The stock market has continued its steady climb since the lows reached on April 8th at the depths of the tariff concerns. The S&P 500 has risen 33% since the low point in April and has climbed about 5% over the last two months. The S&P 500 is now up almost 13% for the year and the Nasdaq is now up about 16% in 2025 – despite the big decline during the tariff announcements.
In the chart below you can see the extreme price volatility in April and the steady move higher over the last four months.
Economic news has been mostly negative over the last month. Inflation has increased slightly over the last two months. Jobs numbers have been weak lately and the unemployment rate is now climbing. Just this week, the Fed decreased interest rates by 0.25% and they indicated that there could be two more rate decreases before the end of the year.
If inflation remains under control, I expect the economy to be fairly resilient. Interest rate cuts will help, and the economy is being carried by two groups that are less affected by a soft labor market – the wealthiest 10% and retirees.
The steady and consistent increases in stock prices are a cause for some concern. My valuation gauge indicates that the stock market (S&P 500) is now 24% above its fair market value in late September. This is higher than we were in January 2022. The last time the market was overvalued by this much was in 2000 during the dot-com bubble.
I do not trade based on market valuation levels and you should not either. It is just a reminder that you need a strategy in place to protect your savings in case we experience a bear market. Older investors in particular need loss protection.
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
A major challenge for most people in investing is setting the right goals and expectations. Even the most educated and experienced investors often get this wrong. Without clear, realistic goals, you won’t succeed as an investor.
The process begins with self-awareness—understanding your emotions and attitudes toward investing. You need to know what kind of investor you are emotionally. The second part is educating yourself about the possibilities for investment returns. Once you know both yourself and the range of outcomes, you can set meaningful goals and expectations.
Knowing Yourself
To better understand yourself as an investor, ask these questions:
1. What is your tolerance for short-term losses?Some people can’t tolerate even small, temporary losses—for example, a 5% drop in three months. If that’s you, the stock market isn’t a good fit. Even bonds might feel risky, considering they lost 16% in 2022 and still haven’t fully recovered as of late 2025.
Others recognize that markets are volatile in the short term and are willing to accept even large losses (up to 40%) in exchange for long-term gains. Most people fall somewhere in between, accepting moderate short-term losses for the chance at higher long-term returns.
2. Are you a risk-taker or a speculator?Some investors are drawn to the idea of getting rich quickly. They want to bet big on the “next Amazon, Google, Apple, or Nvidia.” While this approach can pay off, it carries enormous risks.
Speculating—by concentrating heavily in one stock, cryptocurrency, or other high-risk asset—is closer to gambling than true investing. While you might double or triple your money, you could just as easily lose it all.
Speculation has no place in retirement accounts. You can gamble with money you can afford to lose, but not with the money you’ll depend on in retirement.
3. What do you consider good, excellent, or disappointing results?Many investors don’t have a clear idea of what typical returns look like. Before setting expectations, write down your own benchmarks. Ask yourself:
What do I believe are average returns? (3%, 5%, 7%, 12%?)
What would I consider good returns? (7%, 9%, 15%?)
What would I consider excellent returns? (12%, 15%, 20%?)
What would disappoint me? (6%, 3%, or even negative returns?)
Also, consider potential losses. How much could you tolerate losing during a market decline? Write that number down—it’s just as important as your return goals.
The Possible Outcomes
Your initial opinions matter but now let’s look at the typical range of actual results—your reality check.
Average investor: about 5% per year.
Above-average investor (with an advisor): about 7% per year.
Very good investor: 9% or more per year. Some skilled do-it-yourself investors achieve 10–11% annually, even before getting higher returns from my system.
And what about the top professionals? Surprisingly, fewer than 1% of highly paid fund managers beat the S&P 500 consistently over the long run. In my own review of 9,000 funds, only 9 managers outperformed the index over a 20-year period.
While some managers shine for a year or two, very few sustain superior results over decades—the time frame that truly matters for retirement investors. If you’re 65, you need to plan for a 30-year horizon.
Yes, there are rare investing “superstars” who earn 20–30% annually for decades, but they run hedge funds for the ultra-wealthy and have access to opportunities the average investor doesn’t.
So ask yourself honestly: if 99.9% of professionals can’t consistently beat 10% annual returns, what are the odds that you—or your advisor—can?
Losses
Let’s now look at the possible losses that you could experience.
The only thing that can’t lose money is a savings account or a Certificate of Deposit. If the bank fails, you would still be covered by insurance up to a certain amount.
Money market funds technically can post a short-term loss, but it is highly unlikely. Money market funds were underwater for a short period of time in the Financial Crisis of 2008, but they quickly returned to par value.
Bonds can and do lose money in the short-term. Bonds lost about 16% in 2022 and have yet to recover at the end of 2025. If you own individual bonds and hold them to maturity, you will not lose money in the long run.
Losses in the stock market can be substantial. Stocks enter a bear market decline about every six years on average. Over the last 25 years, the S&P 500 has posted losses of 55% in 2008, 48% in 2001, 34% in 2020 and 25% in 2022. Aggressive growth funds (tech funds) lost 77% in 2001. Older investors simply cannot suffer these kinds of losses.
Time Horizon
One of the biggest mistakes investors make is judging results over the wrong time frame. Short-term performance (6 months, 1 year, even 3 years) is misleading. Any strategy can outperform—or underperform—temporarily.
