Nobody will argue that Donald Trump’s second term as President has been unusual.

Trump’s behavior is that of a (very) successful businessman, not that of a politician – good or bad.  

One would expect that investors should be thrilled with 2025, and looking forward to 2026 with excitement.

Trump’s goals have been to reduce the impact of government to both individuals and businesses, and to bring more employment back from foreign countries into America.  

That is a tall order; a President has limited power.  Despite Democrats’ claims that he is a dictator – something they work hard to be when they are in power – the means of taking the actions available to a President have not always made it possible for Trump to achieve what he set out to do – even when backed up by a GOP-dominated Congress.  

The road has been a rocky one for investors.  There have been times when the stock market was very unsure how to react to Trump’s actions.  

But let’s take a look at some numbers. 

The S&P 500 at the end of 2024 closed at 5,881.63.  The S&P 500 closed 2025 at 6,845.50.  That is a gain for 2025 of more than 16%.  The average gain for the past 15 years – 2011-2025 – is just under 12¼ percent.

The gains for your stocks (and funds, if you have any) should be fairly close to that same percent – which is definitely “nice work if you can get it.”

If you are employed and have a 401k with your employer matching your contributions, your gains should be even higher.  

Can Trump take the credit?  

Let’s look at his predecessor:  Joe Biden’s Presidency of 2021-2024.  

Biden’s political impact in 2021 was minimal; effectively, the impacts of Trump’s policies were dominant.  

However, inflation surged in 2021 to 7 percent, its highest since the Jimmy Carter years of 1977-1980.  The inflation rate was 6.5 percent for 2022.  For 2023, inflation fell to “only” 3.4 percent, and continued falling in 2024, down to 2.9 percent, still too high.  An inflation rate of about 2 percent is considered preferable.

But Biden’s hugely-inflationary budget for 2022 was a disaster for investors, who saw their investments nose-dive by 13.4%.  

Investments in 2023 were up more than 21 percent from 2022’s big decline, but the real comparison to consider was between 2023 and 2021:  your investments were up a mere 0.6 percent!  

You effectively lost two entire years of investing, thanks to Biden and the Democrats.

The impacts of Trump’s stumbles are minimal compared to the impact of the Biden years.

What is in store for 2026?

President Trump and the GOP will continue to hold the leadership position politically for 2026.  Elections will be in November, but the next Congress, whatever the election winners, will take office in January 2027.  

There will be no big-spending, massively unbalanced socialist Democrat budgets in 2026.  

Inflation can be expected to continue its decline.  The Fed wants to lower interest rates, but the signals are mixed.  Inflation is not slowing as much as expected, so they would combat that by maintaining higher rates. 

But unemployment remains stubbornly high, which usually is an incentive for the Fed to lower interest rates.  

A moderate “middle of the road” path is not good for either goal.

On the international front, China’s authoritarian government dictates the status of its economy to suit its purposes, convinced that being a dictatorship is the right path to follow.  They are continuing to manipulate the exchange rates of the U.S. dollar against their yuan and other currencies.  

Europe, meanwhile, is finding that its EU over-regulation and general socialist slide are resulting in economic decline.  Germany’s economic health, in particular, gives all the signs of being midway into a death spiral.  In Britain, freedom of speech is under attack with increasing censorship and coming to an end.  

Socialism does not work.

President Trump will no doubt continue encouraging U.S. companies to employ Americans, in an effort to strengthen Americans’ well-being.  

The bottom line:  the S&P 500 finished 2025 at 6845.  Most forecasts expect an economically quiet, non-disruptive year, with the S&P 500 destined to go above 7800 in 2026, yielding an increase of about 15%.  

It looks like it is a good time to buy stocks, at least for the short term.

Capitalism works.

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