THE DEAN’S LIST New Year Edition

Dean’s note: This is the week between years. Trading desks are thin. Volume is light. The real action begins in January. Use this time to reflect, not react.

A clearer map of what matters this week - and why the turn of the calendar is more psychological than financial.

The year is ending. The S&P 500 has climbed roughly 17% in 2025, marking a third consecutive year of double-digit gains - something that's only happened a handful of times since 1929. Gold has surged past $4,500 an ounce, up about 70% year-over-year, its strongest performance since 1979. Silver has nearly tripled. The Fed has cut rates three times, bringing the target range to 3.50%–3.75%.

And yet the mood is cautious. December has been choppy. The S&P 500 is hovering just below 7,000, tantalizingly close to a milestone it hasn't quite reached. AI stocks have been volatile. The Fed's hawkish tone at its December meeting rattled markets. And the Santa Claus rally has been more of a Santa Claus stumble so far.

Here's the context that matters: 2025 saw a 43-day government shutdown that created permanent gaps in economic data. October's jobs report was never released. The October CPI was cancelled. The Fed made its final decision of the year flying partially blind. Powell acknowledged as much, noting the committee was "well positioned to wait and see how the economy evolves."

Translation: Even the people driving monetary policy aren't sure what's happening. And that's okay. Uncertainty is the permanent condition of markets.

Here's what's shaping money this week:

• The Santa Claus rally window runs December 24 through January 3 - historically positive 79% of the time

• Fed meeting minutes from December drop on Tuesday - watch for clues on 2026 policy but rates are starting to signal more easing ahead

• Year-end tax moves have a hard deadline: December 31

• 2026 is a midterm election year - historically they tend to look weak in the context of the presidential cycle, but stay tuned for much more nuance on this topic in our coming 2026 outlook and forecast

• Wall Street forecasts for 2026 cluster between 7,100 and 8,100 for the S&P 500

This is a week for taking stock, not taking action. Let's dig in.

Gold has been the quiet story of 2025 - except it's no longer quiet. While everyone focused on AI stocks and Fed policy, bullion surged past $4,500 an ounce, up roughly 70% year-over-year. That's the strongest annual performance since 1979. But silver has been even more spectacular - nearly tripling to cross $77 an ounce, driven by supply constraints, speculative inflows, and its recent designation as a U.S. critical mineral.

The drivers are familiar: geopolitical uncertainty, central bank buying, expectations of continued rate cuts, and a weakening dollar. The U.S. blockade of Venezuelan oil tankers, strikes against ISIS in Nigeria, and broader concerns about global stability have fueled some demand for safe-haven assets. The dollar index posted its biggest weekly decline since June.

Analysts think gold could reach $5,000 in the first half of 2026. Silver targets range from $80 to $100. But precious metals are volatile and analysts are closer to fortune tellers than mathematicians. Thin holiday liquidity has amplified price swings in both directions.

Dean’s note:
Gold and silver aren't trading vehicles for most retirees - they're insurance policies. If you don't own any, consider a small allocation (5-10% of your portfolio) as a hedge against tail risks. If you already own some, don't chase the rally. The time to buy insurance is before you need it.

The Federal Reserve's December meeting delivered its third consecutive rate cut, bringing the target range to 3.50%–3.75%. But the 9-3 vote tells a more complicated story. One governor wanted a bigger cut. Two regional presidents wanted no cut at all. Chair Powell called it a "close call."

This is not your typical Fed consensus. The dot plot suggests perhaps one more cut in 2026, though markets are pricing in two. Powell's message was clear: the committee is "well positioned to wait and see how the economy evolves." Translation: unless something breaks, don't expect aggressive easing.

Also worth watching: Powell's term ends in May. The president has signaled he'll nominate someone who favors lower rates. Markets are already building in a risk premium for potential challenges to Fed independence. The Fed also announced it will resume buying Treasury securities - starting with $40 billion in T-bills. This is liquidity support, not QE, but it's worth monitoring.

