Who among us wouldn’t love to see calmer waters? The level of tension across our society is palpable and deeply uncomfortable. Opinions are so filled with angst that it has become difficult to have reasonable conversations about the state of our country and the world. The sad reality is that this tension is not going away any time soon. The passions of these views are incredibly strong, and most people are unwilling to compromise how they see the world.
Having acknowledged this state of affairs, how do we conduct ourselves? While social behavior is not the point of this letter, it does, and will continue to, influence investment behavior. For many, it was hard, if not impossible, last spring to imagine the stock market rising again after such a sharp decline. Since that time, the market, as measured by many indices, has pushed to new record highs. The reversal has many shaking their heads in disbelief and assuming it is only the calm before the storm.
It is so easy to conclude that the tensions described above, combined with recent market behavior, mean we are in one gigantic bubble and that the years ahead cannot possibly be profitable for investors. But they very well may be. Why? Because the fundamentals of economics, capitalism, and entrepreneurship are not being left at the door. American business acumen is not governed by social tension. Corporate leaders are responsible for running successful companies. That responsibility requires focus, discipline, and the ability to look beyond the mood of the moment. Businesses cannot operate effectively if they are trapped by fear. This past year alone demonstrated that companies unwilling to conduct business-as-usual due to concerns over tariffs, bubbles, or inflation would have missed the significant economic growth enjoyed by the US economy.
I have commented in previous letters on the evolving world that technology continues to shape. Our daily lives have changed dramatically as technological innovation has altered so much of our everyday experience. The pace of the changes has been remarkable. Many argue that such progress only benefits those at the top, but that claim has been made repeatedly over the last century. Time and again, history has shown that people adjust, improve, and grow. Our resilience as citizens of the world comes from our ability to adapt, expand, and ultimately figure things out.
Of course there is much to be concerned about in today’s world, but there is also much to be excited about. However one balances those forces, our lives should be guided by optimism rather than fear, including how we invest. Pessimism has never been a good way to make decisions, in life or investing. And there is no such thing as the “the good old days.” There is only where we are, here and now. And so, if you wrestle with the state of our country and the world, invest with the understanding that progress will continue, with or without you.
The core of intelligent investing is, and always has been, diversification. The attributes of a successful approach are patience and discipline, grounded in humility. We work hard to identify the best opportunities, but investing is an art, not a science. The risk to investors is not only the fear of losing money, but how easily today’s markets allow us to act on that fear. The liquidity that the stock market provides makes it possible to change course at a moment’s notice, often in reaction to headlines or emotion. That ability, while valuable, also presents a real risk, and it is part of what makes this such a complicated time for investors.
Both we and you must be comfortable with your asset allocation and then allow the process to unfold. Any mid-course change must be clearly thought out and driven by long-term objectives, not reactions to the moment.
I wish you all a healthy and happy 2026, and please know that we at GW&K are always here for you.
This represents the views opinions of GW&K Investment Management. It does not constitute investment advice or an offer or solicitation to purchase or sell any security and is subject to change at any time due to changes in market or economic conditions. The comments should not be construed as a recommendation of individual holdings or market sectors, but as an illustration of broader themes. Data is from what we believe to be reliable sources, but it cannot be guaranteed. GW&K assumes no responsibility for the accuracy of the data provided by outside sources.
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4Q25 GW&K Market Insights
Macro | Insight
Harold Kotler, Bill Sterling, & Dan Fasciano discuss their outlook on the markets, highlighting discipline, diversification, AI, easing inflation, and a broadening global rally.
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Entering February, the outlook for municipal bonds remains favorable: Supply and demand are broadly in balance, credit quality is strong, and tax-equivalent yields are attractive.
GW&K Investment Review 4Q 2025
ECONOMIC COMMENTARY
Who among us wouldn’t love to see calmer waters? The level of tension across our society is palpable and deeply uncomfortable. Opinions are so filled with angst that it has become difficult to have reasonable conversations about the state of our country and the world. The sad reality is that this tension is not going away any time soon. The passions of these views are incredibly strong, and most people are unwilling to compromise how they see the world.
Having acknowledged this state of affairs, how do we conduct ourselves? While social behavior is not the point of this letter, it does, and will continue to, influence investment behavior. For many, it was hard, if not impossible, last spring to imagine the stock market rising again after such a sharp decline. Since that time, the market, as measured by many indices, has pushed to new record highs. The reversal has many shaking their heads in disbelief and assuming it is only the calm before the storm.
It is so easy to conclude that the tensions described above, combined with recent market behavior, mean we are in one gigantic bubble and that the years ahead cannot possibly be profitable for investors. But they very well may be. Why? Because the fundamentals of economics, capitalism, and entrepreneurship are not being left at the door. American business acumen is not governed by social tension. Corporate leaders are responsible for running successful companies. That responsibility requires focus, discipline, and the ability to look beyond the mood of the moment. Businesses cannot operate effectively if they are trapped by fear. This past year alone demonstrated that companies unwilling to conduct business-as-usual due to concerns over tariffs, bubbles, or inflation would have missed the significant economic growth enjoyed by the US economy.
I have commented in previous letters on the evolving world that technology continues to shape. Our daily lives have changed dramatically as technological innovation has altered so much of our everyday experience. The pace of the changes has been remarkable. Many argue that such progress only benefits those at the top, but that claim has been made repeatedly over the last century. Time and again, history has shown that people adjust, improve, and grow. Our resilience as citizens of the world comes from our ability to adapt, expand, and ultimately figure things out.
Of course there is much to be concerned about in today’s world, but there is also much to be excited about. However one balances those forces, our lives should be guided by optimism rather than fear, including how we invest. Pessimism has never been a good way to make decisions, in life or investing. And there is no such thing as the “the good old days.” There is only where we are, here and now. And so, if you wrestle with the state of our country and the world, invest with the understanding that progress will continue, with or without you.
The core of intelligent investing is, and always has been, diversification. The attributes of a successful approach are patience and discipline, grounded in humility. We work hard to identify the best opportunities, but investing is an art, not a science. The risk to investors is not only the fear of losing money, but how easily today’s markets allow us to act on that fear. The liquidity that the stock market provides makes it possible to change course at a moment’s notice, often in reaction to headlines or emotion. That ability, while valuable, also presents a real risk, and it is part of what makes this such a complicated time for investors.
Both we and you must be comfortable with your asset allocation and then allow the process to unfold. Any mid-course change must be clearly thought out and driven by long-term objectives, not reactions to the moment.
I wish you all a healthy and happy 2026, and please know that we at GW&K are always here for you.
Happy New Year.
Harold G. Kotler, CFA
Founder-Chairman, Chief Investment Officer
Harold G. Kotler, CFA
Founder-Chairman, Chief Investment OfficerDisclosures
This represents the views opinions of GW&K Investment Management. It does not constitute investment advice or an offer or solicitation to purchase or sell any security and is subject to change at any time due to changes in market or economic conditions. The comments should not be construed as a recommendation of individual holdings or market sectors, but as an illustration of broader themes. Data is from what we believe to be reliable sources, but it cannot be guaranteed. GW&K assumes no responsibility for the accuracy of the data provided by outside sources.