The first Friday of a new quarter means it’s time for our review of the third quarter of 2025—what I’m calling On Point Perspective.
In a world overflowing with “breaking news” and endless commentary, it’s easy to lose perspective. But success in investing almost always comes down to the ability to filter out the noise and keep your perspective on point.
I may be biased (I surely am), but this may be my favorite On Point Perspective so far.
If nothing else, there is clearly a lot to be positive and optimistic about. I believe, at my core, that optimism is required for successful equity investing. I hope I’ve encouraged that optimistic viewpoint here while still also addressing a few notable concerns.
As always, I welcome your candid feedback.
In the meantime, enjoy the weekend ahead!
Let’s dive in. 🤿
TL;DR
Markets were strong again in Q3. Consumers are healthier than the news implies. Companies continue to mint profits. The Fed finally cut (a little). Valuations are rich, so discipline matters… but the long-term story of human progress remains the real perspective.
📈 First, the Returns… (YTD through 9/30 unless noted)
Stock Indexes
- S&P 500: [ +14.83 ]
- Dow Jones Industrials: [ +10.47% ]
- U.S. Small Cap: [ +8.81% ]
- International – Developed: [ +26.77% ]
- International – Emerging Markets: [ +22.51% ]
Bond Indexes
- U.S. Aggregate Bond Index: [ +5.96% ]
- U.S. Government Bond Index: [ +5.06% ]
Translation: Broadly good, again. Diversification helped, again. 🙂
👥 The State of the Consumer
Net worth at a record.
Households (and nonprofits) added $7T last quarter to reach $176T, while liabilities barely budged. Household leverage is near a 60-year low—that’s rare air. (Source: First Trust)
Mortgage rate relief.
Rates slid to an ~11-month low heading into the Fed’s cut, and the Fed expects more cuts ahead. That doesn’t guarantee cheaper mortgages tomorrow, but the wind direction helps affordability. (Source: AP News)
Cooling jobs market.
Fewer openings and a tick up in unemployment likely mean slower wage growth—not great for workers, but it can reduce pressure on inflation. (Source: Apollo)
🏢 The State of the Companies
Profits & margins high—and rising.
A softer labor market + ongoing efficiency = a tailwind for earnings (all else equal). Shareholders benefit when great businesses get more productive. (Source: Sam Ro)
Record buybacks.
Companies are on pace to repurchase $1.1T+ of their own shares—an all-time high. Price paid matters, but fewer shares outstanding generally boost each owner’s slice.(Source: USA Today)
📊 The State of Investing
The Fed (finally) cut—by 0.25%.
It took until September to see another cut after December 2024. Forecasts for 2025 were overly confident (shocker). The base case now: a couple more quarter-point cuts by year-end. Hold forecasts lightly. (Sources: 2025 Rate Expectations: Forbes; 2025 Recent News: Brew Markets)
Valuations are elevated.
Full stop. But elevated ≠ un-investable. A decade ago looked “expensive,” too, and quality + innovation (hello, A.I.) surprised to the upside. Process over predictions. (Source: Sam Ro)
Staying the course worked (again).
From a nearly −18% drawdown Jan–Apr to +14% YTD now—blink and you miss the rebound. This is why we don’t turn portfolios into panic buttons. (Source: Callie Cox)
Plenty of quiet positives.
Lower policy uncertainty, firmer consumer expectations, rising capex, more lending, fewer bankruptcies, and near multi-decade-high business formations. The macro backdrop is better than the headlines suggest. (Source: Apollo)
🌍 Two Reasons for Optimism
Fewer kids in extreme poverty.
Down to 412M in 2024 from 507M a decade earlier—~26,000 kids lifted out of extreme poverty every day for 10 years. Read that again. (Source: World Bank)
Feeding 8B people is getting easier.
Record-high global harvests and falling staple prices thanks to relentless productivity. Modern agriculture remains an overlooked miracle. (Source: Human Progress)
Final Thoughts
No one knows the next headline. But we can know our plan. The perspective is that human ingenuity keeps compounding, businesses keep solving problems, and patient investors keep getting paid for owning them. That’s the game worth playing.
If this raised a question—or if life has changed and your plan should, too—send me a message. It’s my pleasure to help you keep your perspective on point.
Ben