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It’s been a great year for investors and I hope you’ve made a lot of money this year!

As we head into the final stretch of the year, the stock market’s momentum shows little sign of slowing. Yes, there are plenty of smart people saying the market is overvalued and due for a pullback.

And they may be right!! (Eventually)

But heading into the end of the year, the market is riding on a powerful combination of psychological, institutional, and seasonal forces likely to propel stock prices higher through year-end.

The Fear of Missing Out is Real

The major stock market indices have posted substantial gains, with the tech-heavy Nasdaq leading the charge.

For investors who have been fully participating, it’s been an exciting ride! But for those who have been cautious, sitting on the sidelines, or maintaining defensive positions, the pain of underperformance is becoming acute.

This is particularly true for institutional investors — who’s careers rely on outperforming the market. (Or at the very least keeping UP with the market.)

As we head into the last two months of 2025, investor sentiment is dominated by one emotion: the fear of missing out.

After watching the market grind higher month after month, even skeptical investors are beginning to capitulate. The regret of missing further gains is proving more powerful than the fear of a potential pullback.

This FOMO dynamic creates its own momentum. As more investors pile in, afraid of being left behind, their buying pressure pushes prices higher, which in turn attracts more buyers. It’s a self-reinforcing cycle that can persist far longer than fundamental analysis might suggest.

The Institutional Imperative

Professional money managers now face an urgent calculus as 2025 to a close. For institutional investors, performance isn’t just about pride—it’s about survival.

Fund managers are measured against benchmarks and peers. In a year when the market is up significantly, being underinvested or underperforming isn’t just disappointing… it’s career-threatening.

Investors in mutual funds, pension boards and endowment committees don’t want to hear excuses about why their managers were cautious when competitors were making money.

Portfolio managers who significantly underperform risk losing assets under management, bonus compensation, or even their jobs.

This creates what I’m calling the “institutional imperative”: professional investors simply must keep up with the market, especially as the calendar year winds down.The only way to do that NOW is to buy what’s working… and what’s working is the largest, most liquid stocks that have been driving the market higher.

Big Tech: The Engine of This Rally

The primary beneficiaries of this dynamic are clear: the mega-cap technology stocks that have powered this bull market. Companies like Apple, Microsoft, Nvidia, Amazon, Alphabet, and Meta have been the dominant force in 2025, just as they were in recent years.

These aren’t random winners. They’re the companies with the strongest narratives around artificial intelligence and digital transformation. They’re also the most liquid names in the market, meaning institutional investors can deploy significant capital without moving prices too much.

When fund managers need to put money to work quickly (and they DO, as we approach year-end), they buy the stocks with the deepest liquidity and the strongest momentum.

That means Big Tech.

Why This Rally Should Continue

Several factors suggest this pattern should persist through December:

Tax considerations prevent selling. Investors sitting on substantial gains face a powerful disincentive to sell before year-end: doing so would trigger tax liabilities that must be paid in April.

Why realize those gains now when you can defer the tax bill by holding for a few more weeks into 2026? This tax-timing consideration is especially relevant given the magnitude of gains many investors are sitting on after such a strong year.

November’s seasonal strength is real. Historical market data shows that November is consistently one of the strongest months of the year for equities. This seasonal pattern is particularly pronounced when the market is already higher on a year-to-date basis… exactly the situation we find ourselves in now.

Markets tend to hold positive momentum heading into the holidays, and there’s little reason to think 2025 will be different.

The path of least resistance is higher. In trending markets, inertia matters. The trend is your friend until it isn’t, and right now, the trend is firmly bullish.

Fighting that trend requires either perfect timing or a strong stomach for underperformance. Most investors (professional and retail alike) will simply choose to ride the wave.

The 2026 Problem

Okay, here’s the darker side of my bullish take on our current market…

As compelling as the near-term bull case is, it’s important to also think about the challenges that will emerge early next year.

Once the calendar flips to 2026, the dynamics that are supporting the market now could reverse quickly. Investors who have held through year-end to defer taxes may decide January is the perfect time to take profits.

After all, they’ll have another full year before those tax bills come due.

More fundamentally, valuations are becoming stretched… The mega-cap technology stocks that have led this rally are starting to look expensive relative to their earnings. And after investing hundreds of billions on AI infrastructure, there is a major risk that the AI payout may be disappointing or may simply take longer than expected to materialize.

When market leaders become overvalued, these particular stocks typically need to take a break.

The question is: which stocks will up the slack?

If Big Tech pauses or corrects, which sectors or stocks will be able to sustain the broader market’s upward trajectory? That’s the question without a clear answer right now, and it’s why the early 2026 outlook is murky at best.

Positioning for the Transition

Given this bifurcated outlook (bullish near-term, cautious longer-term) how should we position our investments?

The answer is nuanced…

For the remainder of 2025, it pays to follow the trend. Stay invested in the stocks and sectors that are working. Don’t fight the tape when momentum, seasonality, institutional flows, and tax considerations are all aligned in the same direction.

The bullish plays that have driven this market higher are likely to continue doing so through December.

However, our positioning will shift heading into year end. Many of the extended and expensive tech stocks are likely to pull back in early 2026. This creates some unique opportunities to profit from falling stocks early next year.

My Speculative Trading Program has the ability to profit from both rising stocks and from falling stocks. And in the past, many of my largest (and quickest) profits have come from buying puts on stocks that are poised to trade lower.

From this point, my goal is to participate in the year-end rally while also adding some insurance against the potential volatility and profit-taking that could emerge in early 2026.

Think of it as having your cake and eating it too… riding the momentum this year, while preparing for a different market environment ahead.

The Bottom Line

The stock market’s strength in 2025 has been impressive, and the forces that have driven it higher aren’t exhausted yet.

FOMO, institutional imperatives, tax considerations, and seasonal patterns all point toward continued gains through December.

But this isn’t a time for complacency. The very factors supporting the market now (stretched valuations in mega-cap tech, universal bullishness, and the need for institutional performance-chasing) are the same factors that could lead to a major pullback once we turn the calendar to 2026.

For now, the message is clear: don’t fight the trend.

Stay positioned in the names that are driving this market higher. But keep one eye on the exit, because the transition from year-end strength to early-year weakness could happen faster than most expect.

The bull case for November and December is compelling. The question is whether you’re positioned not just to capture those gains, but to protect them when the tide inevitably turns.

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