Good morning investors,
On this final trading day of 2025, I want to thank everyone who trusts me for their morning stock market news. Your support has made this newsletter what it is, and 2026 will bring only bigger and better things. As the S&P 500 is on track to close out its third straight year of double digit gains at 17.25%, we reflect on a year that saw the market crash 20% in April only to roar back, Nvidia become the first $5 trillion company, and retail investors outperform the pros. Here's to another year of navigating markets together.
Opening Bell: Year-End Reflection
Dow ($DIA ( ▲ 2.48% )) futures down 35 points with S&P ($SPY ( ▲ 1.92% )) and Nasdaq ($QQQ ( ▲ 2.11% )) futures off 0.1% and 0.2% respectively. Markets head for fourth straight losing session, though declines remain mild as profit-taking replaces Santa Claus rally enthusiasm. The absence of typical year end strength hints at volatility ahead.
The S&P's 17.25% gain marks third consecutive double digit year while Nasdaq's 21.27% validates AI leadership. The Dow's 13.69% and Russell 2000's 12.13% show broadening participation beyond mega cap tech.
2025's Defining Moments
This year delivered drama worthy of Hollywood:
Nvidia falling 17% in a day on DeepSeek fears, losing $600 billion in market cap.
Trump's April 2nd "Liberation Day" tariffs sending the S&P down 10% in two days, its worst week since COVID.
Then April 9th's reversal creating the biggest single-day gain in financial history with the Dow jumping 2,900 points.
Warren Buffett announcing his final year as Berkshire CEO at May's annual meeting.
Nvidia crossing $4 trillion, then $5 trillion market cap barriers.
Bitcoin hitting $125,000 before crashing 30%.
Gold surging past $4,000 for its best year since 1979.
The 43-day government shutdown disrupting economic data.
Oracle's 40% single-day surge on OpenAI revenue recognition that later evaporated.
Retail's Revenge
The year's untold story was that retail investors crushed institutional performance. JPMorgan's data shows mom and pop traders' portfolios outperformed both AI baskets and software strategies. Their secret? Buying the April crash aggressively while institutions panicked.
Retail investors bought a record $3 billion in equities on April 3rd as the S&P fell 5%. They continued buying April 4th despite another 6% drop. When Trump blinked on April 9th, retail sat on the ground floor of a 9.5% surge. The S&P has gained 21% since April 2nd, advantage: Main Street.
VandaTrack data confirms 2025 as the second-best year for dip-buying since the 1990s. Retail shifted from single stocks to ETFs mid-year, particularly flooding into gold funds where 2025 inflows topped the previous five years combined.
One of the great things about writing a newsletter on a daily basis is that there is a record of everything I've said each trading day. A lot of wealth managers and portfolio managers speak on record now that they called the bottom in April and told people to buy, but their commentary told a different story. My writing on April 7th is my proudest moment this year where my conviction went against the media narrative of major crash ahead.
AI's Evolution and Fractures
While AI remained the defining force, the narrative fractured significantly. Alphabet surged 65% as the search giant challenged OpenAI's dominance. Amazon lagged at just 6% despite AWS strength. The Magnificent Seven bifurcated rather than moving in lockstep.
Nvidia and OpenAI's $100 billion circular financing deal in September sparked skepticism about AI economics. Oracle's RPO surge and subsequent collapse highlighted revenue recognition concerns. DeepSeek's January announcement claiming rival AI models at fraction of costs triggered the first real AI valuation reckoning.
Commodities' Silent Victory
Gold's 66% surge and silver's 165% moonshot stole the show from equities. Gold breaking $4,000 marked its best year since 1979, driven by central bank buying, geopolitical uncertainty, and currency debasement fears. Silver more than doubling reflects both monetary metal status and industrial demand from solar and electronics.
Copper's 41% gain validates AI infrastructure demands. Every data center needs miles of copper wiring, physical constraints creating pricing power independent of financial engineering.
Government as Shareholder
The U.S. taking a 9.9% Intel stake at $20.47 (now $38) exemplifies 2025's blurred public-private lines. Government as minority shareholder in critical semiconductor infrastructure represents strategic shift from pure capitalism toward industrial policy.
This precedent matters for 2026 as national security concerns override free market principles. Expect more government equity stakes in strategic industries from AI to energy.
Looking Ahead to 2026
Wall Street's near unanimous bullishness for another double digit year faces headwinds. Valuations stretched in places, earnings need to catch up, midterm elections loom. My 10% gain projection with 10-20% volatility reflects these realities, but I do see a positive year ahead for the markets where earnings growth accelerates.
Yet the market's resilience through 2025's shocks, from 20% crash to 43-day shutdown, demonstrates remarkable durability. Each crisis created opportunity for those with conviction and capital.
Final Thought
As we close 2025, the lesson is clear - the markets reward courage over caution, conviction over consensus. Retail investors buying April's crash while professionals panicked proves expertise matters less than emotional discipline. The winners weren't those with the most sophisticated models but those who acted when others froze.
The year that saw Nvidia hit $5 trillion, Bitcoin touch $125,000, and gold break $4,000 taught us records exist to be broken. What seemed impossible in January became inevitable by December. That's the market's magic, it makes believers of skeptics and humbles the overconfident.
2026 will test different skills. With valuations elevated and easy gains harvested, stock selection matters more than momentum. The broadening beyond tech creates opportunities in forgotten sectors. International markets offer value for those willing to look beyond US borders.
My greatest privilege this year has been guiding you through these historic moments. From April's crash to December's records, we've navigated together. Your trust during volatile times motivates me to deliver better analysis, clearer insights, and actionable intelligence.
Thank you for making Market Pulse part of your morning routine. For believing my perspective adds value to your investment process. For sharing the newsletter with colleagues and friends. This community we've built transcends market commentary, it's about shared journey through unprecedented times.
2026 promises new challenges and opportunities. AI's next chapter, midterm volatility, international rotations, commodity supercycles - we'll navigate them all together. The newsletter will expand with new features, deeper analysis, and more interactive content. Your feedback shapes this evolution.
Wishing you and your families a prosperous, healthy, and successful 2026. Thank you for an incredible year.
Best regards,
Dan Sheehan
This newsletter is for informational purposes only and should not be considered as investment advice. Please consult with your financial advisor about your specific situation.