Dean’s note:
 The Fed chair transition is one of the underappreciated stories for 2026. A new chair pushing for faster rate cuts could be a tailwind for risk assets more than it should raise inflation concerns. Watch this space.

Every December, the strategists publish their year-ahead targets. This year, the consensus clusters around 7,100 to 8,100 for the S&P 500—implying returns of roughly 3% to 17% from current levels.

Here's where the major firms stand:

• LPL Financial: 7,250 (cautious, citing elevated valuations)

• JPMorgan: 7,500 base case

• Goldman Sachs: 7,600

• UBS: 7,700, citing continued economic momentum

• Morgan Stanley: 7,800—their most bullish outlook in years

• Deutsche Bank: 8,000

• Oppenheimer: 8,100 (the most bullish on the Street)

The common thread? Earnings are expected to do the heavy lifting. Most strategists project S&P 500 EPS growth of 12-17% in 2026. AI-driven productivity gains are expected to flow through to corporate profits. The bear case centers on valuation compression - with stocks trading at elevated multiples (CAPE ratio near 39, levels last seen during the dot-com bubble), there's limited room for multiple expansion.

Dean’s note:
The fat part of this forecast bell curve is usually far from the bullseye. Is the outcome higher or lower? We will make our case in the coming 2026 outlook and forecast. It's useful understanding what's driving the institutions’ thinking. Right now, that's AI productivity, Fed policy, and earnings growth.

2026 is a midterm election year, historically the weakest year in the presidential cycle. But there's a nuance worth understanding: it's also potentially a lame-duck midterm, meaning the sitting president may be ineligible for re-election.

The historical record for lame-duck midterms is interesting. Since 1950, five of six such years produced positive returns - often with the bulk of gains arriving in the second half. The one negative outlier (1974) occurred during an oil embargo, collapsing earnings, and a political crisis. It was an extreme scenario, not a typical midterm.

The implication isn't that 2026 is guaranteed to be positive. It's that negative outcomes have historically required something to actually break—a recession, a credit crisis, a policy mistake. Absent systemic stress, these environments have tended to favor risk assets.

Dean’s note:
A common worry I'm hearing: "But this would be four consecutive positive years. Isn't that extended?" History says no. Markets have posted runs of six, eight, even nine consecutive positive years. Cycles end due to economic disruptions, not calendar fatigue. If we're really in a bubble, we'll need euphoric sentiment to materialize before it pops. By most measures, we're not there yet.

The Turning of the Page

There's something about the week between Christmas and New Year's that invites reflection. Markets are quiet. The year is ending. The new one hasn't quite begun. We exist in a liminal space - between what was and what will be.

I've been thinking about what 2025 taught us. The government shut down for 43 days, and markets barely flinched. The Fed cut rates three times, and inflation didn't reignite. AI stocks swung wildly, but the broader market kept climbing. Gold had its best year since 1979. Silver nearly tripled. Bitcoin hit $126,000 in October before giving back a third of its gains. The S&P 500 is up roughly 17% despite a choppy December.

The lesson? Markets are resilient. They absorb bad news. They climb walls of worry. They reward patience and punish impatience.

Looking ahead to 2026, the strategists see 7,100 to 8,100 for the S&P 500. That's a wide range - 3% to 17% upside. The truth is, nobody knows. We never know. What we can do is prepare for a range of outcomes.

2026 will bring midterm elections, a Fed chair transition, ongoing tariff negotiations, continued AI disruption, and the usual parade of headlines designed to make you feel like something important is happening every day. Most of it won't matter six months later. Almost none of it will matter six years later.

What will matter is whether you stuck to your plan. Whether you stayed invested. Whether you resisted the urge to react to every piece of news.

The scoreboard on December 31, 2025 is not your life. It's a number on a screen. Your retirement isn't won or lost in a single year. It's built patiently, consistently, deliberately - over decades.

So as the page turns, remember: the goal isn't to predict the future. The goal is to build something that thrives across many possible futures.

Happy New Year. May 2026 bring you health, wisdom, and the discipline to stay the course.

— Dean