7 Lessons From 2025

View the video of this post here.

Weekly chart breakdowns.

Big-picture market themes.

Actionable insights.

Subscribe to our YouTube channel HERE to separate the signal from the noise.

1) Don’t Fear All-Time Highs

2024 was a great year for the U.S. equity market, with the S&P 500 hitting 57 all-time highs.

Was that something to fear?

Not if one looked at the data.

Since 1989, the S&P 500 has averaged a total return of 13.5% in the year following all-time highs, which is actually above the average return from other time periods (+11.9%).

So what that means is new all-time highs tend to be followed by even more all-time highs.

And that’s exactly what we’ve seen in 2025, with the S&P 500 hitting 37 more all-time closing highs.

2) Panic Is a Signal

There’s no better signal for investors than fear and panic which tend to be followed by positive outsized returns.

And back in April of this year during the “Tariff Tantrum,” we saw various forms of panic including:

-The 12th biggest 4-day decline in the S&P 500 since 1950 (-12.1%).

-The percentage of bears in the AAII sentiment poll rising to 62%, the highest since the week of the March 2009 low and before that the October 1990 low.

-The Volatility Index ($VIX) spiking 143% over 4 trading days with a close above 50 for the first time since 2020.

What has transpired since is one of the biggest short-term rallies in history, with the S&P 500 rising 43% from its intra-day low on April 7.

3) Everyone Loves a Comeback Story

On April 8, the S&P 500 was down over 15% on the year, its 4th worst start to a year ever.

But after a 38% rally on a closing basis, it’s now up over 17% on the year, hitting 37 all-time highs. This is one of the greatest market comebacks in history, right up there with 2020 and 2009.

While the magnitude of the 2025 comeback is greater than most, the story of the stock market is really story of comebacks – one after another. If we look at the S&P 500, every single year has a drawdown, averaging -14% since 1980.

Overall, the S&P 500 has lived in a drawdown 92% of the time since 1950. But every drawdown in the past was eventually followed by a new all-time high. The comeback is the most reliable part of the story.

4) The Status Quo Is Hard to Break

At the start of the year, the vast majority of Americans (both Republicans and Democrats) believed that the U.S. federal government debt was unsustainable (67%) and that we should move to balance the budget (83%).

But that was not enough to change the status quo in Washington, who continue to spend far in excess of what they are taking in.

As a result, the U.S. national debt crossed above $37 trillion in August and $38 trillion in October. Over the last decade, our nation’s debt level has more than doubled.

The interest expense on that debt is now a record $1.25 trillion, which is more than what we spend on national defense.

But the status quo is hard to break and absent a crisis it seems unlikely that Washington will change its profligate ways. Because the primary goal of most politicians is simply to get re-elected, and kicking the can down the road is the easiest way to accomplish that.

5) Why You Diversify

“Why should I own anything other than the S&P 500.”

That was #1 question investors we asking at the end of 2024.

Why were they asking it?

Because we had just witnessed over 16 years of U.S. outperformance versus international stocks, by far the longest stretch of outperformance in history.

But there’s a cycle to everything as we’ve seen so far this year with European Stocks (+34%) and Emerging Market Stocks (+32%) outpacing the S&P 500 (+19%).

The U.S. stock market is in the bottom third of country performers year-to-date.

Who could have predicted that?

No one. Which is precisely the point. You diversify because the future is unknown.

6) Every Bear Market Is Different

With a >20% decline from its February high to its April low, the S&P 500 had entered its 4th bear market in past 7 years (2018, 2020, 2022, and 2025).

But that told you nothing about what would happen next because every bear market is different.

It took less than 3 months from the April bear market lows this year for the S&P 500 to hit a new all-time high. That was the 2nd fastest recovery for US stocks in the last 75 years, trailing only the vertical rally in 1982.

During bear markets, it’s tempting to think you can get out and get back in when the “coast is clear.” The only problem? By the time the coast is clear, many of the best days and biggest gains will have already passed. We saw that again this year.

7) Time > Money

How is it December already? Where did the year go?

The most important lesson for investors each and every year has nothing to do with investing. It has everything to do with time and how you spend it.

As Naval once said: “Money doesn’t buy happiness – it buys freedom.”

The main benefit of building wealth is that it gives you the freedom to spend your time in ways that bring the most meaning to your life. Many who have that freedom don’t use it and fewer still use it wisely.

Why? Because they think they have time…

And that’s it for this week. Thanks for reading!

Every week I do a video breaking down the most important charts and themes in markets and investing. Subscribe to our YouTube channel HERE for the latest content.

Disclaimer: All information provided is for educational purposes only and does not constitute investment, legal or tax advice, or an offer to buy or sell any security. Read our full disclosures here.

The post 7 Lessons From 2025 appeared first on Charlie Bilello’s Blog.