The Headlines This Year Were All About Fear, Anxiety, and Disaster. The Markets Kept Setting Records Anyway. Where Does That Leave You?

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In 2025, danger appeared to be lurking at every turn in the financial news. Aggressive tariff announcements in April rattled trade and supply chains, darkening global forecasts. The rise of AI spurred its own set of concerns about the stock market becoming overconcentrated in tech giants that are taking on increasing levels of debt from opaque “private credit” firms to fund data-center build-outs. The lingering inflation hangover and seemingly frozen housing and hiring environments added to the bad feelings. And it wasn’t just hyperbolic pundits and AI haters doing the worrying: Some pretty big names in the business world have suggested they wouldn’t be surprised by an imminent correction, contraction, or bubble pop.

But the markets don’t seem to have gotten the memo, recovering from April’s lows within a month — and, despite a bit of recent turbulence, closing December in the black across major asset classes. Stocks have rallied, bonds are surprisingly solid, and gold is up 60 percent on the year.

So if your personal financial life feels discombobulated, you’re probably not alone. Against this confusing backdrop, we tackled three questions you might be asking (and some buzzwords you may have heard).

1. Am I overconcentrated?

The AI boom has turned Big Tech into Even Bigger Tech. The “Magnificent 7” (Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla) now account for over a third of the S&P 500’s value. By some measures, it’s an unprecedented era of market concentration. While this has been great for most portfolios, it’s not necessarily ideal in the long term that the market is starting to look like a seven-firm group project.

The risks are elevated for the employees holding options and RSUs at companies with significant market caps. Let’s say you work at Nvidia and get access to its stock purchase plan, which lets you contribute up to 25% of your salary to buy NVDA shares at a 15% discount. On paper, that’s a dream. Nvidia stock was up around 30%  — nearly double the S&P 500’s gains — as of publication time.

But when a few stocks dominate world markets — especially when one of them is your employer’s — their quarter-to-quarter performance becomes quite high-stakes. When Nvidia blew past expectations last month, just about every asset class reacted positively. (Some call this an “everything rally.”) But that also means that if a few Mag 7 members falter, jobs and savings everywhere could be under threat. Which is to say: If you are heavily concentrated in tech, you’re not alone. And you should bear in mind that there are good reasons — related to the empirical benefits of diversification — that a lot of companies have stopped offering their own stock in retirement plans.

2. Should I be moving into cash (or gold)?

Gold is the market’s oldest safe haven — the literally solid asset investors rush to when everything else feels wobbly. And 2025 has given it plenty of runway, from Liberation Day fears about the U.S. abandoning its role as a global economic leader to concerns about the potential collapse of circular funding schemes in semiconductor world. The Fed’s recent interest rate cuts have reduced the relative appeal of bonds, too. 

These factors have all contributed to gold’s 60% year-to-date rise. In a neat trick, the metal has become an asset sought out by those who think disaster may be imminent — including some foreign governments — as well as the kind of meme-loving retail traders who like to jump onto anything that’s going up. Other spooked investors, meanwhile, are building cash piles by selling securities and buying into money-market funds. 

Should you be one of them? Maybe not: As convinced as you might be that a downturn really is coming, it’s worth thinking about the evidence that investors who move money around while trying to predict downturns usually end up hurting themselves. Not every period of high concentration ends with a prolonged market drop; some bull runs are followed by muted corrections and then periods of further growth. Even within the Magnificent 7, not all companies are banking equally on AI revenue or doing the same amount of debt-funded expansion. Long-term investors who stayed invested in a diversified U.S. stock portfolio in 2008 and 2020 in most cases are doing fine today; the fact that the S&P fell 14% as recently as April before reaching a record high in June is a good reminder that “gauging the current mood on Wall Street” isn’t always a great way to do long-term planning.

Regarding cash and gold specifically, past data shows that trying to guess which asset class will outperform in any given year is extremely difficult. Gold’s price was largely flat for nearly three years before it began its recent rise. Putting 100% of your money into tech right now would be a very risky move. But so would taking all your money out of tech.

3. Is the U.S. economy, once again, #1?

One way of looking at this year is that early on investors got collectively very excited about futuristic stuff like AI superintelligence, crypto, and gold ETFs at the same time that they got very worried about the international economic regime that the U.S. government had been stewarding since roughly 1945. (The idea that investors might lose trust in the reliability of U.S. bonds — and in the dollar as a standard currency — sometimes goes by the name debasement.) That story has faded; crypto, which has taken a dive since October, has been one of the few reliable ways to lose money this year. (The Labubu aftermarket has also slowed.) Tariff hostilities have died down, too. For now, we’re back to a conventional-wisdom world where companies are rewarded for earning money in the here and now, Treasury bonds are a reliable source of returns, and old-fashioned dollars are still a good way to do business.

Most Wall Street forecasters are also cautiously optimistic that 2026 could be another good year for U.S. growth — largely on expectations that the Federal Reserve will lower interest rates and this year’s dramatic wave of trade shocks will not be repeated. But keep in mind that economic forecasts often amount to guessing that what’s already happening is going to continue to happen. As Bloomberg put it not too long ago, that “the problem with financial forecasts is they’re usually wrong.” Trends never continue forever, and there are already signs, as we mentioned, that the job market is cooling: Amid high-profile corporate layoffs, hiring managers are becoming cautious and fewer jobs are being posted. That might cascade into slower wage growth and chip away at consumer confidence — leading in turn to less spending and lower economic growth.

So what should you do about the cocktail of optimism and underlying fragility that this market has mixed up? In the end, what’s best for you is probably the same as it’s always been: Control what you can control. Protect your short-term plans by keeping an emergency fund and cash you might need for a major purchase in stable assets; invest everything else for the long haul passively in diversified funds with low fees. And if you’re worried about the headlines, channel it into doing good work and building a strong reputation in your field, because in the end your most reliable source of income is, well, your income. 

Thanks to Anqi Chen of Boston College’s Center for Retirement Research for sharing her insights on company stock plans.