How Do Stocks End 2025?

The bull run that started in April was a sight to behold. Not just the 43% gain from valley to peak...but also the longevity which made it seem like going up was the only option.

The most healthy thing to happen is what took place in November. That being a stiff pullback with ample profit taking from many overripe groups (especially AI stocks).

After a brief test of the 100 day moving average stocks quickly got back on the next bull run to where we stand now. That being just 1% below the all time highs and 2.5% below the next psychological hurdle at 7,000 for the S&P 500 which we will likely touch before January.

Long story short, the bull market is still in charge even though not all of the economic data is robust. We will cover all that and more as you read on below… 

Market Commentary

A couple weeks back when doing the November 2025 Zen Investor webinar  we focused on what I called a “Rolling Correction” for stocks. That being a sector rotation on steroids where many groups will be pushed down to correction territory (-20%) before resurrecting.

This was not meant to scare anyone. Just a logical step for a market that had enjoyed a 7 month rally ushering in over 40% gains from bottom to top.

It’s logical because bull runs typically lead to excesses. This was especially true in areas like AI were valuations were getting to unsustainable levels.

The point being that we just went through a healthy process. What many market participants call “the pause that refreshes”.

Often with that pause, a new perspective takes hold of what are the right stocks going forward. Indeed, there seemed to be a greater eye towards value. This likely explains why the small caps in the Russell 2000 rallied over 7% from the mid November lows to where we stand now...more than twice the gain for the more bloated large caps in the S&P 500.

Let’s hope that trend continues given our overweighting of small caps as well as our ever-vigilant watch for value propositions.

It is easy to read the above and assume that all is well with the world. Yet, I would be remiss if I didn’t point out some troubling signs in recent economic data.

Most notable of which are inflation still too high...employment too weak.

None of this says recession as of this moment. But it doesn’t say robust economy either.

The weakness in employment really started the beginning of the year when all the talk of tariffs started up. As myself and many other market strategists noted...uncertainty over tariffs generally is bad for employment.

Meaning that when you are uncertain about the future, then you likely take on less risk. Like hiring less people. That has clearly been the case as you can see in this month by month employment chart from the past year:

Clearly the trend has been soft since the end of 2024 results. Yet don’t be impressed by the recent blue bars. The US economy actually needs to add 150,000 jobs a month just to keep up with the birth rate. Anything under that typically leads to a rise in unemployment.

Also disturbing is the Chicago PMI report from a week ago coming in at an anemic 36.3 when anything below 50 points to contraction. This report is rarely a market mover, yet insiders know it is often a tip off as to what will come in the nationally focused ISM Manufacturing report.

That report came shortly after on Monday December 1st.The showing of 48.2 is contractionary...but not as ominous as the Chicago PMI reading. However, directionally it is not a positive that the forward looking New Orders component slipped to 47.4.

No...I am not on recession watch just yet. But it is easy to be enthralled with market gains and lose sight of the fundamentals required to keep that party on track.

The best thing going for us right now is a robust Q3 earnings season with some of the healthiest positive revisions for the future. On top of that we have a Fed that seems willing to keep lowering rates. And at some point, tariffs will be resolved...and those companies that had hiring freezes will not be so cautious. 

These are solid reasons to remain bullish overall. However, we need to stay on vigilant watch for any other ominous signs of economic deterioration that would increase odds of recession...and odds of severe market downside. You can count on me to do so.

For now, expect more market upside into year end. Hopefully with continued emphasis on value as we have seen in recent weeks. If so, then our portfolio will continue to outperform. 

What To Do Next?

Discover my Zen Investor portfolio that relies upon my 45 years of investing experience. 

During that time I have learned vital lessons from 7 bear markets…8 bull markets and just about everything else the “Mr. Market” can throw at us. 

I use this knowledge to create a detailed investment plan. Then lean into our proven Zen Ratings quant model to select the best stocks given their average annual return of +32.52%. 

In total the Zen Investor portfolio now has 20 top stocks that are hand picked for today’s unique market landscape. 

Plus 3 new stocks I just added in early December with stellar upside potential. 

If you are curious to learn more, and want to see my current top 20 stocks, then please click the link below to get started now. 

Discover the Zen Investor & Top 20 Stocks >

Wishing you a world of investment success!

Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)

Editor of the Zen Investor

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