Portfolio update: year-end 2025

2025 was another rather extraordinary year for investors, with nearly all global asset classes ending the year higher.  The portfolio strategy of being long risk paid off handsomely in 2025, as did owning gold.  Even as stocks soared, I did some rebalancing of my portfolio by taking some money off the table involving a few “high-flying” tech names, and by exiting names that I thought were too exposed to the consumer.  I also did some rebalancing into names I felt were more defensive, slightly skewed my portfolio more towards international equities, and increased my cash position.  My blended full-year return for 2025 across my portfolio (excluding alternative assets) was 17.1%.   It helped being in the right names, a combination of a bit of skill and experience, and a lot of luck.

Context: performance of market assets and indices in 2025

The star performer across asset classes was gold, which soared 65% in 2025.  International equity markets generally outperformed U.S. stock markets, a reminder that global diversification pays off.  Intermediate and long-term US Treasuries also chalked up gains in 2025, although the improvement in yields largely stagnated in the fourth quarter just as the Fed started to ease.   The table below contains returns for several major indices and asset classes for the years 2023, 2024 and 2025, and the CAGR for the period 2021-2025 (five years, average annual growth), which will allow you to put my 2025 portfolio performance into a market context.

My portfolio allocation

My portfolio at year-end was 75.5% equities, 6.7% corporate bonds (mostly corporate IG and floating-rate HY, i.e. leveraged loans), 4.7%  gold, 4.5% alternative assets, 1.6% government bonds > 3 months maturity, and 7.0% cash / USTs < 3 months maturity.  Compared to the end of 2024, the percentage of my portfolio in stocks and corporate bonds was slightly less, and my cash position was significantly higher.  The table below contains my asset allocation at year-end.

I discussed my (re)allocation strategy during the past year in the first paragraph of this update.  I deviate very little over time from keeping stocks as the core of my investment portfolio, although I shifted to a slightly more defensive posture within my stock portfolio in 2025.

Equity portfolio: key positions

The table below illustrates my top 10 equity positions at the end of 2025, along with some valuation attributes of each stock.  In 2025, two new stocks entered my top 10 holdings: LLY at the 6^th position and JNJ at the 9^th position.  Two stocks exited the top 10 in 2025: Apple, which was my 4^th largest holding at the end of 2024, and PG, which was my 7^th.  I added to my LLY position in the second quarter of last year at much lower prices than the shares finished the year.  JNJ caught a decent bid too, with healthcare being a good sector performer for me (and relatively defensive, although LLY is arguably now a touch on the expensive side).  Apple fell out of the top 10 because I have continued to trim my position (although I consider the stock core), and P&G shares simply did not perform (-14.5% YoY).  I cut my positions (meaning shares owned) into strength on my top four holdings, although all racked up price gains in 2025.  Other changes in my stock portfolio included:

• I completely exited two consumer discretionary stocks / brands: LULU and SBUX (following the exit of NKE in 2024),

• In the weight-loss drug space, I bought more LLY on share weakness, and completely gave up on NVO mid-year, existing the position at a loss (but retaining some call options into 2026),  

• I increased my positions in SO (utility) and MO (consumer staples),

• I further reduced my position in BRK.B (my larget holding) to lessen my concentration in this name, and I took money off the table on most of my Mag 7 names including MSFT, GOOG and AMZN although all remain top 5 holdings as their stocks moved sharply higher YoY in line with the exuberance around A.I.,

• I added to ASML and NVDA throughout the year, both of which had periods of weakness that I considered buying opportunities, and both of which ultimately delivered strong returns in 2025 (albeit neither is a Top 10 holding),

• I sold nearly all of my position in CRWD (too early admittedly) because I felt the shares got over-valued.  However, I believe a position in a cyber security company makes a lot of sense, so I will consider reloading if the shares re-approach $400/share or so (on market, not company-specific, weakness).

