STOCK MARKET RECAP DECEMBER 2025

The stock market has been unstable of late. See the chart below.

After a steady climb higher to the end of October, stock prices have stalled out in the last month and a half.  Stocks declined in the first three weeks of November then rebounded over the three weeks ended December 12^th.  Over the last four days, prices have declined once again.

These up and down movements are the sign of an unstable market. 

Most of the instability is coming from the tech sector, particular the AI trade. This next table compares the declines in the S&P 500 (the overall market) to the decline in the Nasdaq-100 (tech) to the change in the semiconductor sector (AI).

Market Performance Comparison

Period	S&P 500	Nasdaq-100	Semiconductor Stocks
Oct. 29 – Nov. 20	-5%	-8%	-12%
Dec. 11 – Dec. 17	-3%	-4%	-9%

You can see that the semiconductor stocks have been leading the market lower in the two recent corrections.  We are still in the middle of the latest correction so that story is still being written.

Investors were concerned about Oracle’s recent earnings report but there have also been positive reports from AI leaders like Google.  The bubble has not popped yet, but it has stalled out of late.

The economy and the stock market are being driven by AI investments and spending from older affluent consumers sitting on large 401K and IRA accounts.  There has been no slowdown in AI spending, but there has been some concern over the returns on the massive AI investments.

Unemployment continues to creep higher.  Job growth has slowed but not stopped. The inflation report this morning was slightly below expectations.  Once the tariff increases work their way through the economy, there is a good chance that inflation will drop to a more acceptable level.  That could take three to six months. 

The Fed is in a difficult decision and last week decided to lower interest rates by 0.25%.  The market responded positively to today's inflation report as it appears to give the Fed more room to lower rates next year.

My stock markete valuation gauge indicates that the stock market (S&P 500) is now about 25% above its fair market value in mid December. 

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 during stock market downturns.

My investing system comes with built-in loss protection.  It is designed to avoid most of the losses in bear market meltdowns.  But it also produces big gains in bull markets.  You can now invest in my system directly from your brokerage account.  Click on this link to get on my calendar to learn how to start using my Growth and Safety investment system.

Meeting

Stay Disciplined My Friends,

Phil

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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.