As we begin a new year, we are pleased to report another very successful chapter in our shared pursuit of your most important lifetime financial goals. This week marked the end of an extraordinary era in investing, as Warren Buffett stepped down as CEO of Berkshire Hathaway after 60 years. While his role may be changing, the principles he championed — patience over prediction, discipline over emotion, and ownership over speculation — remain as relevant as ever.
Those same ideas have long guided our approach to planning and portfolio management. Our work continues to focus on goals rather than forecasts, long-term progress rather than short-term noise, and thoughtful decision-making in the face of inevitable market emotion. With that foundation, Frank, Tom, and Lindsey look forward to another year of opportunity, responsibility, and the privilege of serving the families we work with.
In keeping with that perspective, we will begin this year's letter by restating the core beliefs that guide our work and our decision-making. From there, we will offer a few observations on the current economic and financial backdrop before concluding with our expectations for the year ahead.
GENERAL PRINCIPLES
- We invest with the mindset of long-term owners, not short-term participants. Our work begins with clearly defined life goals and is carried out through thoughtfully constructed, broadly diversified portfolios of high-quality businesses and fixed income. Our portfolios are tools in service of your plan, and to the lives that depend on that plan.
- Experience has repeatedly demonstrated that economies cannot be reliably forecast, nor markets consistently timed. Accordingly, we do not seek to predict turning points. Instead, we seek to participate patiently, recognizing that the long-term return of equities is earned only by remaining invested through inevitable and uncomfortable periods of volatility.
- We accept market uncertainty as a permanent condition, not a problem to be solved. For that reason, we do not alter strategy in response to headlines, narratives, or short-term events. When your long-term goals remain unchanged, our discipline in pursuing them remains unchanged as well.
- We have learned that the greatest risk to investors is rarely economic or financial—it is behavioral. Fear during market declines and enthusiasm during periods of success are equally dangerous. The most durable advantage an investor can cultivate is the ability to remain rational, patient, and intentional when others are not.
CURRENT COMMENTARY
In 2025, the broad equity market completed its third consecutive year of double-digit returns, supported by a strong economy and meaningfully higher corporate earnings. The S&P 500 finished the year up 16.39% .
Looking ahead, the consensus of analyst forecasts calls for even stronger earnings growth, approaching 15% annually in both 2026 and 2027 . Somewhat remarkably, profit margins have continued to expand, reaching 13.1% in the third quarter of 2025, the highest level in 15 years. One might reasonably have expected inflation in input costs, combined with consumer resistance to further price increases, to present a significant headwind. Thus far, at least, that expectation has proven incorrect.
The one notable soft spot in the economic picture has been the labor market, which has continued to cool. Yet even here there is an important and constructive offset. Strong economic growth combined with a relatively flat employment base has driven solid gains in per-capita productivity. While the unemployment rate has recently ticked up to 4.7%, most of the workforce is producing significantly more output per hour. This productivity improvement allows companies to raise wages without necessarily reigniting inflationary pressure.
Monetary policy has also turned meaningfully more accommodative. Following six consecutive rate cuts, Federal Reserve policy now stands approximately 175 basis points looser than it did a year ago, despite CPI inflation that remains sticky near the three-percent level. It seems reasonable to expect that the lagged effects of this easing will begin to be felt more fully as we move through 2026.
Fiscal policy may offer a near-term boost as well. American taxpayers — particularly those in the middle class — are poised to receive tax refunds this filing season that have been estimated at roughly $150 billion, representing about a half-percentage-point contribution to GDP. The primary drivers are a higher standard deduction and the temporary restoration of the SALT deduction cap to $40,000 from $10,000. Taken together, these represent a meaningful, if likely temporary, economic tailwind.
It would not surprise us if much of the foregoing came as news to you with the exception, of course, of the softening labor market, which has been widely emphasized in the financial press. It bears remembering that much of the economic and financial "news" we consume is intentionally skewed toward the negative, as agitation and alarm command attention.
At the same time, a strongly rising equity market may (and arguably does) already reflect much of this favorable data, and perhaps more. Accordingly, the dominant market concern of the past year became "Are we in an AI bubble?" This replaced the prior year's question "When and by how much will the Fed cut rates?", which in turn replaced the 2023 question "Will there be a recession?" As it turned out, there was no recession, but that is beside the point.
The larger lesson is that the market's prevailing "burning question" is very often the wrong question altogether, and almost always a distraction for the well-diversified, long-term investor.
There is no question that today's equity market is more heavily concentrated in a small group of very large technology companies — companies that cannot all emerge as dominant winners in the race to commercialize artificial intelligence — than at any point in our investing lifetimes. This elevated concentration has coincided with a market valuation that sits near historical extremes. We noted these conditions a year ago, and they are as notable today as they were then.
Our response to this reality remains twofold. First, valuation has never been, and will never be, a reliable market-timing tool. Second, disciplined portfolio design and rebalancing — which entails trimming what has become expensive and reinvesting in areas offering greater relative value — addresses this risk directly and constructively.
The next significant market shock is most likely to arise from an "unknown unknown," rather than well-recognized concerns such as valuation levels or fiscal imbalances. Like past shocks, whatever form it takes will have little to do with our long-term plan, except as a potential source of opportunity.
