Winter 2025 Investor Letter: A Broadening Market
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Just as the investment theme in 2024 was centered on the Magnificent 7 group of stocks, this carried over into most of 2025. This past year this same group of seven companies accounted for 42% of the S&P 500 Index return. As reported by S&P Dow Jones Indices, the total return for the S&P 500 Index in 2025 equaled 17.88%, and excluding the Mag 7 stocks, the index’s total return equaled 10.36%. The S&P 500 Index is capitalization weighted, which means the larger companies account for more of the weight in calculating the index’s return.
As we discuss in our quarterly Investor Letter not one of the Mag 7 stocks was in the top 10 for performance in 2025 though. As 2026 is getting underway the equal weighted S&P 500 Index (RSP) is outperforming the cap-weighted S&P 500 Index, 3.21% versus 1.73%, respectively. Additionally, evidence of a broadening market is also noted by smaller companies outperforming their larger counterparts. Year to date the Russell 2000 Index is up +6.09% versus the S&P 500 Index up +1.73%. Also seeing continued outperformance are international markets.
More of our thoughts on the year ahead are contained in the Winter 2025 Investor Letter.
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