Commentary · Commentary
2025: Strong Markets, Narrow Leadership, Familiar Lessons
Written by the William Allan team · Published
As we enter November, the market has once again delivered strong returns — and once again, it has done so in a way that doesn’t always feel strong.
The market has recovered from a sharp spring selloff, with the largest companies continuing to have an outsized influence on capitalization-weighted indices.
If that sounds familiar, it should.
The gains have come with real turbulence. Cboe’s April 2025 review documents the sharp decline and exceptional volatility earlier this year. A strong recovery does not make that experience a shallow pullback.
It’s easy to declare invincibility when markets grind higher.
It’s harder to zoom out — but that’s exactly when doing so matters most.
Remember: this stretch followed a painful reset in 2022. That loss reduced the cumulative gain across the decline and subsequent recovery. A recent rally alone does not describe the return earned over a full cycle, and investors experienced different results depending on their holdings and cash flows.
Strong? Yes.
Unstoppable? Nothing ever is.
A Familiar Market Shape
Just like last year, market leadership in 2025 has been concentrated.
A small group of mega-cap names — many tied to AI, data infrastructure, and platform dominance — have carried disproportionate weight.
Business strength and investment value are separate questions. When a handful of stocks heavily influences the index, the headline return can conceal very different experiences elsewhere.
Strip out size weighting and look at the equal-weighted S&P 500, and the story changes. The rally broadens and contracts in phases, but has not matched the enthusiasm seen in the largest companies.
Leadership and valuations can change. A broader rally is one possibility, but concentration can persist and prices can decline across the market. None of those paths follows a dependable schedule.
Where Does It Go From Here?
Two possible outcomes, among others:
- Leaders grow into their price
Earnings could expand and productivity gains could help support valuations. Other companies might participate more broadly in a rally.
- Leadership cools
Prices could consolidate or pull back. Companies outside the largest names might attract more interest, although they could also decline.
Either path may create opportunities, but patience and business quality do not assure a positive investment return.
Trying to guess which week that shift happens? That’s where investors typically get hurt.
Where We See Opportunity
The story of 2025 hasn't just been about the giants.
Our research looks for strong balance sheets, repeat-purchase models, durable cash flows, and reasonable valuations. Whether a particular company meets those standards requires company-specific evidence.
A business outside the dominant group is not automatically undervalued, and a price below an earlier high is not enough to establish an opportunity.
Staying the Course (The Uncomfortable Truth)
The headlines will keep coming.
The noise will stay loud.
Predictions will continue.
Our long-term process emphasizes:
- Owning exceptional companies
- Avoiding emotional investing
- Staying patient during rotations
- Letting fundamentals work over time
We don't invest six months at a time.
We invest across cycles — and through cycles.
The discipline doesn’t change just because the calendar does.
This commentary is for informational purposes only and is not investment, tax, or legal advice. All investing involves risk, including the possible loss of principal, and past performance does not guarantee future results.