A full market cycle averages about 7.5 years and includes:
A bear market decline
A steady growth cycle
A volatile growth cycle
You need to know how your strategy performs across all three phases. That knowledge requires patience—far longer than a few months.
Conclusion
You’re now equipped to set intelligent investment goals and expectations. These should align with both your chosen strategy and your emotional comfort level.
You need to decide what you think your average annual returns will be on your investments and what your potential losses could be in bear markets.
If you are conservative investor, you should expect returns between 3% and 5% and only small losses in bear markets. If you are a typical investor that follows the standard industry advice, you should expect returns of around 6.5% and you should be prepared to experience losses of around 30%. If you are an aggressive investor, you could expect returns of 9% to 10% but you need to be prepared to suffer losses of 40% or more in an ugly bear market.
These are not great tradeoffs. Your choices are not that great. That is why I developed my Better and Smarter investment system. I spent years developing a system that can generate average annual returns 13% to 15% and that loses less than 10% in ugly bear markets.
My system is designed to deliver higher long-term returns while minimizing bear-market losses. It was built specifically for older investors who need growth to outpace inflation but can’t afford catastrophic drawdowns.
If you want to learn more about my system and how it can provide better results and peace of mind, click here to schedule a call.
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
Artificial Intelligence (AI) is already reshaping the economy and the stock market, but its full impact is only beginning to unfold.
Current Impact
One of the most visible effects of AI today is the massive investment in data centers required to power AI applications. The biggest players—Microsoft, Meta, Amazon, and NVIDIA—are collectively spending $100 to $200 billion per year on infrastructure. That level of capital deployment is so large that it is meaningfully boosting GDP growth.
Naturally, the stock prices of these tech giants have surged. But the key question remains: will these investments pay off?
So far, revenue models are still developing. Billion-dollar AI service deals are being signed, but revenues haven’t yet caught up with the spending. Investors are increasingly uneasy, comparing today’s AI buildout to the broadband overexpansion of the late 1990s dot-com bubble. Any sign of weak returns could trigger a sharp decline in stock prices.
Future Impact
Over the long term, the real force behind AI’s influence on markets will be productivity gains across the entire economy.
We’re already seeing this: software developers using AI coding tools are many times more productive. Soon, nearly every profession will benefit from custom AI applications, dramatically boosting efficiency.
Here’s a conservative scenario for the S&P 500:
20% increase in labor productivity
10% reduction in supplier costs, as AI makes upstream industries more efficient
Stable revenue, as lower prices are offset by increased demand
These assumptions alone could double corporate profits, leading to a corresponding doubling of stock prices. Even with today’s somewhat stretched valuations, AI-driven productivity easily justifies the current market.
And this may be only the beginning. If productivity were to double—a plausible outcome—profits could skyrocket far beyond current projections.
Societal Impact
But the benefits won’t come without serious challenges. While higher profits and stock prices are great for shareholders, AI’s effect on employment could be devastating.
In my conservative 20% productivity increase scenario, unemployment could climb to 15–20%—triple today’s acceptable level.
In a more aggressive AI-and-robotics future, unemployment could approach 50%.
Without sweeping changes to our economic system, such levels of job loss could collapse both the economy and democracy. Businesses may remain efficient, but too few people will have money to buy their products.
Unfortunately, our political system is poorly equipped for the challenge. If we struggle to deal with the impact of 3% inflation, how will we handle rapidly rising unemployment? Worse, the gradual pace of disruption will allow misinformation and partisan infighting to block real solutions until it’s too late.
The Hard Truth
There’s no way around it: addressing mass unemployment will require higher corporate taxes to fund support for displaced workers.
Yet with corporate lobbyists wielding enormous power in Washington, passing such reforms will be nearly impossible. By the time public pressure forces change, the damage could be severe. If corporations resist contributing, demand for their products will collapse anyway. And if the government turns to printing money instead, we’ll face runaway deficits, inflation, and currency devaluation.
The painful lesson of globalization—where jobs were shipped overseas while leaders failed to act—will look minor compared to the disruption AI brings. The scale and speed of this transformation will dwarf past economic shifts.
Conclusion
I wish I could be more optimistic, but history shows us that societies rarely act proactively—we tend to wait until crises force change. Sadly, the coming AI upheaval may be no different.
These AI concerns are another reason why I honestly believe that my investing system is the best way to manage your retirement money. The primary objective of my system is to shift your money out of the stock market before big losses are realized. It works best in any financial meltdown, but it will be the only way to protect you when the AI crisis materializes.
If you want to learn how my investing system can improve your results and protect your life savings, click here to schedule a call.
I am actually a long-term optimist. Humans eventually do the right thing, I believe. We will eventually make the necessary changes and put ourselves on a better path. It will just take some time.
Stay Disciplined My Friends,
Phil
Disclaimers The Beyond Buy & Hold newsletter is published and provided for informational and entertainment purposes only. We are not advising, and will not advise you personally, concerning the nature, potential, value, or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. Beyond Buy & Hold recommends you consult a licensed or registered professional before making any investment decision.
Investing in the financial products discussed in the Newsletter involves risk. Trading in such securities can result in immediate and substantial losses of the capital invested. Past performance is not necessarily indicative of future results. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, and market dynamics.
%20(1).png)
