2025 was a historically strong year for markets despite the many events that took place along the way. The past year delivered no shortage of headlines including April’s tariff announcements, ongoing developments in artificial intelligence stocks, the passage of the One Big Beautiful Bill Act, and more. Yet through it all, investors are likely happy as U.S. stocks rose to new record highs, international markets outperformed, and bonds continued their rebound. The S&P 500 has now generated double-digit returns in six of the past seven years and has nearly doubled in value since the market bottom in 2022.

The past year reinforces the lesson that the best way to weather uncertainty is to remain disciplined and focused on long-term goals. As we look ahead to 2026, understanding what drove markets last year can help investors navigate the challenges and opportunities that lie ahead.

Key Market and Economic Drivers in 2025

• The S&P 500 gained 17.9% with dividends in 2025, achieving 39 new all-time highs. The Dow Jones Industrial Average rose 14.9% and the Nasdaq returned 21.2%.
• The VIX, a measure of stock market volatility, remains low by historical standards, finishing at 14.95 after climbing as high as 52.33 in April.
• The Bloomberg U.S. Aggregate Bond Index gained 7.3%, its best performance since 2020. The 10-year Treasury yield ended the year lower at 4.17%, down from 4.57% at the start of the year.
• International developed markets and emerging markets each gained over 30% in U.S. dollar terms based on the MSCI EAFE Index and MSCI EM Index, respectively.
• The U.S. dollar index ended the year at 98.32, falling 9.3% from 108.49 at the beginning of the year. The dollar reached a low of 96.63 in September.
• Bitcoin experienced a decline of about 6.5% from $93,714 to $87,647, after rising as high as $125,260 in October.
• Gold prices rallied throughout the year, finishing at $4,341 per ounce for a 64% gain. Silver prices also rose to $70.60 per ounce from $29.24 at the start of the year.

Major events in 2025

Many of the events of the past year were “known unknowns.” This concept was made famous by former Secretary of Defense Donald Rumsfeld, who distinguished “known unknowns” from “unknown unknowns.” For investors, this distinction can be helpful since the former are uncertainties we can anticipate. When markets react to these events, investors can be prepared in advance and avoid being caught off guard.

Concerns around tariffs, for instance, were very much on investors’ radars ahead of April 2. While this didn’t diminish the market reaction due to the size of these tariffs, it did allow the market to rebound quickly once events played out. Investors also knew the Fed would likely adjust rates once the job market weakened. Many also expected a new tax bill to pass given that Republicans control both houses of Congress.

Even concerns around AI, which are perhaps the biggest uncertainty for markets today, have also been at the top of investors’ minds. While the DeepSeek moment in January, when a Chinese AI company showed that models could be created and run more cheaply, was unexpected, the parallels to the dot-com boom and past surges in capital expenditures by large companies are well understood.

To summarize the major market-moving events over the year, here are the top 10:

• January 20: President Trump is inaugurated.
• January 21: The $500 billion private-sector Stargate project is announced.
• January 27: AI stocks fall on DeepSeek news.
• April 2 to 9: “Liberation Day” tariff announcement leads to a market correction. This was followed by a 90-day pause which sparked a rally.
• July 4: The “One Big Beautiful Bill Act” is signed into law, extending many Tax Cuts and Jobs Act provisions.
• September 17: The Fed begins cutting interest rates again.
• September 22: Nvidia and OpenAI announced a major strategic partnership and investment, raising concerns of “circular deals.”
• October 1: The government shuts down for what would be a record-setting 43 days.
• October 14: Jamie Dimon warns of “cockroaches” after the bankruptcies of Tricolor and First Brands.
• December 16: According to the BEA, the unemployment rate hit a four-year high of 4.6% in November.

Three key themes defined the past year

What themes drove markets across these events? First, it’s hard to miss the fact that artificial intelligence dominated market narratives throughout 2025. From massive infrastructure investments to concerns about market concentration, AI grew as an important source of economic growth and market returns. The Magnificent 7 stocks now represent around one-third of the S&P 500, creating concentration risk that means most investors have exposure to these stocks whether they realize it or not. Recognizing this when crafting investment strategies and financial plans will only grow in importance.

