A Letter to Our Clients

As we begin a new year, we want to pause and reflect on where we’ve been, and, more importantly, to remind you how and why we invest the way we do.

2025 was another successful year in our ongoing pursuit of your most important financial goals. As always, your plan—and therefore your portfolio—was driven by those goals, not by predictions about the economy, interest rates, or the next market headline.

That approach won’t change this year, or any year.

Our Planning & Investment Philosophy

• We are long-term, goal-focused, plan-driven investors. Your portfolio is built to support the life you want to live, not to chase short-term market outcomes.
• We do not believe the economy can be consistently forecast or the markets consistently timed. History shows no reliable pattern in how markets respond to economic news, good or bad.
• Market declines are inevitable, uncomfortable, and historically temporary. In our experience, staying invested through them is the only reliable way to capture long-term equity returns.
• We do not react to headlines or attempt to anticipate events. When your goals remain unchanged, your plan remains unchanged, and the portfolio follows, aside from disciplined rebalancing.
• Long-term compounding is the most powerful force in investing. As Charlie Munger once said, “The first rule of compounding is to never interrupt it unnecessarily.”

Review Our Investment Philosophy >>

A Few Observations on the Backdrop

The past year offered no shortage of reasons to worry. Markets once again reminded us why perspective matters.

Markets and earnings

• The broad equity market posted a third consecutive year of double-digit returns in 2025.
• Corporate profit margins have continued to expand, reaching their highest level in more than a decade.

Economic conditions

• The labor market has softened, but productivity gains have allowed wages to rise without reigniting inflation.
• After multiple rate cuts, monetary policy is now more accommodative than a year ago, with effects that tend to show up over time.
• Tax refunds this filing season are expected to support consumer spending, particularly for middle-income households.

Perspective

Financial news is designed to emphasize risk, fear, and uncertainty. That may be good for clicks, but it’s rarely good for investors.

The Questions Everyone Is Asking

Each year seems to bring its own set of “burning questions.”

• Will there be a recession?
• When will the Fed cut rates?
• Are we in an AI bubble?

The recurring lesson is that the most popular question is usually the wrong one, and almost always a distraction for disciplined, long-term investors.

Concentration, Valuation, and Discipline

It’s true that today’s market is more concentrated among a handful of large technology companies, and valuations are elevated relative to historical standards.

Valuation has never been a reliable market-timing tool.

Portfolio rebalancing exists for precisely this reason—and it will continue to be applied thoughtfully and deliberately. 

Final Thoughts

Market shocks will happen. They always do. They tend to arrive unexpectedly, and from directions no one was watching. In our opinion, when they do, they rarely change the long-term plan and often create opportunity rather than risk for investors who are prepared.

Our approach has worked for generations of investors because it is grounded in discipline, patience, and humility. We don’t believe “this time is different,” regardless of the narrative of the moment.

We wish all our clients and friends—because to us, they're the same—a healthy, happy, and prosperous 2026. We're always here to answer your questions or address your concerns. Thank you for being our clients. It is a privilege to serve you.

Your team at Spaugh Dameron Tenny

Sources and References:

Sources are provided for informational and educational purposes only and reflect data available at the time of publication. Forward-looking estimates, economic data, and tax provisions are subject to change and are not guarantees of future results.

Equity Market Performance & Earnings

S&P 500 annual returns (2023–2025)
Sources: S&P Dow Jones Indices; Bloomberg
S&P Dow Jones Indices. S&P 500 Total Return Index – Annual Returns.

Consensus earnings growth expectations for 2026–2027 (as of late 2025)
Source: Yardeni Research
Yardeni Research. S&P 500 Earnings Forecasts and Margin Trends.

Corporate Profit Margins

S&P 500 profit margins reaching approximately 13.1%, among the highest levels observed in the past 15 years
Source: FactSet
FactSet Research Systems. S&P 500 Earnings Insight and Net Profit Margin Data.

Labor Market & Productivity

Employment trends and unemployment rate (~4.7%)
Source: U.S. Bureau of Labor Statistics
Bureau of Labor Statistics. Employment Situation Summary.

Labor productivity trends and costs
Source: U.S. Bureau of Labor Statistics
Bureau of Labor Statistics. Labor Productivity and Costs.

Monetary Policy & Interest Rates

Federal Reserve rate cuts totaling approximately 175 basis points as of late 2025
Source: Federal Reserve Board
Federal Reserve. Federal Open Market Committee Statements and Historical Target Rate Data.

Research on the historically lagged effects of monetary policy easing
Source: Federal Reserve Bank of San Francisco
Federal Reserve Bank of San Francisco. Monetary Policy Transmission and Lags.

Inflation

Consumer Price Index (CPI) inflation running near 3% based on recent readings
Source: U.S. Bureau of Labor Statistics
Bureau of Labor Statistics. Consumer Price Index Summary.

Tax Refunds & Fiscal Factors

Estimated tax refunds and potential consumer spending effects
Sources: Joint Committee on Taxation; Congressional Budget Office
Joint Committee on Taxation. Estimated Budget Effects of Tax Legislation.
Congressional Budget Office. Macroeconomic Effects of Tax Policy Changes.

Temporary changes to the SALT deduction cap under current tax law
Sources: Internal Revenue Service; Joint Committee on Taxation
Internal Revenue Service. Individual Income Tax Provisions – SALT Deduction.
Joint Committee on Taxation. Explanation of Individual Tax Provisions.

Market Concentration & Valuations

Elevated index concentration in large-cap technology stocks
Sources: Goldman Sachs; S&P Dow Jones Indices
Goldman Sachs Global Investment Research. Equity Market Concentration Reports.
S&P Dow Jones Indices. Index Concentration Metrics.

S&P 500 valuations elevated relative to long-term historical averages
Sources: Yale School of Management; FactSet
Shiller, R. Cyclically Adjusted Price-Earnings (CAPE) Ratio.
FactSet. Forward and Trailing P/E Multiples.

Long-Term Market Principles

Research on market timing challenges and the long-term equity premium
Sources: Vanguard; Dimensional Fund Advisors; J.P. Morgan Asset Management
Vanguard Research. The Case for Long-Term Investing.
Dimensional Fund Advisors. Market Returns and Investor Behavior.
J.P. Morgan Asset Management. Guide to the Markets.

Perspective on long-term compounding
Source: Berkshire Hathaway
Munger, C. Remarks from Berkshire Hathaway Annual Meetings.