"Enough is a Feast"
(Buddhist Proverb)
4th Quarter 2025 Commentary • Kori Allen, CFP®
There is an oft-used metaphor of an iceberg where the mass above the water is only about 13% of the total size. What is seen on the surface is only part of a much larger story.
We rounded out the year with a seemingly strong US stock market, evidenced with an S & P 500 returning 16% for the year.* Some might surmise that this means that our economy and consumers are in good shape… Let’s dive in.
The S & P 500 tracks 500 companies, but each company doesn’t count equally toward the index’s performance. Instead, a company’s influence is based on its total stock market value—essentially, the stock price multiplied by the number of shares that exist. So, a company with a $3 trillion market value has far more impact on the index than a company worth $10 billion. This means strong gains in just a few very large companies can lift the entire index, even when most companies are flat or down.
The top ten stocks now represent nearly 41% of the S & P 500. In 2025 the top “Magnificent Seven” of this list—Apple, Amazon, Alphabet (Google), Meta (Facebook), Microsoft, Nvidia and Tesla—returned 23%. The remaining 493 companies returned 13%. The largest capitalized stock (outstanding shares multiplied by price) was Nvidia, but the top performer was Alphabet. Is the market overvalued? It depends on where you look and what you believe the future holds for each company, industry, or economy.
Have you heard of the “K-shaped” economy? This is a popular description of the haves and have-nots. The upward line of the K represents investors, including those who have stocks in retirement accounts. The downward line represents those that are not participating in asset growth. In the last 5 years, the top 20% of our population grew their net worth to $41 trillion to two and a half times the remaining 80%. In terms of earning and spending, the top 20% earns 51% of pre-tax income and their spending accounts for 38%. Whether it’s a K or an iceberg, there is a stark divergence in realities.
Isn’t it curious that even though the top 20% earns 51% of the income, it accounts for only 38% of the nation’s spending? There are multiple reasons for the difference: taxes, discretionary spending declines as we age, savings and investing, among others.
It’s important to acknowledge that affordability is a significant issue in the US. According to Realtor.com there were only five metro areas where two people, together, could afford to live working minimum wage jobs while spending no more than 30% on housing. If a person has the luxury to set aside savings and live well below their means, with compounding, they can build their wealth significantly. In” The Millionaire Next Door”, authors Stanley and Danko called these “Prodigious Accumulators of Wealth” (PAW). The PAW placed their financial independence over most all lifestyle choices. Once a person has lived a life of accumulation, it is often challenging to relax into spending the savings for what it was originally intended. A lifetime of habit is hard to break.
The tensions we are facing in the US are weighty. Oftentimes grief, stress or pessimism undermine a sense of security, and many of us anchor our sense of security to a number— a portfolio value that feels “safe.” What math says is safe, though, might not feel safe. The gap is real and worth honoring. The irony is that the very discipline that built our security—saving, restraint, vigilance—can become a barrier to enjoying what that security was meant to provide. In transitioning from “accumulation” to “distribution,” success and security may no longer be measured by the balance growing but how the balance serves your actual life.
In this new year, how might you adopt new habits or lessen your grip on outdated ones and allow yourself more ease and grace?
“We are caught in an inescapable network of mutuality, tied in a single garment of destiny. Whatever affects one directly, affects all indirectly.”
—Dr. Martin Luther King Jr., Letter from Birmingham Jail, 1963
* Please note that Pearl Wealth does not benchmark to the S & P 500, but rather the All Country World Index, ACWI
*Any of our regulatory filings are available on-line or upon request.
The views expressed represent the opinions of Pearl Wealth, LLC as of the date noted and are subject to change. These views are not intended as a forecast, a guarantee of future results, investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial or legal advice or service to any person. The information contained has been compiled from sources deemed reliable, yet accuracy is not guaranteed.
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Past performance is not a guarantee of future results.