2025 Third Quarter Commentary Report
Market Review
Global Market Performance
Global equities steadily appreciated to record highs in the third quarter despite a softening job market. Trade deals with Japan, the European Union and the United Kingdon helped propel the markets higher. Within the US market, small companies outperformed.
U.S. Stocks: +8.18%
International Developed Stocks: +5.33%
Emerging Markets Stocks: +10.64%
Global Real Estate Stocks: +4.22%
Bond Markets
Bond prices also appreciated as yields fell. Inflation moderated slightly, moving from 3.1% to a 2.7% rate. The Federal Reserve cut interest rates in September for the first time since December and indicated more cuts were coming. Excepting Canada, interest rates increased slightly abroad.
· U.S. Bond Market: +2.03%
· Global Bonds (excluding the U.S.): +0.49%
The third quarter ended with a government shutdown as Congress was unable to reach a funding agreement. History suggests this is no cause for concern. Since 1981, there have been eleven government shutdowns, with four lasting five days or more. The US market ended higher for three of them and flat for the other.(1)
With the markets up, we continue to rebalance portfolios. We are finding that capital gains for taxable accounts may be a little above normal, however, capital gain distributions are expected to be negligible.
Planning Perspective
The Tax Cuts and Jobs Act of 2017 created a rule that allows up to $10,000 to be withdrawn from a 529 plan for K-12 tuition. It is up to each state to allow or disallow this. Most states give a tax deduction for 529 contributions. If you pay K-12 tuition, one could simply deposit and withdraw the $10,000 and pick up the state tax deduction. The recently enacted One Big Beautiful Bill Act of 2025 increases this amount to $20,000, starting in 2026.
The main reservation people have for saving in 529 plans is what to do with the funds if children don’t go to college. In an effort to encourage saving in 529 plans, Congress allowed 529 funds to be rolled into a Roth IRA with the SECURE 2.0 Act in 2022. As usual, there is some fine print. Annual contribution limits apply but there is no income limitation. There is a lifetime limit of $35,000, the account must be open for fifteen years, and the funds have to be in the 529 for five years. This makes it important to go ahead and open an account to get the clock started. We’ve done a few of these 529 to Roth rollovers and the process is straightforward.
As we move toward year-end, we’re evaluating planning opportunities, including charitable stock gifting, partial Roth conversions, and tax-loss harvesting to offset realized gains. For those taking Required Minimum Distributions (RMDs) from retirement accounts, we’ll be in contact over the next few months to make sure they are distributed.
Personal Perspective
There’s an old saying that growth lies just outside your comfort zone. I may have taken this a little too literally when I signed the office up for a “team building” backpacking trip: three days and two nights of discomfort in the backcountry of Pisgah National Forest in Western North Carolina. It featured seventeen miles of hiking and a few thousand feet of elevation change. I’ve done a fair amount of backpacking, but for Diane, Abby, and Grainne, it was a new experience.
There’s a bit of a learning curve one must overcome the first time they go backpacking. We got a late start the first day and found ourselves setting up camp about five miles deep. We were all fumbling around setting up tents and inflating sleeping pads as the sun began to set. After dinner, Abby and Grainne provided the entertainment, spending at least an hour trying to get all their food to fit into their bear bin. We used extra Nalgene bottles for what couldn’t fit and settled in for what was bound to be a chilly evening. (Pro tip: if you put boiling water in a Nalgene bottle and throw it in the bottom of your sleeping bag, it’ll warm you right up.) Around 1 AM, a few coyotes started howling; a sound both slightly terrifying and beautiful. The second day was about a seven-mile hike summitting Black Balsom and Devil’s Courthouse and camping along Flat Laurel Creek. The third day, just five more miles to “extraction.” We had some great people in our group and met others along the way. They all decided that my wife is a very wise woman; not just for declining my invitation to join, but for packing me a few bars of chocolate in case anyone got cranky.
You can tell a great deal about a person by how they face adversity. We were all happy campers, taking it in stride (pun intended). I heard mostly laughter and giggles about the ridiculousness of sleeping on the ground in the middle of the woods and hiking seventeen miles with thirty pounds on our backs just for the “experience.”
I can’t say I converted anyone to backpacking. But it does make you realize what we take for granted: warm showers, cheeseburgers, chairs… As we move into the holidays, let’s not forget how fortunate we truly are. We live in a beautiful world, coyotes and all. Best to go out and enjoy it.
Myles B. Brandt, M.S., CFP®
Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio.
Market segment (index representation) as follows: US Stock Market (Russell 3000 Index), International Developed Stocks (MSCI World ex USA Index [net dividends]), Emerging Markets (MSCI Emerging Markets Index [net dividends]), Global Real Estate (S&P Global REIT Index [net dividends]), US Bond Market (Bloomberg US Aggregate Bond Index), and Global Bond Market ex US (Bloomberg Global Aggregate ex-USD Bond Index [hedged to USD]). S&P data © 2025
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