Despite the economic uncertainty over the past 12 months, the S&P 500 still posted a strong 17.51% gain. As a market cap-weighted index, its performance was driven by tech giants like Apple, Microsoft, Amazon, and Google. In contrast, the equal-weighted S&P 500—where each stock carries the same weight—returned 7.66%, reflecting the average stock’s performance.
The gap highlights the dominance of large-cap growth companies, also captured by the NASDAQ 100, which surged 23.66%. In the last ten years, these companies have been the dominant contributor to the returns of the S&P 500 and continue to lead market gains by leveraging technology for rapid growth and profitability. Socha Financial Group’s portfolios benefited from this trend, with strong exposure to both the S&P 500 and NASDAQ 100, and limited allocation to equal-weight strategies.
Since the launch of ChatGPT in March 2023, AI has rapidly reshaped industries. These technologies demand immense computing power which is something only recently made possible by Nvidia’s advanced chips. Building the infrastructure requires massive capital investment, and the ‘Magnificent Seven’—Nvidia, Microsoft, Apple, Amazon, Google, Meta, and Tesla—are leading the charge.
Corning Incorporated is also benefiting from the AI boom, as its fiber optic solutions support the global data surge. The market has taken notice—Corning’s stock soared 85.61% over the past 12 months.
From an economic perspective, strong corporate earnings and positive market returns suggest the U.S. economy remains resilient. Since 2023, equity markets have hit record highs. While we maintain a positive outlook, we recognize that much optimism is already priced in, and future gains may moderate.
Key economic drivers include tariffs, capital investment, government debt, inflation, and interest rates. The current administration is using tariffs to encourage domestic manufacturing and reduce the budget deficit. Historically, low U.S. tariffs benefited consumers but hurt domestic producers. The new strategy aims to level the playing field and attract investment.
Apple’s $2.5 billion commitment to manufacture all iPhone and Apple Watch cover glass in the U.S. is one example. Tariff revenues, estimated at $150–$220 billion, are intended to help offset the deficit without raising taxes. While tariffs can fuel inflation, the impact thus far has been modest as shown by the Fed’s rate cut in September, yet the long-term impact is still unknown.
Our organization remains cautiously optimistic about U.S. equities but emphasizes the importance of diversification. Markets are volatile—the S&P 500 rose 17.51% over the year but also experienced an 18.56% drop from February to April amid tariff uncertainty. Diversification helps cushion such downturns and can be achieved by the incorporation of investments, which tend to be more resilient during equity market sell offs, and can provide better risk reward balance over extended periods of time.
While traditional bonds are effective for downside risk protection, we also incorporate alternative investments chosen for their low correlation to equities to help enhance portfolio resilience, diversification, and performance. Since implementing our new strategy in Q4 2024, portfolios are performing as intended.
In addition to economic change, the passage of the One Big Beautiful Bill Act (OBBBA) brings about significant modifications to prior tax legislation. This new legislation introduces a range of tax updates—including adjustments to standard deductions, the expiration of certain credits, increases to SALT (State and Local Tax) limits, and more.
We have sent a series of brief updates highlighting key provisions of the bill and what they might mean for your individual situation. Our goal is to help you stay informed and well-prepared as these changes take shape. Please be mindful that there could be delays this tax season as new forms and schedules must be developed and implemented within the tax software.
If you have not already, we invite you to schedule a time with your advisor to review the specific details of your portfolio, tax situation and how it aligns with your financial goals.
All our best,
The Socha Financial Group Team
View PDF: Third Quarter Commentary 2025
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