The Investing Principle That Matters Most
There’s no universal agreement on the single most important rule of investing. Ask a room full of investors and you’ll hear a range of answers. Still, most guidance consistently comes back to three fundamentals:
Define clear financial goals and follow a strategy designed to reach them
Maintain diversification that reflects your personal situation and comfort with risk
Commit to a long-term mindset rather than reacting to short-term market swings
That last principle—staying disciplined over time—was repeatedly put to the test throughout 2025.
As AP reporter Stan Choe observed,2025 was both unsettling and rewarding for investors.Markets endured sharp pullbacks driven by concerns over tariffs, interest rate policy, and the sustainability of rapid advances in artificial intelligence. Yet for investors who stayed invested through the volatility, the year ultimately delivered strong results.
Corporate Earnings Provided a Steady Foundation
Despite ongoing geopolitical tensions and policy uncertainty, the financial performance of U.S. companies helped anchor investor confidence.
According to FactSet analyst John Butters, earnings growth among companies in the Standard & Poor’s (S&P) 500 Index played a meaningful role in supporting equity markets throughout the year. A closer look at earnings by quarter highlights how growth varied across sectors:
First Quarter 2025
Aggregate S&P 500 earnings increased9%
Healthcare companies posted earnings growth of43.0%
Energy-sector earnings declined12.7%
Second Quarter 2025
Overall earnings advanced7%
Communication Services earnings rose45.6%
Energy earnings fell18.0%
Third Quarter 2025
Earnings grew4%across the index
Information Technology earnings climbed29.2%
Communication Services earnings declined7.8%
Reports forfourth-quarter 2025 earningsare expected to begin in January 2026.
Consumer Sentiment Weakened as the Year Unfolded
While corporate earnings remained supportive, consumers grew increasingly uneasy.
By December 2025, the University of Michigan’s Consumer Confidence Survey showed sentiment nearly30 points lowerthan its level a year earlier. Although the Michigan index edged slightly higher from November, the Conference Board’s consumer confidence index continued to slide.
Barron’s journalist Sabrina Escobar noted that consumers ended the year feeling notably pessimistic about the economy. The Conference Board’s present situation index dropped9.5 points to 116.8, reflecting rising concern about business conditions and the labor market. Notably, consumers’ assessment of their personal finances turned negative for the first time in almost four years.
Spending Held Up Despite a Gloomy Outlook
Traditionally, consumer confidence has been closely tied to consumer spending—one of the most important drivers of U.S. economic growth. When confidence falls, spending typically slows.
In recent years, however, that relationship has loosened, and 2025 reinforced that trend.
Even as sentiment weakened,consumer spending remained resilient. U.S. retail sales (excluding automobiles) increased3.9% year over yearthrough the holiday season. Online sales rose7.4%, while brick-and-mortar sales grew2.9%, according to data from a major payment network.
In short, consumers may have felt uncertain, but their purchasing behavior told a different story.
Carrying Core Investment Principles into the New Year
No one can predict what markets will do next. As 2026 begins, the most reliable approach remains grounded in fundamentals.
Investors are best served by staying focused on their long-term goals, maintaining diversification appropriate to their risk tolerance, and resisting the urge to react emotionally to market volatility. While downturns can feel uncomfortable, selling during periods of stress may lock in losses and make it harder to achieve long-term objectives.
History shows that some of the strongest market advances occur early in recoveries, as noted by Charles Schwab. Remaining invested and periodically rebalancing a portfolio may help investors stay aligned with their goals.
Last week, major U.S. stock indexes ended higher, while yields on U.S. Treasury securities remained relatively stable.
| Data as of 12/26/25 | 1-Week | Y-T-D | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 1.4% | 17.8% | 14.8% | 21.9% | 13.2% | 12.9% |
| Dow Jones Global ex-U.S. Index | 1.5 | 28.2 | 28.2 | 14.2 | 5.3 | 5.7 |
| 10-year Treasury Note (yield only) | 4.1 | N/A | 4.6 | 3.9 | 0.9 | 2.2 |
| Gold (per ounce) | 3.8 | 72.4 | 71.6 | 35.7 | 19.3 | 15.6 |
| Bloomberg Commodity Index | 3.4 | 13.9 | 14.7 | -0.3 | 8.0 | 3.8 |
S&P 500, Dow Jones Global ex-US, Gold, and Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods. Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested in directly. N/A means not applicable.
Quick Quiz: How Well Do You Remember 2025?
The past year was full of headline-making moments. Artificial intelligence dominated global conversations. Pope Leo XIV became the first American to lead the Catholic Church. NHL goaltender Alex Nedeljkovic recorded a historic goal and assist in the same game. Katie Ledecky broke her own 800-meter freestyle world record—for the sixth time. Wildfires swept through Los Angeles, while Louisiana and Texas faced their first-ever blizzard warnings.
Test your recall with this brief quiz:
1.A company offering space tourism has been flying passengers to experience weightlessness and view Earth from space. What is the name of its rocket?
a. Spaceship Unity
b. Falcon 9
c. New Shepard
d. Blue Ghost
2.The Economist’s 2025 Country of the Year emerged from civil war in 2024 and is now forging new alliances, with improved living conditions despite ongoing challenges. Which country was it?
a. Sudan
b. Syria
c. Myanmar
d. Yemen
3.A video game-inspired movie became a cultural phenomenon despite mixed reviews. A scene featuring Jason Momoa fighting a zombie riding a chicken led audiences to:
a. Bring a live chicken
b. Throw popcorn and drinks
c. Leap to their feet and cheer
d. All of the above
4.Student-led protests erupted in Nepal after a social media ban. Which outcome didnotoccur?
a. The ban was lifted
b. Smartphones were banned
c. The prime minister resigned
d. A nationwide curfew was imposed
Which moments from 2025 were most memorable for you and your family?
Weekly Focus – Think About It
“Uncertainty is an uncomfortable position. But certainty is an absurd one.”
—Voltaire
________________________
Answers: 1) c; 2) b; 3) d; 4) b