The Danger of a Hurricane-Free Year
Last year, Florida experienced something unusual. For the first time in roughly a decade, the state went through an entire hurricane season without a named storm making landfall. In fact, no hurricane made landfall anywhere in the United States during 2025, the first such occurrence since 2015.
Most Floridians viewed that as good news, and of course it is.
Yet there is also a sense in which a hurricane-free year can be dangerous. Not because hurricanes become more likely, but because complacency becomes more likely. A hurricane-free year does not increase the probability of a hurricane, but can increase the probability that people will be unprepared when one arrives.
Anyone who lived through Ian remembers how differently people thought about hurricanes in the months that followed. Insurance coverage received more attention, generators were serviced, roofs were inspected, and emergency plans were reviewed. The possibility of another storm felt immediate because the consequences of being unprepared were still fresh in everyone's mind. As time passes, however, that heightened awareness gradually fades. A series of quiet hurricane seasons can create the impression that extensive preparation is no longer necessary, even though the underlying risk has not changed.
Investing presents a remarkably similar challenge.
A Curious Finding
Each year, an independent research firm called DALBAR publishes a study that attempts to measure the impact of investor behavior. Specifically, it compares market returns with the returns actually earned by investors, helping to quantify the cost of emotional decisions, poor timing, and deviations from long-term plans. Historically, the study has found that investors often underperform the investments they own because they buy, sell, and alter their portfolios at precisely the wrong moments.
The most recent report produced an unusual result. During 2025, the average equity investor earned 17.16%, compared with 17.88% for the S&P 500. The resulting gap of just 0.72% was one of the smallest observed in decades and the lowest since 2012.i
At first glance, this appears to be entirely positive news. Many observers have interpreted the result as evidence that investors are becoming more disciplined.
Perhaps they are. But there may be another explanation worth considering.
A Forgiving Market
One of the more interesting details in the DALBAR report is that investors continued to withdraw significant amounts from equity funds throughout the year. Yet despite those withdrawals, investor returns remained remarkably close to market returns.ii
In other words, the unusually small behavior gap may not reflect the absence of emotionally driven or poorly timed decisions. It may simply reflect a market environment that imposed relatively few consequences for those decisions.
This is very different from what occurred during periods such as 2008, 2020, or 2022. During those environments, emotional decisions often carried substantial costs. Investors who abandoned long-term plans frequently missed powerful recoveries, producing the large behavior gaps for which the DALBAR study has become known.
By comparison, 2025 appears to have been a relatively forgiving year. Investors who made less-than-perfect decisions often experienced outcomes that remained reasonably close to those enjoyed by investors who maintained greater discipline.
That is certainly welcome news, but it contains an important lesson.
When Risk Becomes Invisible
Most investors associate risk with difficult markets. Bear markets feel risky. Recessions feel risky. Periods of heightened uncertainty feel risky.
Yet some of the most consequential investment mistakes occur during periods that feel perfectly safe. The reason is straightforward. Difficult environments make risk visible. Favorable environments often conceal it.
Consider again the homeowner who experiences five or ten consecutive years without a significant storm. As memories of past hurricanes begin to fade, preparedness often receives less attention. Insurance coverage that once seemed appropriate may go unreviewed. Maintenance projects become easier to postpone. Emergency plans become outdated. None of these decisions appears reckless in isolation. In fact, most seem entirely reasonable at the time.
The danger is not that hurricanes have become more likely. The danger is that a long period of calm has made preparation seem less necessary.
And by implication:
The danger is not that markets have become more risky. The danger is that favorable markets have made riskmanagement seem less necessary.
After several years of strong returns and relatively few consequences for poor decisions, diversification can begin to feel unnecessary, risk management can appear overly cautious, and long-term plans become easier to second-guess. Investors may gradually conclude that the disciplines which protected them in the past are no longer required.
History suggests that many significant investment mistakes begin not with fear, but with confidence. They occur when favorable outcomes convince investors that risk has diminished, when in reality only the evidence of risk has diminished.
The Real Lesson
The most important lesson of the 2025 DALBAR study is not that investor behavior no longer matters. If anything, the lesson may be exactly the opposite.
The unusually small behavior gap serves as a reminder that not every market environment tests discipline equally. Some years expose mistakes immediately. Other years are far more forgiving. Unfortunately, we rarely know which type of year we are experiencing until after it has passed. This is why successful investing depends more upon preparation than prediction.
We cannot forecast the next bear market any more than we can forecast the path of next year's hurricane season. What we can do is maintain a plan designed to withstand both favorable and unfavorable conditions.
A hurricane-free year is something to celebrate. So is a year in which investors largely avoided the costly behavioral mistakes that have historically reduced long-term returns. Neither, however, should be mistaken for a permanent condition.
After all, the purpose of hurricane insurance is not to prove its value during calm weather, and the purpose of a disciplined investment strategy is not to prove its value during easy markets.
The greatest threat to long-term success is rarely the storm itself. More often, it is the belief that a long stretch of sunshine has made preparation unnecessary.
Frank Hujsa, CFP®, CLU®, CEPA®
Partner, Acadium Financial Partners
27499 Riverview Center Blvd, Suite 108
Bonita Springs, FL 34134
Any opinions are those of Frank Hujsa and are 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.
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i https://www.linkedin.com/posts/the-2026-qaib-report-is-now-available-at-share-7450940582329462785-wAH9/
iiii https://briefglance.com/companies/dalbar-inc/pulses/35700