We continue to follow an approach that has worked, over long periods of time, by helping investors like us achieve their most important financial goals. We do not accept the notion that "this time is different," regardless of what "this" may be in any given cycle. We do not adjust strategy to accommodate the fears or fads of the moment. We do not retreat to cash during periods of market stress, nor do we concentrate portfolios based on narratives of "new era" miracles, artificial intelligence included.
LOOKING AHEAD
As we look toward the year ahead, we believe the principal risk facing investors is not an imminent recession or a sudden shift in monetary policy. It is the gradual erosion of caution that tends to follow extended periods of success. Reflecting on the wisdom and investing insight of Warren Buffett—arguably the most successful investor in history—is a good place to start. After years of unusually strong returns and no broad, sustained market decline, it becomes easy to forget that investing necessarily includes both winning and losing.
In environments like this, recent history can quietly distort judgment. As prices climb and confidence builds, risk can feel as though it is receding. In reality, the opposite is true. The higher prices go, the lower expected returns become and the greater the risk an investor accepts; the lower prices go, the higher expected returns become, and the lower long-term risk tends to be. This inverse relationship between price and opportunity is central to sound investment thinking, even though it runs counter to common intuition.
Warren Buffett spent over six decades reminding investors of this uncomfortable truth, emphasizing that success in investing is rarely about intellect and almost always about behavior. As he put it succinctly:
"Be fearful when others are greedy, and greedy when others are fearful."
Today's environment presents a particularly subtle test of that discipline. As concerns about an imminent "AI bubble" fade and market advances become familiar, the emotional challenge shifts from fear to expectation. Newer investors, especially, may come to believe that gains are simply what markets deliver and that safety lies in owning more of whatever has most recently performed best. Over time, this can quietly undermine commitments to diversification, asset allocation, and rebalancing.
This tendency has a name: performance-chasing. When an investment is appealing primarily because it has already risen sharply, the decision is anchored in price movement rather than value or future return potential. History shows that few habits are more reliably harmful to long-term outcomes. As Buffett observed many decades ago:
"The investor of today does not profit from yesterday's growth."
That insight becomes more important as prices rise. Past gains are already embedded in current valuations; buying at elevated prices means accepting lower forward returns as the trade-off. This does not make markets unattractive or dangerous, but it does make discipline, diversification, and rebalancing increasingly important as prices move away from underlying value and cash flows.
Rebalancing is often most effective precisely when it feels least comfortable. It requires trimming what has performed extremely well and reallocating toward areas that have lagged, where prices are lower and expected returns higher. "Buy low, sell high" remains as true as ever, even if familiarity with success makes it emotionally difficult.
None of this implies pessimism about capital markets. We remain confident in the long-term wealth-building power of equities, the adaptability of American enterprise, and the progress driven by innovation and productivity. What we reject is the idea that optimism excuses a lapse in discipline. Rising prices do not reduce risk, and popular narratives cannot repeal the relationship between price and expected return.
To be clear, we are not forecasting outcomes, neither a decline nor a continued advance. Forecasting presumes knowledge of what comes next; we don't believe that knowledge is attainable with consistency. What is attainable is preparation: aligning portfolios with long-term goals, respecting valuation, rebalancing with intention, and allowing time to do the compounding.
That, ultimately, is why we write. Periods of volatility and uncertainty are not interruptions to long-term plans; they are often the source of opportunity. As Buffett once noted,
"Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold."
The task is not to predict those storms, but to maintain an investment philosophy capable of capitalizing on them. Investing has never been about avoiding discomfort. It has been about avoiding permanent mistakes—and those mistakes are more often made in periods of overconfidence than in moments of fear.
That understanding — the tension between price and value, risk and return, patience and temptation — has guided successful investors across generations. It has guided our work for decades, informed in no small measure by the enduring wisdom of Warren Buffett, and we believe it will continue to guide our work for clients for many years to come.
Acadium Financial Partners doesn't measure a year only by returns. We measure it by the number of good decisions made quietly, by the conversations that kept clients on course, and by the plans that moved another step closer to the goal. That's the work we love. If someone in your circle needs a calm place to think through their finances, point them our way and we will do our very best to help them.
Thank you for your trust. Serving you is the privilege of our professional lives.
Frank Hujsa, CFP®, CLU®, CEPA®
Partner, Acadium Financial Partners
27499 Riverview Center Blvd, Suite 108
Bonita Springs, FL 34134
Lindsey Hansen, CFP®, CPWA®
Partner, Acadium Financial Partners
3601 PGA Blvd, Suite 301
Palm Beach Gardens, FL 33410
Thomas Udovich, CFP®
Partner, Acadium Financial Partners
3601 PGA Blvd, Suite 301
Palm Beach Gardens, FL 33410
Any opinions are those of Frank Hujsa, Lindsey Hansen, and Thomas Udovich and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. The information contained in this letter does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Securities offered through Raymond James Financial Services, Inc. member FINRA/SIPC. Acadium Financial Partners is not a registered broker/dealer and is independent of Raymond James Financial Services. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc.
Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance does not guarantee future results. Keep in mind that individuals cannot invest directly in any index. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals to successfully complete CFP Board's initial and ongoing certification requirements.
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