The Dividend Cafe - Monday - December 22, 2025

Episode Date: December 22, 2025

Today's Post - https://bahnsen.co/4pUysvR Final Dividend Cafe of 2025: Year-End Market Recap and Outlook for 2026 In this final Dividend Cafe of 2025, David Bahnsen reviews key economic data points and market trends, including the performance of major indices and sector highlights. The discussion covers the lack of seasonality in market movements, updates on bond yields, and the significance of periodic portfolio rebalancing. The episode also touches on public policy issues related to data centers and provides insights on midstream energy sectors. David announces the upcoming annual 'year behind, year ahead' white paper and his ongoing book project on dividend growth investing. The session concludes with a look ahead to the first Dividend Cafe of 2026 and encourages listeners to read further on topics like gold as an inflation hedge. 00:00 Welcome to the Final Dividend Cafe of 2025 00:43 Recap of the Year and Upcoming Plans 02:44 Market Updates and Trends 06:29 Public Policy and The Fed 07:28 Energy Sector Insights 08:39 Looking Ahead to 2026 Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Welcome to the Dividend Cafe, weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. Hello and welcome to the final Dividendon Cafe of 2025. I mentioned on Friday from New York, that was our final Friday Dividendon Cafe of the year. And I really do want to direct any of you who did not listen to it, watch it, or see it yet on video. whatever your chosen medium is, to check that out, I went through the last 25 years, the first 25 years of this new century, and basically tried to use the entire quarter century that we've gone through to make one single investment point that I think is profound and perhaps the most

important investment point anyone can focus on now. So that was our final Friday Diven Cafe. And today, I'm just going to do a very quick recap. There really is not a lot to go through. We're very, very limited on economic data points. I'll give a quick update on the Fed and a couple little policy comments, market comments, but there's not a lot to cover. And then we're going to leave you alone through the holiday week and into New Year. I will be off next week writing the whole week, our annual year behind, year ahead, what we refer to as a white paper.

But it's going to be the first Dividy Cafe of 2006 on that Friday, which I believe is January 9th, that'll come out. And it's really a very special tradition for us. I've been doing it now for, oh, my God, I think it's 15 years maybe. It's around there, 13 or 14 at least. And I want to go through and report card all of the kind of themes and things we brought up last year about what 2025 would be. And now that we have the gift of a year's hindsight, we're going to look at all that and then do the same for 2026. So that'll come out on the first Friday, January 9th, into our real New Year launch.

And then in the meantime, I do have a little bit of other writing to do next week as well because I am writing a book that will come out in the middle of 2026, updating a significant look at dividend growth investing. And my deadline on my publisher is February 1. So I have a lot of writing to do. But it's going to be a really special book, I think, capturing a significant. amount of our outlook on investment, on how we think about allocating capital, updating a lot of the argumentation around dividend growth investing, and then looking at it specifically

relative to other methodologies, other ways of thinking about risk asset investing and try to, again, extract what we think are the best arguments for what we do here at the Bonson Group. So a lot of writing I'll be focused on bringing in the new year. I wouldn't have it any other way. With that said, the market today opened up and then it dropped a little bit and then came back up but mostly state and positive territory for the day Dow closing up 228 points half a percentage point the S&P up about two thirds of a percentage point NASDAQ up about half a percentage point so all three market indices not a lot of volume not a lot of volatility this notion I get I still get emails about it drives me bonkers but you know people want to ask they hear

things, I get it. Do I believe that there's some sort of seasonal trend is the last week of the year or the second last week of year or is there's some type of seasonality around the way these things go? And there isn't. But if there were the many, many, many years that represent an exception to it, make it all completely obsolete. It makes it worthless in any practical consideration. If you say that two-thirds of the time, markets are up around the holidays, and that's way more then markets are normally up, so therefore there's some kind of an opportunity there, you still have to account for what you would do if you were in one of the one-third of the times. Two-thirds, one-third is not exactly 99-1.

And so I just don't really understand where all this stuff comes from, but not to mention the fact that the empirical data is nothing like that to begin with. So I will just repeat why I ignore discussions about seasonality in the calendar. Another thing people are talking about right now is the Japanese bond yields have moved higher. other global bond yields have moved higher as well. How much hand-wringing is there over it? 86% of the NICA right now is above its 200-day moving average. Japanese stocks have certainly not struggled with bond yields going higher.