Second, tariff policy created uncertainty but has had less economic impact than expected. Tariffs on imported goods have risen sharply for many trading partners, yet the feared economic consequences largely failed to materialize. This is because companies adapted, tariffs were paused or scaled back, and consumer spending remained strong. For investors, this highlights that the outcomes of policy changes in Washington, whether its trade or federal finances, do not always have an obvious effect on the economy or markets.

Third, many asset classes performed well in 2025. International stocks outperformed U.S. markets, due in part to the decline in the U.S. dollar. Bonds generated strong returns and have nearly recovered their losses from 2022. Other individual assets including gold also had record years. So, benefiting from all of these asset classes is less about making individual investments, but about having the right asset allocation that can take advantage of opportunities while managing sources of risk.

Looking Ahead: Venezuela, Oil, and the Impact on Portfolios

The arrest of Venezuelan President Nicolás Maduro by U.S. forces represents an unexpected and significant geopolitical event. As has been widely reported, the U.S. military successfully conducted an operation that detained Maduro on charges related to drug trafficking and corruption. President Trump stated in a press conference that the United States will “run” Venezuela and work to expand its oil production.

While the humanitarian and geopolitical implications for the Venezuelan people and the region are most important, investors may naturally wonder what all of these issues mean for their portfolios. The move raises many questions around the role of the U.S. in the region, whether this will pave the way for democratic elections in Venezuela, the effect on the narcotics trade, if oil production will increase meaningfully, and how it will impact the sphere of influence of countries like Iran and China. 

History provides important context: geopolitical events often create short-term market volatility, but their long-term market impact tends to be limited. This is because these events don’t typically change the direction of broad economic and market drivers, even if oil production is affected. This has certainly been true of geopolitical conflicts in recent years, including in Ukraine and the Middle East. Understanding this pattern can help investors maintain perspective and focus on the factors that historically drive market performance.

Historical perspective

First, it’s helpful to briefly review the history of U.S. involvement in the region, since the discussion around U.S. intervention in Venezuela is complex and spans topics from international law to regional stability. The Monroe Doctrine, first articulated by President James Monroe in 1823, established that European powers should not interfere in the Western Hemisphere. Applied to recent events, it would suggest that South America represents the country’s “backyard,” so any hostile act in the region would be viewed as an act against the United States. President Trump has referred to this idea, most recently calling his foreign policy views the “Don-roe Doctrine.”

This is far from the first time the U.S. has intervened in a Latin American country. For example, in 1990, exactly 36 years ago to the day, the U.S. captured Manuel Noriega in Panama based on drug trafficking charges. And while the latest operation in Venezuela was generally unexpected, Maduro has been under indictment by the U.S. Department of Justice since 2020 on charges of narco-terrorism and drug trafficking. The Biden administration had maintained sanctions on Venezuela and, in early 2025, placed a $25 million bounty on Maduro, which was then raised to $50 million by the Trump administration.

Like other U.S. military and law enforcement actions, there are many interrelated objectives. The stated reason for the operation was to target narco-terrorism, which Maduro and 14 Venezuelan officials were criminally charged with by the U.S. in 2020. The fact that many nations view Maduro’s rule as illegitimate, based on the country’s 2024 election, strengthens this objective. Prior to the presidencies of Maduro and Hugo Chávez, Venezuela was a democracy and one of the wealthiest in the region.

For long-term investors, the most important point is that geopolitical risk is a normal part of investing, even if the specific circumstances differ each time. These news stories may also feel more concerning since they differ from everyday business news about corporate earnings and economic data. The chart above highlights many significant geopolitical events over the past few decades. In most cases, markets recovered within weeks or months, if they were affected at all.

Oil connects geopolitics to financial markets

For investors, the effect on oil prices may be the most consequential issue. This is because the primary channel through which geopolitical events affect financial markets is through commodity prices, and oil remains central to the global economy. Venezuela is important in this regard since the country possesses the world’s largest proven oil reserves at approximately 304 billion barrels, according to the U.S. Energy Information Administration. To put this in perspective, this exceeds even Saudi Arabia’s 267 billion barrels.

Despite these vast reserves, Venezuela produces far less oil than other countries. Venezuelan oil production has declined dramatically over the past two decades due to mismanagement, lack of investment in infrastructure, and sanctions. Today, production has fallen to less than 1 million barrels per day, compared to the U.S. of nearly 14 million.¹ If Venezuelan production is increased, it will likely take time and investment to meaningfully add to global supply. This minimizes the immediate effect on markets.

