January 5th, 2026

This report is for the fourth quarter ending December 31st, 2025. U.S. stock performance was flat for the last quarter. For all of 2025 stocks gained 15% on average. The Cloak composite returned 24% for the twelve-month period. Oil prices are down 17% while Gold prices have risen 67% for the year. Interest rates are steady. Bitcoin is down by 7%. Real estate activity is slow. Inflation measures continue to decline and the economy is growing over 4% a year.

The majority of investors around the country invest in index funds, not realizing that their portfolios are no longer diversified. On the contrary, they are highly concentrated in a small number of highly valued technology companies. Nvidia, Apple and Microsoft now comprise 20% of the Standard and Poor's 500. The top ten public corporations represent 50% of an index purported to track the performance of 500 stocks. A house of cards? Not quite, but the numbers are becoming increasingly warped. There are a few things out of balance. Ten percent of households make 50% of the income. Economic disparity seems to be increasing. Three thousand new data centers are under construction or in the planning stages across the country, in addition to the 4000 that already exist. That's awesome dude, if you're a social media tycoon rolling out the latest version of chat this or chat that, but what about that pizza parlor on the corner or the real estate agent with no inventory. The daycare centers are doing great, but they are being audited. It just seems a little suspect these days, those nervous types are sniffing the wind.

All eyes are on the world stage. The Ukraine, China, South America and Africa. Don't forget the sudden re armament of Germany and Japan and a revolution in Iran. The bulldog in Washington has three more years of unabashed economic and foreign policy assertiveness remaining. It is exciting and transformational but for many the term is alarming. Suddenly a trove of posthumous emails and photographs from a nefarious womanizer seem not so important. Tariff mania has faded, and Obama care has come home to roost...surprise! We count a total of 21 government shutdowns, does anyone care?

Fraud and then some more fraud. Billions abroad and now billions at home. American taxpayers have been taken to the cleaners. Political stewards have squandered the piggy bank. The thirty year old in pajamas at Food Mart midday is still working thru his covid subsidy and has hired a wealth manager to handle the proceeds from the perfectly staged car accident in front of Saks Fifth Avenue, professionally litigated by Myers, Reinwald and Mendosa, a law firm he saw advertised on late night TV while smoking his latest batch of high grade skunk from the legal cannabis shop down the street. Black Lives Matter executive indicted for stealing $3 million. Veteran and animal welfare nonprofits with $Billion endowments, enough to floor every soldier in perpetuity continue to advertise. There are CEO's, and CFO's, it's a corporation after all. Quality people don't come cheap! That $100 Shriner donation is now being charged each month because the phone bank contractor slammed you, and there is no phone number on their website! So sorry, we found ourselves wandering, must be a bout of Christmas season PTSD.

Prediction Markets are all the rage; everyone is getting in on the action. Elections, sporting events or weather, pick a topic and put your money where your knowledge is. Coming to a financial institution near you! Santa Fe, N.M. introduces pajama voting; election ballots delivered to your door. Also, a N.M. First, comprehensive childcare. With a stroke of a pen, all childcare expenses are paid by the state (the taxpayer), $600 million budgeted for 2026. Analysts predict $1 billion a year by 2028. Care givers scrambling to open new locations and hire staff. Sound familiar? What could go wrong? Tired of hearing about Artificial Intelligence? So are we. Keep working on your diction. From the drive-up window to the doctor's office, it looks like you will be talking to a computer. I ordered an unsweetened iced tea, damn it! Options are dwindling for young graduates. Looks like trade school or that coding degree from Phoenix college.

The investment horizon looks fairly stable, but the bullish consensus is overdone. The twenty-five or so Technology giants have created their own self-dealing economy. Some caution is warranted. We remain invested in the familiar success stories, understanding that valuations are dependent on continued success. For the coming year, earnings are forecasted to increase 15% vs 12% for 2025. As we wait for the accelerating technological future to unfold, there are plenty of wallflowers and high yielding value plays for additional investment. Business development corporations, mortgage REIT's, healthcare and small capitalization companies of all types offer a buffet of compelling opportunity. The volume is rising on many fronts. Unprecedented volatility is always lurking. Risk and opportunity seem to increase hand in hand. Current financial markets have a very long learning curve. We recommend sunscreen and a sack lunch as the four-wheel drive portion of our trip unfolds.

Investment questions, healthcare insurance, and real estate. We can help. We value your business, have a great new year!