As I often say, investing can be simple—but that doesn’t make it easy.
In 2025, investors were tested early and often: stocks flirted with bear-market territory in April, policy noise out of Washington rattled confidence and the market’s narrow obsession with artificial intelligence showed signs of fatigue.
Those who stayed disciplined—tuning out the noise and remaining invested—were ultimately rewarded. Not only did markets recover, but leadership also began to broaden beyond the same handful of mega-cap tech stocks, offering a timely reminder that patience and diversification still matter.
The so-called Magnificent Seven still delivered strong results—the Roundhill Magnificent Seven ETF (MAGS) outpaced 500 Index (VFIAX) 23.0% to 17.8%—but their grip on the market loosened.
Consider Vanguard’s best-performing U.S. stock fund last year: PRIMECAP Core (VPCCX), up 30.2%. The fund has long been underweight the Mag-7, yet it thrived as performance spread beyond the usual suspects.
So let’s review the investment year that was—what worked, what didn’t and what 2025 reminded us about investing—using Vanguard as our lens.
As always, I’ll also check in briefly on my Portfolios. (You can find a full rundown of their ups and downs here.) And if you’re looking ahead, you can find my Outlook for 2026 here.
A Year When Everything Worked
While 2025 turned out to be a profitable year for investors, it didn’t feel that way early on.
The Trump administration’s shift in policy—particularly on tariffs—sent traders scrambling in the first quarter. By early April, 500 Index was flirting with bear-market territory, down nearly 20% from its prior high.
Then the tone changed.