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12:00 TUESDAY – Investing Insights #269 – 12/16/25


by Robert Holman, CFA CFP© | www.DefensiveAdvisor.com


STOCK MARKET RATING (THE BIG PICTURE) …

·         Bullish/Bearish Rating: 5 = Neutral (1 - 4 is bearish, 5 is neutral, 5 - 9 is bullish).  

·         Market/Economic Condition: Normal

·         Future Outlook: Liquidated some positions to cash, about 80% invested, very cautious

 

RATING: 5. I’ve pulled my rating back to neutral.  The market appears to be faltering again, although many experts still see the market advancing.  However, Warren Buffett is still selling.  The price of market leader NVDA stock has changed very little since its favorable earnings report.

 

The S&P 500 is flashing a warning only seen twice before, in the past 40 years


The S&P 500 had a forward price-to-earnings (PE) multiple of 22.4 as of Dec. 5, according to FactSet Research. That is above the five-year average of 20 and the 10-year average of 18.7. In fact, excluding the past year, the index has traded above 22 times forward earnings during only two periods in the past 40 years, and it declined sharply both times.


The first incident was the dot-com bubble. The S&P 500's forward P/E ratio topped 22 in the late 1990s and generally stayed there until the bubble burst in the early 2000s. The index eventually dropped 49%.


The second incident was the COVID-19 pandemic. The S&P 500's forward P/E ratio topped 22 in 2020 and stayed there for about a year. The index eventually dropped 25%.


The S&P 500's present valuation is high by historical standards. So, any troubling news about the economy could spark a downturn. Investors should consider selling any stocks in which they lack confidence (i.e., stocks you would not want to hold through a correction or bear market). Now is also a good time to build a cash position.

 

MUST READ: (click link to read)

 

PORTFOLIOS … After reading this report, if you are unsure how to respond to these conditions, you may send a message to my Secure Email, and I’ll reply with the information you need.  I’ll also give you a free portfolio assessment. See the link below.

 

TO MY CLIENTS … THANK YOU FOR YOUR TRUST.

 

 

LEARN FROM THE BIBLE … Proverbs 15:22 MSG - Refuse good advice and watch your plans fail; take good counsel and watch them succeed.

 

This report is a 3-minute read, published every other Tuesday afternoon. To sign up for this bi-weekly e-Newsletter, go to: http://www.defensiveadvisor.com/blog.

 

Opinions in this post are for general information only and are not intended to provide specific advice to, or recommendations for, any individual without our complete knowledge of that individual’s total financial profile. No strategy assures success or protects against loss. Nor does past performance guarantee future results.

 
 
 

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Last Edited: October, 2025

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To earn the CFA charter, candidates must master a broad-based curriculum of investment principles, and commit to abide by, and annually reaffirm, their adherence to the CFA Institute Code of Ethics and Standards of Professional Conduct. The CFA Program curriculum provides a comprehensive framework of knowledge for investment decision making and is firmly grounded in the knowledge and skills used every day in the investment profession. The three levels of the CFA Program test a proficiency with a wide range of fundamental and advanced investment topics, including ethical and professional standards, fixed-income and equity analysis, alternative and derivative investments, economics, financial reporting standards, portfolio management, and wealth planning.

 

The CFA Institute Code of Ethics and Standards of Professional Conduct, enforced through an active professional conduct program, require CFA charter holders to:

  • Place their clients’ interests ahead of their own

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  • Disclose conflicts of interest and legal matters

 

CFA® charterholders who fail to comply with the above ethics, professional standards and other requirements may be subject to the CFA Institute’s enforcement process, which could result in censure or permanent revocation of their CFA® charter.

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To attain the right to use the CFP® marks, an individual must satisfactorily fulfill the following requirements: 
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  ●  Examination – Pass the comprehensive CFP® Certification Examination. The examination includes case studies and client scenarios designed to test one’s ability to correctly diagnose financial planning issues and apply one’s knowledge of financial planning to real-world circumstances; and
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Individuals who become certified must complete the following ongoing education and ethics requirements to maintain the right to continue to use the CFP® marks: 
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CFP® professionals who fail to comply with the above standards and requirements may be subject to CFP Board’s enforcement process, which could result in suspension or permanent revocation of their CFP® certification. 

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