As we close out the fourth quarter and head into the new year, we want to start with a simple message: thank you. Whether you’ve worked with us for years or you’re getting to know Forrest Financial Partners for the first time, we’re grateful for the trust and the conversations – especially in a market environment that continues to reward patience, discipline, and clear planning.
Business Updates
This year marked a meaningful period of momentum and evolution at Forrest Financial Partners. We continued to invest in our people, capabilities, and client experience – always with the goal of delivering thoughtful, long-term advice that evolves alongside your needs.
Key developments this year included:
- Welcoming Nick Stecklein, CFP®, EA. Nick joined our team as a seasoned financial planning professional with deep expertise in proactive tax planning and optimization. His background in creative, forward-looking tax strategy meaningfully expands our capabilities and allows us to introduce annual tax preparation and filing as a new service beginning in 2026.
- Continued growth driven by client referrals. Our assets under management increased by 40% compared to the end of 2024. Nearly all of this growth came through referrals from existing clients – something we view as a powerful reflection of trust, alignment, and long-term relationships.
- Media recognition. I was honored to be featured in a Bloomberg article this year, contributing perspective on broader financial planning and market themes.
- Industry recognition. Forrest Financial Partners was named an Excellence Awardee for the InvestmentNews 2025 NextGen Advisor Award.
As we look ahead, our focus remains on delivering clarity, continuity, and thoughtful guidance – while staying deeply grateful for the trust you place in us and the opportunity to serve you and your family.
Reflecting on 2025
As we close the books on 2025 and look toward the horizon of 2026, we are struck by the resilience of the U.S. economy in the face of what many would call “unstable” conditions. The past year was defined by a series of high-stakes structural shifts – from the imposition of the highest tariffs in a century to a record 43-day federal government shutdown. Yet, through this “policy storm,” markets have remarkably “climbed a wall of worry,” with the S&P 500 recording its third consecutive year of double-digit gains.
- In general, growth has surprised to the upside, even as the “feel” of the economy remains uneven. Real GDP in Q3 2025 rose at a 4.3% annualized rate, led by consumer spending, exports, and government spending.
- The labor market is cooling, but not cracking. The unemployment rate stood at 4.7% in November, a level consistent with a slower – but still functioning – job market. Additionally, there are indicators that this increase in the unemployment rate is not indicative of structural deterioration, but simply a temporary “matching problem” due to the influx of new entrants to the labor market (mostly among new college graduates).
- Monetary Policy Pivot: After years of restrictive policy, the Federal Reserve began easing its stance. The Fed delivered three consecutive quarter-point rate cuts in the latter half of the year, concluding with its December meeting where it set the federal funds target range at 3.50%-3.75%.
- Inflation has moderated, but it’s premature to declare victory. Recent inflation readings remain in the “mid-2%” neighborhood on certain measures, with category-level pressure still uneven.
Markets responded constructively. U.S. equities finished the year higher, with major indexes reaching new highs and leadership gradually broadening beyond a narrow group of large-cap stocks. International markets also delivered strong performance, marking one of the more notable years of relative strength outside the U.S. in over a decade. In fixed income, bond yields stabilized after a volatile period, restoring income potential across high-quality portfolios.
2026 Outlook
As we look ahead to 2026, we believe fiscal and monetary policy may be among the most important forces shaping markets over the coming year – both in terms of opportunity and risk.
At present, policy conditions are broadly supportive. The Federal Reserve has already cut interest rates three times, moving policy away from restrictive territory. Looking forward, the direction of travel appears to remain toward further easing. With a midterm election year approaching, there is strong political incentive to support economic growth, and the current administration has been clear in its preference for a Federal Reserve leadership that is inclined to err on the side of accommodation rather than restraint.
At the same time, the fiscal impulse is meaningfully positive. Recent legislation – most notably the One Big Beautiful Bill Act (OBBBA) – is expected to inject additional liquidity into the economy in 2026 through lower effective taxes, higher refunds, and targeted incentives. Taken together, these fiscal measures should provide a tailwind to growth at a time when monetary policy is already becoming more supportive.
Lower interest rates reinforce this dynamic. Easier financial conditions tend to encourage capital expenditure by businesses, particularly in technology, infrastructure, and productivity-enhancing investments. They also help support a rebound in household borrowing, from mortgages to consumer credit, after a period of tighter lending standards. Both forces point toward stronger aggregate demand as we move through the year.
What does this likely mean in practice? In the near term, it suggests that the economy could continue to run “hot,” even as inflation has cooled from prior peaks. From a market perspective, that backdrop is generally constructive for risk assets and helps explain why investors remain willing to look past elevated valuations.
However, this environment also raises the risk of a policy mistake. When fiscal and monetary policy are simultaneously loose, the margin for error narrows. The key risk we are watching is a renewed rise in inflation – not necessarily immediately, but as stimulus works its way through the economy and demand accelerates faster than supply can respond.
A rebound in inflation would complicate the policy outlook, potentially forcing the Federal Reserve to reverse course or pause easing sooner than markets currently expect. Even the perception of that risk could introduce volatility across interest rates, equities, and credit markets.
Our base case is not a return to runaway inflation, but rather a more fragile balance between growth and price stability than headline numbers alone might suggest. In this kind of environment, markets are likely to remain sensitive to policy signals, inflation data, and shifts in expectations – reinforcing the importance of diversification, selectivity, and risk management as we move through 2026.
Asset Allocation in a More Nuanced Cycle
Against this backdrop, our approach to asset allocation remains grounded in balance and flexibility rather than taking explicit directional bets.
We continue to emphasize diversified equity exposure across U.S. and international markets, with attention to valuation, quality, and earnings durability. While equities remain an essential driver of long-term growth, we are mindful that forward returns are likely to be more modest than those of the past decade, reinforcing the need for diversification beyond a narrow set of market leaders.
In fixed income, higher yields have restored the role of bonds as a meaningful source of income and stability. We favor thoughtful duration management and high-quality credit exposure, balancing income generation with risk control, and we are biased towards shorter-durability. Cash and cash-like investments continue to play an important role as well, offering flexibility and optionality in a changing environment.
Where appropriate, we also consider diversifying assets – such as real assets or select alternatives – not as core holdings, but as complements designed to help manage risk in a world shaped by fiscal uncertainty and structural change.
Above all, portfolios are constructed at the individual level. Asset allocation decisions reflect each client’s time horizon, liquidity needs, tax considerations, and ability to remain invested through market cycles. Our goal is not to predict every market move, but to build portfolios that can adapt and endure.
Closing Thoughts
As we enter 2026, we remain optimistic about the opportunities ahead while staying realistic about the challenges that accompany a maturing economic cycle. Thoughtful planning, disciplined investing, and clear communication will continue to be essential.
We are grateful for the trust you place in us and for the opportunity to work alongside you. We look forward to continuing our partnership and helping you navigate whatever 2026 may bring.
Warm regards,
Chris & Peter