Over time, U.S. energy companies could see an opportunity to increase their access to these reserves, although a lower oil price due to greater supply could offset some of this upside. For the broader economy and consumers, any shock to markets could potentially be positive since increased Venezuelan production would place downward pressure on oil prices over time. This makes it different from other conflicts such as Russia’s invasion of Ukraine in 2022, which disrupted existing supply and drove oil prices to nearly $128 per barrel. That situation worsened post-pandemic inflationary pressures and pushed average U.S. gasoline prices above $5 per gallon.

Current oil prices remain far below those peak levels. In fact, prices have been subdued over the past year, with WTI crude trading below $60 per barrel and Brent crude just around that level. According to reports, the immediate response to recent events in Venezuela by OPEC+ countries has been to keep their production quotas steady, suggesting they are monitoring the situation before making strategic adjustments. The fact that the U.S. is now the largest producer of oil and gas in the world helps to further reduce the impact on the domestic economy.

That said, it’s important to remember that energy prices are difficult to predict with accuracy, and the U.S. is still dependent on crude imports. When Russia invaded Ukraine, many predicted that oil and natural gas prices would remain elevated indefinitely, especially with a harsh winter forecasted for Europe. However, prices stabilized and began declining far sooner than many projected. This is a reminder that, since oil is a global commodity, there are many factors that can unexpectedly affect prices.

Venezuela plays a minimal role in global markets

Another key fact for investors is that Venezuela plays an insignificant role in global financial markets. Its stock market, the Bolsa de Valores de Caracas, is small and illiquid, with limited foreign participation. It is not included in the MSCI Emerging Markets Index, so most international investors have minimal or no direct exposure to Venezuelan stocks. The country’s economic collapse over the past decade has essentially excluded it from emerging market portfolios.

When it comes to the bond market, Venezuela has been in default since 2017 when it failed to make payments on its debt. Bondholders have been negotiating restructuring terms, but the bonds trade at deeply distressed levels reflecting the expectation of significant losses. 

The situation in Venezuela will continue to evolve, and there may be additional developments that capture market attention. The indirect effects on oil prices and uncertainty are likely to outweigh the direct effects from the country and its stock market. Rather than trying to predict exactly how the situation might play out, investors should instead focus on aligning their portfolios with their financial goals.

The bottom line? The events of early 2026 are the first real test of the lessons we learned in 2025. Last year proved that markets can climb a “wall of worry”—generating record highs despite tariffs, political shifts, and economic fears.

While the situation in Venezuela is historic, the investment implication remains the same: Headlines generate noise, but fundamentals drive returns. The market shrugged off the “known unknowns” of 2025, and history suggests it will look past today’s geopolitical headlines as well. By focusing on your long-term plan rather than the daily news cycle, you position yourself to capture growth regardless of where the next crisis emerges.

References

Click to access 3dtab.pdf

 

Copyright © 2025 Clearnomics, Inc. All rights reserved. The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete and its accuracy cannot be guaranteed. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, or correctness of the information and opinions contained herein. The views and the other information provided are subject to change without notice. All reports posted on or via http://www.clearnomics.com or any affiliated websites, applications, or services are issued without regard to the specific investment objectives, financial situation, or particular needs of any specific recipient and are not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not necessarily a guide to future results. Company fundamentals and earnings may be mentioned occasionally, but should not be construed as a recommendation to buy, sell, or hold the company’s stock. Predictions, forecasts, and estimates for any and all markets should not be construed as recommendations to buy, sell, or hold any security–including mutual funds, futures contracts, and exchange traded funds, or any similar instruments. The text, images, and other materials contained or displayed in this report are proprietary to Clearnomics, Inc. and constitute valuable intellectual property. All unauthorized reproduction or other use of material from Clearnomics, Inc. shall be deemed willful infringement(s) of this copyright and other proprietary and intellectual property rights, including but not limited to, rights of privacy. Clearnomics, Inc. expressly reserves all rights in connection with its intellectual property, including without limitation the right to block the transfer of its products and services and/or to track usage thereof, through electronic tracking technology, and all other lawful means, now known or hereafter devised. Clearnomics, Inc. reserves the right, without further notice, to pursue to the fullest extent allowed by the law any and all criminal and civil remedies for the violation of its rights.