The rally in speculative, low-quality stocks that began last April took a breather in the fourth quarter. AI-linked names, meme stocks and crypto lagged while value and international names outperformed the S&P 500. However, this weakness did not significantly reduce the out-performance of low-quality stocks for the year. The performance impact was most pronounced in small caps, where over 40% of the Russell 2000 Small Cap Index consists of money-losing companies.
If all economists were laid end to end, they would not reach a conclusion. – George Bernard Shaw
4th Quarter 2025 Market Commentary
The rally in speculative, low-quality stocks that began last April took a breather in the fourth quarter. AI-linked names, meme stocks and crypto lagged while value and international names outperformed the S&P 500. However, this weakness did not significantly reduce the out-performance of low-quality stocks for the year. The performance impact was most pronounced in small caps, where over 40% of the Russell 2000 Small Cap Index consists of money-losing companies.
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