And in the meantime, even as other global bond yields have moved higher, the U.S. is still sitting below 4.2% on its own tenure. As a matter of fact, we closed today at 4.16, which was up at one basis point. You've had just a really heck of a year in the U.S. bond market as yields across the curve have come down from where they were at the beginning of the year. Our top performing sector today in the stock market was materials, which was up a robust 1.35%. Right behind it was financials, which were up 1.25%. The only negative sector out of 11 S&P sectors was consumer staples, which was down 40 basis points. One thing I just wanted to bring up real quick that I just happened to note.

in a daily report I get from Apollo, was that a 60-40 stock bond index in 2019, if it hadn't been touched at all since then, would now be 80-20, just simply because of the relative moves between stocks and bonds and how much stocks have moved in that time period. And if you think about it, it's not really a big surprise, but it does reiterate. We are annual rebalancers at the Bonson group. Others do it more frequently than that. But those who don't rebalance really do wake up one day with a significantly different risk profile in their own portfolio. So I think it continues to argue for that periodic rebalancing.

But then I also would argue that even with what's in those allocations, which are themselves perhaps much larger than they used to be, but the composition they're in has changed a lot. the mag seven, the high top heavy sector, the concentration, top 10, top five is more than double what it was at that time within the index. So I wrote a dividend cafe about it. It was actually one of my favorite dividend cafes of the year about two months ago. The link is in today's Monday dividend cafe. But my point being that there is a great argument out there for rebalancing as people go into the new year. The public policy front, just a very quick comment. We really are expecting a lot more on these issues of federal attempts to circumvent state

and local complications, or in some cases, just opposition to data center build out. There is an overwhelming argument that we have inadequate amount of data center. There's an even more overwhelming argument that we have inadequate power to power these data centers. And then now there is an issue of just legal authority as to whether or not some of these can or how they will go about getting built, getting approved, et cetera. Big story there in public policy that will be a theme in 2026. The Fed right now, we have an 80% chance that they won't do anything with interest rates next meeting in January,

but there is a 65% chance that will be at least a quarter point, if not two quarter points, a half point lower by the time J-Pow leaves in May when his term comes to an end. Oil today was up to an half percent. That's after being down to an half percent last. year, last week. Last week, midstream was down one and a half, oil down 2.2, natural gas down five, you had energy down a bit. But it's worth saying about midstream that it's going to end 2025 as its fifth calendar year in a row in positive territory. And I did not do any kind of search on this. It's entirely possible. I'm missing something. But off the top of my head and one

who does this with a great deal of attention and intensity, I can't think of any other equity sectors or subsectors that would be up five years in a row, plenty that would be up more over the total five-year period, but not without any down years over the last five years. So quite a run for midstream. And really entering 2026, we think, with an awful lot of tailwind. Someone had asked if it was time to move into gold or other metals as a hedge against inflation. I'd recommend you go to Ask TBG at the homepage.com, where I give the six issues that are problematic with some of the assumptions around that about gold being this hedge against inflation or a bursting of equity bubble. I would really recommend that you check that out if that subject is important to you.

And with that said, I'll be back in the Monday Dividing Cafe two weeks from today, January 5th as the Bonson Group launches its new year. And then, of course, that Friday, year behind year ahead, Dividendon Cafe will be coming on Friday, January 9th. For clients, by the way, on Wednesday, January 7, we'll get our first weekly portfolio holding support of the year. I'll also do a video for that edition, and it will cover a year in review of particulars across all the silos in our portfolio management. With that said, for the final time at 2025, thank you for listening. Thank you for watching and thank you for reading. The Dividendon Cafe. Have a very merry Christmas and a happy new year. The Bonson Group is a group of investment professionals registered with Hightower

Securities LLC, member FINRA and SIPC, with Hightower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through Hightower Securities LLC. Advisory services are offered through Hightower Advisors, LLC. This is not an offer to buy or self-securities. No investor process is free risk. There is no guarantee that the investment process or investment opportunities referenced Tyrion will be profitable.

Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities, referenced TIRN, may not be suitable for all investors. All data and information referenced herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary and does not constitute investment advice. The Bonsor Group in Hightower shall not in any way be liable for claims and make no express or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or emissions from the obtained data

and information referenced here in. The data and information are provided as of the date reference, such data and information are subject to change without notice. This document was created for informational purposes only, the opinions expressed, are solely those of the Bonson Group and do not represent those of Hightower Advisors LSC or any of its affiliates. High Tower advisors do not provide tax or legal advice. This material was not intended or written to be used or presented to any entity as tax advice or tax information. Tax laws vary based on the client's individual circumstances and can change at any time without notice. Clients are urged to consult their tax or legal advisor for any related questions.