Editor’s Note: Every December, we like to sit down with our leader, Brad Thomas, to take stock of the year that was… and look forward to what comes next. Over the next several days, we’ll share Brad’s insights on the biggest stories of 2025 and what he’s looking forward to in 2026. The below interview has been lightly edited for clarity.
Van Bryan (VB): Brad, the year is almost out. When you look back on 2025, what do you think the biggest stories were? What caught your attention?
Brad Thomas (BT): Well, right off the bat, I think you have to acknowledge that – as far as stocks are concerned – it’s been a great year by any measure. Right now, the S&P 500 has returned about 17% since January. There’s a real chance for a “Santa Claus rally” in the final few weeks that could possibly bring the index above 20% on the year. And if that does happen, that would make this the third year in a row where the S&P has returned 20% or more, which is remarkable.
It’s interesting because, in the moment, investors jump from one narrative to the next. There’s always something to obsess over, something to worry about. But at the end of the year, that’s all forgotten. And you’re left with a wonderful return from the major indices.
As for what stood out to me, I think you have to look at the impact of the Trump administration on markets – some of it good, some of it bad.
VB: Let’s start there. The president shocked the market with his Liberation Day tariffs. The major indices fell nearly 20%. What do you make of the tariff policies from the White House?
BT: Well, I think the president likely underestimated the market’s reaction. And, so, yes, he pivoted to a more case-by-case approach with regards to negotiating trade deals. And I think he’s largely been successful at that. But at a high level, I actually don’t think tariffs have been much of an issue for day-to-day operations for many companies.
There will be exceptions, of course. But I read a lot of earnings transcripts from companies that we follow. Tariffs really haven’t been a major theme. Companies adapt. The world keeps turning.
In the moment, I think it’s easy to get fixated on the volatility that tariffs caused this year. But I actually believe that, with time, the trade policy of the Trump administration could be remembered as a good thing. It served as a wake-up call that could lead to future economic expansion.
VB: How do you mean?
BT: If the United States wants to stay a dominant economic power, it can’t be solely reliant on far-flung supply chains thousands of miles away, especially if they exist within countries that are potential adversaries. Onshoring some manufacturing capacity for critical industries is in the U.S. long-term interest.
This has been going on for longer than people realize. I think COVID will probably be remembered as the moment when it started to shift. During that time, certain products – semiconductors, automotive parts, etc. – just couldn’t be sourced because all these complex supply chains had broken.
I think several industries finally figured out that there were other considerations outside of just the lowest cost of production. After all, what good are cheaply manufactured goods if you can’t deliver them to the end consumer?
The Boston Consulting Group has done some wonderful research on that point. I read a report earlier this year that looked at what industries are prioritizing low-cost production versus more qualitative advantages like business environment, quality assurance, supply-chain resiliency, etc. What’s interesting is that about 30% of those surveyed said these qualitative factors were more important, which is a big shift from a few decades ago. In some really important industries like equipment manufacturing, about 36% said qualitative factors were most important.
Tariffs, or tariff uncertainty, will probably continue that trend. They’re a bit of a “stick,” but they get the point across.
VB: If tariffs are a “stick,” is there also a “carrot”?
BT: Yes, and that’s one of the other developments that stood out to me this year with regards to the administration.
To start, you have the Big, Beautiful Bill. It solidified the tax cuts from the Tax Cut and Jobs Act from the first Trump administration. And for investors, I think they’ll start to see the benefits of that next year.
When the original tax cuts were passed in 2017, one of the results is that many public companies used those savings to reward shareholders in the form of buybacks and special dividends the next year. With more clarity on the corporate tax rate, I think we could see something similar going forward.
But arguably more important was solidifying the bonus depreciation clause. That simply means that businesses that make purchases for equipment and deduct the full expense in the first year rather than spreading it out over several years. That’s a big incentive to make new investment in U.S.-based operations. And with that locked in, I think that’s what we’ll see.
In addition to all that, the U.S. government has been highly supportive of certain industries and companies. The government took a 10% equity stake ($8.9 billion) in Intel (INTC) this year. The government paid $20.47 per share which Intel said was a discount to the current market price.
As of July, it also owns preferred shares in MP Materials (MP), a rare earth miner and refiner. The Defense Department is now the largest shareholder in the rear earth miner which has a market cap of $10.3 billion.
VB: Some critics would say that the government owning equity in public companies is interference in the capitalist system. What would you say to that?
BT: Well, it’s not like this is a new development. How many pharmaceuticals have come about thanks to generous U.S. grants? There’s plenty. Companies like Boeing (BA) only exist because of generous defense contracts over the years. For a time, the federal government owned preferred shares in many of the banks because of the 2008 bailouts. So, it’s not as if this is unprecedented.
But, yes, I understand the critique. And, yes, I’m sure plenty think it would be wonderful if we could just exist in a pure laissez-faire system where the government stays out of private industry. But we don’t live in that world.
Just look at something like rare earths. These materials are essential to just about every piece of electronics we depend on; military equipment, consumer electronics – all of it.
Not many people know this, but in the 1970s and 1980s, the U.S. produced the vast majority of the world’s rare earths. But then in the 1990s, China began subsidizing its own rare earths industry, undercutting American production. The result is that the U.S. basically handed China a monopoly on producing these materials. That country controls about 80% of production and refining capacity now.
The United States government considers that arrangement unacceptable now. And that’s how you arrive at the U.S. owning preferred shares in MP Materials.
It’s probably a similar story with Intel. As a company, it’s still trying to find its footing. But Intel also has important assets – wafer-fabrication facilities on American soil. The company has also broken ground on some new chip fabrication plants in Ohio. I think it’s likely that the Trump administration views those assets as too important to be left to the whim of the markets. And, so, that’s how you arrive at an equity stake in Intel on behalf of the U.S. government.
Is all this interfering in private industry? Maybe.
But we don’t live in the Reagan era anymore. The U.S. is not the only economic power in the world. And I think the federal government is probably realizing that it’s in the country’s long-term interest to support some of these critical, U.S.-based industries. And if we wanted to take a realist perspective, I think we’d have to admit it’s a necessary step.
Editor’s Note: Tune in tomorrow for our next conversation with Brad. We’ll discuss commercial real estate, real estate investment trusts, and which property sectors deserve your investment in 2026 and which you should steer clear of.
And before you go, you might find this interesting. According to Brad, there’s one more “carrot” from the Trump administration to ignite the American industrial revival. As he puts it, the administration has thrown its weight behind the AI infrastructure buildout, and it’s setting up a handful of companies for success in the months and years ahead. Get the full story on “Trump’s Final Deal” from Brad right here.
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