Stocks performed very well in 2025, as the stock market overcame a significant spring decline and some late-year volatility to post its third consecutive positive year. The springtime bear market was triggered by the aggressiveness and uncertainty related to the Trump administration’s announcement of tari s on imports from other countries. The later-year volatility was caused by concerns that large, artificial intelligence-focused company stocks were becoming overvalued and that the Federal Reserve Board might lower interest rates more slowly than expected going forward. However, although longer-term impacts remain to be seen, investors’ concerns related to tari s, high valuations, and monetary policy ultimately abated enough for the stock market to overcome its initial fears. As a result, the S&P 500 Index ended 2025 up 16.39%, while the Dow Jones Industrial Average gained 12.97% last year. The Bloomberg Intermediate U.S. Government/Credit Bond Index increased by 6.97% during 2025.

Ironically, the same factors that led the stock market to recover from the depths of the early-year decline were the cause of the market’s trepidation later in the year. The enthusiasm surrounding artificial intelligence and the billions of dollars invested in the potential of its emerging technology propelled stock prices much higher over the summer. Later, worries that the artificial intelligence trade became too overheated led investors to sell and take their profits, sending stock prices down. Additionally, the market rose from the April lows to all-time highs as excitement grew over the Fed lowering interest rates. Lower-than-expected inflation and simultaneous concerns about the economy led the Fed to lower rates several times in 2025, as they felt they could do so without risking a meaningful rise in inflation. The Fed also felt that keeping rates too high for too long would be a substantial risk to the economy, particularly the seemingly weakened labor market. However, late-year hawkish comments by some Fed o cials led many to fear that the pace of future rate cuts may be slower than expected. This uncertainty caused the markets to cool o as well.

Despite some negative economic data, such as consumer sentiment indicators and a slowing job market, consumers continued to spend money during 2025, which helped the economy to grow. When consumers spend more money, corporate profits typically increase. Increasing corporate profits usually leads to higher stock prices. One reason consumer spending may have increased last year was due to lower interest rates, which made borrowing easier. Consumer spending makes up approximately 70% of the country’s gross domestic product, underscoring the impact that low interest rates can have on the economy and the stock market.

Although it is positive for stocks and the economy that the Federal Reserve Board has been lowering interest rates, the future direction of the Fed’s monetary policy remains uncertain. Future data surrounding inflation and the economy will play a large role in the Fed’s decision-making. If interest rates do not decline as quickly as investors expect, this could negatively impact the economy and stock prices going forward. Furthermore, some of the optimism surrounding future rate cuts may have already been priced into the financial markets. It will be very important to monitor developments in the Fed’s interest rate policy throughout this year.

Finally, there are continuing concerns that some stocks are overvalued after several years of significant gains and positive corporate earnings. In particular, there is a small group of very large technology companies known as the “Magnificent Seven” that have led the technology and artificial intelligence

boom. These companies have grown so large that they now account for approximately one-third of the S&P 500 Index's market capitalization. If these stocks falter this year, the entire stock market will likely decline, as they carry such a significant weighting in the primary market indexes. It will likely take even better earnings growth from these artificial intelligence stocks this year to support such high prices. Therefore, the stock market may not perform as well this year as it did in the last several years.

Last year, we generally kept our investment philosophy simple by overweighting large-company U.S. stocks while investing very little in small-company stocks, emerging markets, and other volatile asset classes. We did increase our exposure to large, developed country foreign stocks for certain investors. These stocks ended up having a very good year. This year, we may prioritize less volatile, value-oriented U.S. stocks if exposure to riskier areas of the market becomes problematic. We continue to favor short- term bonds over long-term bonds because they provide a better risk/reward profile. We may also add additional exposure to bonds if circumstances warrant it.

As always, we will continue to monitor ongoing economic and financial market conditions. In the meantime, please contact us if you have any questions regarding your portfolio or the financial markets in general.

^{* Index returns were obtained from the Wall St. Journal and Bloomberg on January 1, 2026.}

^{Please remember that past performance may not be indicative of future results. Di erent types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Nadler Financial Group, Inc.), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from Nadler Financial Group, Inc. Please remember to contact Nadler Financial Group, Inc., in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing /evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Nadler Financial Group, Inc. is neither a law firm, nor a certified public accounting firm, and no portion of the commentary content should be construed as legal or accounting advice. A copy of the Nadler Financial Group Inc.’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request, or at www.nadlerfinancial.com.}

^{Historical performance results for investment indices, benchmarks, and/or categories have been provided for general informational / comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment management fee, nor the impact of taxes, the incurrence of which would have the e ect of decreasing historical performance results. It should not be assumed that your Nadler Financial Group, Inc. account holdings correspond directly to any comparative indices or categories. Please Also Note: (1) performance results do not reflect the impact of taxes; (2) comparative benchmarks/indices may be more or less volatile than your Nadler Financial Group, Inc. accounts; and (3) a description of each comparative benchmark/index is available upon request.}