Nick Hodge,
Publisher
Nov. 18, 2025
Editor’s Note: What follows is the market analysis provided in the November issue of Foundational Profits. We are ahead of the S&P by a factor of two this year, even as it broke multiple records. To get the related stock recommendations and allocations, follow this link.
Even amid a bit of increased volatility during the government shutdown, the US stock market was able to hit new all-time highs.
The S&P 500 touched 6,920 on October 29, and is now recovering from a subsequent 5% mini-correction. We remain in a bull market for stocks, up some 17% for the year.
The main drivers of that index this year have been the tech names. Same as last year. Same as the past five years. Same as the past decade.
Interestingly, despite all the stock market records, you may have seen that gold is now outperforming the S&P over the past decade — winning by a score of ~275% to ~220%.
(Of course, Bitcoin is up some 14,000% in the same time. But let’s set that anomalistic return aside for the next few hundred words.)
From my chair, what we’re witnessing is a melt up of asset prices as priced in cheap and weakening fiat currencies, driven by easy-money policies.
This process, what could be referred to as a quasi-bastardization of capitalism, has had drastic effects both positive and negative. The US created 1,000 new millionaires daily last year. It also lost over 220 people daily to drug overdoses.
What we’ve seen in the two decades since the Global Financial Crisis is concentrated kowtowing to the asset-owners and a cold-shouldering of the non-owners by global governments.
It’s easy to see the connection, but it’s hard to separate in your mind.
There is profit in that separation. Most people get hung up on it. You’ll hear some variation of this: “How can the stock market be doing so well when [fill in the blank].” That blank is then filled in with phrases like:
- There is so much wealth inequality;
- People’s wages aren’t keeping up with inflation / so many people are struggling; and/or
- We have $38 trillion in debt.
And while all those bulleted phrases are true, they don’t negate the economic numbers that matter to the machine, i.e., growth and inflation.
Zooming in quickly from the past two decades to the past two months, this phenomenon is easily viewable.
How can the stock market be doing so well when the government is shut down? How can the stock market be doing so well when millions don’t know where their next meal will come from? How can the stock market be doing so well with so many layoffs being announced?
Even if you don’t know the answer, the market does.
When US gross domestic product for Q3 is reported later this month — delayed because of the shutdown — it will show that the economy once again grew at a +3% clip.
The algorithms don’t care how many meals were missed during that quarter. The algorithms don’t care if AI and data centers are driving 90% of the growth. The algorithms don’t care if it’s the wealthy doing all the retail spending.
If the economy grows in GDP-terms, the stock market, by and large, goes up — even more so if inflation falls at the same time, which looks like the setup for the next quarter as oil remains soft.
We’ll likely have growth and inflation both right around 3% for Q3 and Q4, and then inflation cooling a bit as we head into the new year. The stock market likes that, which is why it remains near all-time highs. That doesn’t make the policies driving those numbers right or just because, again, the algorithms lack empathy.
But just because markets lack empathy doesn’t mean you have to. In fact, fellow contrarians and gold supporters, I dare say that gravitating toward gold is an empathetic endeavor. Because we feel the plight of man locked in a fiat world, and we know that gold is the key.
On the rate cut front, we’re now at 50/50 odds of another quarter-point cut at the December meeting. Odds have been falling because the stock market is healthy and inflation is set to cool after the next print. And, ironically, that’s why the stock market has been volatile these past few days.
But post-Thanksgiving and Christmas, you will see new highs in the stock market and in gold.
You can understand and empathize with the causes of wealth inequality and the K-shaped economy. And you can also resolve to keep you and your family on the top side of that K while pointing fingers at the Establishment that enables it.
(You just read a section of the November issue of Foundational Profits. To get all the stock recommendations and suggested allocations that come with it, follow this link.)
Call it like you see it,
Nick Hodge
Publisher, Daily Profit Cycle