4th Quarter 2025 Scouting Report: Climbing the Wall of Worry

As we enter the final quarter of 2025, it’s time once again for our Quarterly Scouting Report , a data-driven look at the current market landscape, the evidence shaping our outlook, and what it all means for investors heading into year-end.

Despite a constant stream of headlines, from government shutdowns to volatility warnings, the evidence continues to favor the bulls. Let’s break down what’s happening, why, and how we’re positioning ourselves as we move into one of the most historically favorable times of the year.

Climbing the Wall of Worry

As the legendary Joe Granville once said,

– “Bull markets climb a wall of worry.”

That’s precisely what we’re seeing today. Despite concerns about the economy, political gridlock, and inflation, the markets continue to grind higher.

Another market veteran, Bob Farrell, reminded us:

– “If everyone’s waiting for a pullback to buy, either the market doesn’t have a pullback… or if it does, you shouldn’t buy into it.”

In other words, markets often move higher precisely when investors are most hesitant.

And Richard Russell, author of Dow Theory Letters, summed it up perfectly:

– “Big bull markets always find a way to keep you frightened and out… to get in, you have to close your eyes and just do it.”

The lesson? Wall Street rewards discipline over emotion. Even in uncertain times, the market often pushes through fear, and this year is no exception.

The Government Shutdown: History Says “So What?”

Let’s address the elephant in the room, the current government shutdown. While these events can cause temporary anxiety, history shows that markets rarely care for long.

Looking back at the last six shutdowns:

• 2018 (35 days) – S&P 500 up 10%

• 2018 (3 days) – up 1%

• 2013 (17 days) – up 3%

• 1995 (22 days) – flat

• 1995 (6 days) – up 1%

• 1990 (4 days) – down 2%

In five out of six cases, the market was either flat or higher. Shutdowns are temporary political events, not structural economic threats. So far, the market’s reaction this time? Barely a shrug.

Seasonality Surprises: A Strong August & September

August and September are traditionally the two weakest months in post-election years. Yet in 2025, both months closed in positive territory, with September marking the second-best performance in 27 years.

That’s a bullish sign. When markets rise during seasonally weak periods, it often sets the stage for even stronger gains in the seasonally favorable stretch from November through April.

The Evidence: Uptrends Across the Board

At Libertas Wealth, we focus on objective evidence, not emotion. So, what are the charts telling us?:

S&P 500: Clear Uptrend

The S&P 500 remains above both its 50-day and 200-day moving averages, with rising trendlines , a strong technical backdrop.
Momentum divergences seen earlier in the year have been resolved, reinforcing the intermediate-term bullish outlook.

Risk-on Intervals

Several relative strength indicators confirm investor appetite for risk:

• Consumer Discretionary > Consumer Staples: Luxury spending is outpacing essentials, a hallmark of healthy markets.
• Technology > Utilities: Growth sectors are leading defensive ones, another bullish signal.

Sector leadership is coming from Technology, Communications, Discretionary, and Financials — the same sectors that typically drive sustained bull markets.

As one of my colleagues often says:

– “You can’t have a market crash while financials are rising.”

Right now, they are.

Volatility Watch: A Compressed VIX

Our friend and volatility expert, Andrew Thrasher, has highlighted an important pattern: the VIX (volatility index) has been compressed, trading at low levels for more than a month.

Historically, when the VIX stays compressed for 21+ trading days, volatility tends to increase in the following month about 92% of the time.

Translation? We might see more market swings in October.
But volatility ≠ danger, it’s a normal part of healthy markets, especially in October, which is seasonally volatile.

Asset Class Rankings: Stocks Still Rule

When we rank global asset classes based on relative strength:

• U.S. & International Stocks – Tied for leadership
• Small Caps – Improving after years of underperformance
• Cash – Still attractive for short-term reserves
• Commodities
• Bonds – Still lagging, but showing signs of life

We’re beginning to see long-term Treasuries and other bond segments stabilize, though we continue to favor shorter-duration and convertible bonds in our portfolios.

The Dollar, Gold, and International Opportunity

The weakening of the U.S. dollar throughout 2025 has boosted international stocks and commodities. If the dollar rebounds, those tailwinds could fade, but for now, international diversification continues to make sense.

Gold, too, has benefited from a softer dollar and inflation trends, though its future path will depend on how both evolve into 2026.

Sentiment: Neutral, Not Extreme

The CNN Fear & Greed Index sits in the neutral zone, not fearful enough to spark a contrarian rally, but not greedy enough to signal euphoria.

This middle ground aligns with what we see in price action: a steady uptrend, absent excessive optimism.

Seasonal Strength Ahead

According to the Stock Trader’s Almanac, post-election years often feature a strong rally from November through April.

Given that the market already defied weakness in August and September, we believe this could be an above-average seasonal stretch, potentially setting up for a robust finish to 2025.

The Pre-Flight Checklist: Mostly Blue Skies

Our internal Pre-Flight Checklist , a dashboard tracking short, intermediate, and long-term trends — remains overwhelmingly positive.

• Short-term signals? Blue.
• Intermediate-term? Blue.
• Long-term? Blue.

The only caution flag is slightly compressed volatility, which we view as a short-term factor, not a reason for alarm.

Our Inverse Traffic Light — another tool we use to gauge risk, remains solidly green. The evidence says: it’s still okay to take risks.

Key Takeaways

• Shutdown = Noise: Temporary and historically insignificant for markets.

• Trends = Up: U.S. stocks, international stocks, and small caps all improving.
• Risk-On: Growth sectors leading defensives.
• Volatility Coming: Expect swings, but stay disciplined.
• Seasonal Strength Ahead: November through April often delivers the best returns.

Final Thoughts

When we sift through the noise, the evidence points toward continued opportunity.

Yes, we may see short-term volatility — especially in October — but the broader trends remain decisively bullish. With the best six months of the year approaching, now is the time to ensure your portfolio is aligned with your goals and positioned for growth.

If you’d like a second opinion on your financial plan, retirement strategy, or investment portfolio, we’d love to help.

Schedule a complimentary 30-minute introductory call at libertaswealth.com, or reach out directly to our team.

Let’s make sure you’re ready to climb the wall of worry — with confidence.