) 225-4505. This number can be used for voice calls, and it must be used for text messages. You can also reach me at (609) 827-0194, which is the same cell phone number you have been using for years.
If you forget and text me on my cell phone number, I will send a reminder to you to use the new text number. As with anything new, it won’t take too long to adjust. Thanks so much, and sorry for any inconvenience.
Compromise is not a bad word and it’s needed NOW!
DISAGREEMENTS ARE NOT UNUSUAL AND COMPROMISE IS THE 60% SOLUTION
In just six short months, our country will be celebrating 250 years of the American experiment. The birthday of a nation founded on a radical goal of self-determination by the people, rather than subjugation by a king, which has come a long way in those 250 years. The Constitution written by our forefathers has endured as a beacon for those individuals throughout the world who desire to choose their government, rather than live under an autocracy.
Not being naïve, I realize there is much disagreement in our country regarding policies of our President to the point where some see him as a “king”. Protesting his policies and speaking out without being jailed is a testament to the value of our Constitution and the fact that it works. Disagreement over varied opinions has been with us since the beginning of the republic, which is why to get most legislation passed in the Senate requires 60 votes.
The point is to force compromise. In colonial times and the early years of the Republic, there were various factions who disagreed, just as there are today. The system was developed to not allow one faction or group to run roughshod over the others. While we didn’t adhere to the premise of all men being created equal “initially”, we should be thankful and quite proud of how far we’ve come. How much protest of policy is allowed in China, Russia, Venezuela or Iran?
While there is no perfect system, it seems the best we can do is attempt to make the best decisions we can to improve our system. Since the founding of the country, the government has grown to the point of where we have a department for just about everything, so our government is not small by any definition. We are primarily a capitalist economy, and yet we have developed social programs, which are supposed to function as a safety net. These adaptations are the epitome of compromise. There will need to be much, more compromise between the two political parties in the months and years ahead.
Many of our citizens have not had the experience of a bout of inflation like we’ve endured from 2021 through 2024. This was the worst period of inflation since the 1970’s and it was bad enough to have many people questioning the idea of the “American Dream” of working hard to attain a home, a family and an adequate income. Unfortunately, the cumulative effect of that inflation was like losing 20% of your income. There are some things we can do to help ease this situation.
After World War II, the government made low interest mortgages available for veterans and Levitt & Sons built the various “Levittowns” to increase housing. In the late 1970’s and early 1980’s, after the inflation of the 1970’s, contractors built small houses, usually two or three bedroom ranch or Cape Cod style homes with unfinished attics, to keep prices low. This helped first-time homebuyers afford a home, because mortgage rates were above 10% back then.
As we enter the new year, rate adjustments to withholding taxes will add some extra dollars to paychecks and tax refunds for 2025 should also be higher due to tax code changes. This should help, but unfortunately, it takes time for incomes to catch up after periods of inflation. Another year of a healthy stock market could also help. Happy New Year USA!
Company Information
Jersey Benefits Advisors is the trade name used by John H. Kaighn to offer various financial products and services.
34 Doe Dr.
Woodbine, NJ 08270
Phone: (609) 225-4505 Text: (609) 225-4505
Email: kaighn@jerseybenefits.com
http://jerseybenefits.com
John H. Kaighn is an Investment Advisor Representative & Registered Representative of Osaic Wealth, Inc. Securities and Advisory Services are offered through Osaic Wealth, Inc. Member FINRA & SIPC.
Osaic Wealth, Inc. is separately owned and other entities and/or marketing names, products or services referenced here are independent of Osaic Wealth, Inc.
18700 N. Hayden Rd.
Suite 255
Scottsdale, AZ 85255
Osaic Wealth, Inc. is not affiliated with Jersey Benefits Advisors or Jersey Benefits Group, Inc.
Jersey Benefits Group, Inc., is a licensed Insurance Agency in the State of New Jersey & offers Insurance and Third Party Administration Services
14 Atlantic Ave. Unit B
Ocean City, NJ 08226
Phone: (609) 827-0194
Text: (609) 225-4505
Email: kaighn@jerseybenefits.com
http://jerseybenefits.com
All opinions expressed in this newsletter are independent of Osaic Wealth, Inc. and are solely those of John H. Kaighn and Jersey Benefits Advisors
*The S&P 500, the DJIA, the NASDAQ and others referenced are unmanaged indices that are widely used as indicators of Market Trends. Past Performance does not guarantee future results and the performance of these indices does not reflect the fees and charges associated with investing. It is not possible to invest directly in an index.
*Dollar Cost Averaging through a systematic savings plan is an excellent way to build an account without a sizeable initial investment. Saving a portion of our pay each month is very important. Company sponsored pension plans are one method to save and should be used for retirement. Other systematic investment accounts, such as ROTH IRA’s, Traditional IRA’s, Coverdell Accounts, 529 Plans, Brokerage Accounts and Annuities can also be opened, and debited directly from checking or savings accounts. For more information, just call to set up an appointment. Referrals are always welcome.
John H. Kaighn
