A holiday reflection on 2025, with finance in mind

Sung to “The Twelve Days of Christmas”: The 12 months of ‘25, the economy sent to me, a whole bunch of volatility.

OK, so maybe it’s not the 12 days of Christmas, but let’s look back and see how much has shifted in a year.

January had raging Southern California wildfires. Anyone who owns property anywhere saw their premiums skyrocket this year. Hail damage might mean a new roof, but you should shop all your insurance and increase your deductibles for potential cost savings.

February ended the Minnesota Democratic legislative boycott, which served as a precursor for seemingly intractable party divisions. But overreacting with big investment decisions to political actions that don’t match your viewpoint, regardless of party, tends to be costly.

Gold hit $3,000 an ounce in March as the dollar started to fall precipitously against the euro. This dollar weakness helped international stock investments because part of their return was due to their currency strength. There are a lot of questions around how to think about gold. Gold is often used as a hedge against inflation or market uncertainty. While its 10-year return looks good, it all occurred in the last five years. For example, from 1992 until 2005, gold prices barely budged.

April marked President Donald Trump’s “Liberation Day,” and skittish U.S. markets sold off sharply on the announcement of much higher across-the-board tariffs than anticipated. Aristotle said, “Patience is bitter, but its fruit is sweet.” This market drop turned out to be a buying opportunity; patience yielded fruit!

May was the best month for the S&P 500 since 1990, causing significant neck injuries from the Liberation Day whiplash. All in or all out by timing the market? Nah.

Trump’s “One Big Beautiful Bill” passed in July, “permanently” maintaining 2017 tax brackets and increasing the federal estate tax exemption, as well as promising energy independence. Paying for this involved reductions in Medicaid and a likely increase in the deficit (as indicated by higher bond yields shortly after its passage). For those charitably inclined, year-end tax planning is important.

Bitcoin blew through $120,000 in August, and bitcoin speculating company MicroStrategy hit its all-time high. No one can determine the true value of digital currencies, even as they begin to become more accepted as a unit of storage. But speculating on MicroStrategy in August would currently cost you two-thirds of your investment. FOMO is alive and well … and expensive.

The Federal Reserve started cutting rates in September. Rate cuts were slower than anticipated as they tried to balance higher inflation with uncertain unemployment numbers. Fed cuts tend to be good for stocks. While many anticipate additional rate cuts — especially with the replacement of Fed Chair Jerome Powell in the spring — until inflation is under control, the Fed is unlikely to be as aggressive as originally thought.

October was a good month for technology stocks, as the Fed again lowered rates and many companies reported solid earnings. Many of those stocks retreated in a volatile November. There is going to be a lot of market volatility in the coming months. It is a great time to be investing monthly into your retirement plans, but if you have a lump sum to invest, you should consider setting up parameters to invest monthly and accelerate investments if the markets fall by 3% or 5%.

In December, we can look back at a lot more that happened in 2025, including the announced retirement of Warren Buffet. One of his most famous quotes is “Only when the tide goes out do you find out who’s been swimming naked.”