The table to the right shows my top 5 best and worst performing stocks in 2025.  Aside from gold, GOOG was the star performer in my portfolio in 2025 due to a combination of the U.S. government

legal suit being “settled”, the perception of Alphabet as an A.I. laggard morphing into an A.I. leader, and very impressive growth across its major business lines.  Of course, the A.I. uplift was visible in the price action of the stocks of companies both directly in the centre of this exciting new area, but also stocks that were more on the periphery, like SO (utility) and CSCO.   Both stocks, as well as many others, were indirect beneficiaries of the A.I. boom in 2025. 

Equity portfolio: sector analysis

As might be obvious from my commentary in the preceding section, I rebalanced away from consumer discretionary names, took money off the table on a few of my Mag 7 holdings, and slightly shifted into less cyclical sectors like healthcare in 2025.  Still, I added shares that were indirect beneficiaries of the current A.I “boom”, and the overall price increases in A.I.-narrative stocks pushed my exposure to the “Information Technology” sector sharply higher.  The table below illustrates my sector exposure at the end of 2025 across the key S&P sectors, and the change compared to the end of 2024. 

Equity analysis: geographic exposure

Geographically, I diversified away from US-listed shares in 2025, which reflected my view that U.S. stocks were expensive vis-a-vis international shares.

Geographic diversification proved to be a good strategy, as most foreign markets outperformed U.S. stocks in 2025.   Nonetheless, I still only have 16% of my equity exposure outside of the U.S., which I will consider tweaking in the first quarter of this year.  Having said this, the valuation gap between U.S. stocks and foreign stocks has closed as foreign markets have appreciated, making the “diversify from the U.S.” trade less obvious.  Equity hedgesI continue to go through periods of writing covered calls on individual stock positions, and I continue to carry overall portfolio protection via index puts.  It is also worth noting that I moved my index puts from the S&P 500 (SPY) to the NASDAQ (QQQ) in the third quarter of 2025, reflecting the fact that I was more worried about the tech bubble deflating that the overall market selling off.

Fixed income portfolio analysis

The table below contains a breakdown of my fixed income and cash holdings at the end of 2025.  My allocation to fixed income and cash was less in the aggregate at the end of 2025 compared to the year prior, but my cash position has nearly doubled.

Portfolio returns

My overall return in 2025 on listed investments in my U.S. and U.K. brokerage accounts (in USD) was 17.1%, of which 15.0% was capital appreciation and 2.1% was investment income (mostly reinvested).  The aggregate return on my USD portfolios was 16.5%, and the return on my GBP portfolio was 13.4% on a Sterling basis and 20.6% on a USD-basis.  My aggregate portfolio return of 17.1% in 2025 compares to an aggregate return on the same basis of 13.3% in 2024.

What’s ahead

Street analysts are even more bullish going into 2026 than they were the year before, perhaps not surprising given that the Federal Reserve is on a monetary easing path, and fiscal stimulus from the “One Big Beautiful Act” is just around the corner.  Nearly every Street analyst is projecting a further uplift in U.S. stocks in 2026 because of this twin stimulus, which is expected to boost both earnings and risk appetite.  However, I am somewhat cautious as far as expectations in that “long stocks” is a crowded trade, perhaps no more obvious than in stocks that have anything to do A.I. (and not just the hyperscalers). 

In this sort of environment, something unexpected – perhaps geopolitically related – can rear its ugly head and potentially cause investors to quickly shift into a risk off mode. Clearly, the path ahead is not as easy as it may seem.  Twin stimulus injections could easily reignite inflation, which would have all sorts of negative effects on both stocks and bonds.  The U.S. fiscal position is worsening by the day, clearly visible in the fact that intermediate- and long-term yields are stuck in a narrow range, in spite of Fed easing.  And of course, there is the wild card of the Trump Administration’s erratic and unpredictable policies, and the uncertainty associated with mid-term elections in November. 

I intend to remain reasonably well hedged, and will buy (or add to) names I like on weakness if I believe that a correction is market-sentiment driven, rather than driven by deteriorating economic or business fundamentals.  I am also not shy about lightening on the A.I. runners, although I consider most of the names in which I am invested reasonably defensive in the context of their diverse and market-leading positions.