December Markets &Year-End Giving:

What Investors Should Know

By John Browning, MBA and CSA® | CEO, Principal

A client once told me about a covered wooden bridge near his childhood home. Each winter, fierce storms would shake it and rattle every board. Yet it never collapsed. As he grew older, he learned the secret. The bridge was designed with flexible joints that allowed it to bend under pressure instead of breaking. 

Financial markets and investor psychology operate the same way. Success is rarely about avoiding stress. It is about having a structure flexible enough to withstand it.

As we look back on November’s turbulence and forward to year-end planning opportunities, that bridge serves as a potent reminder. Strength comes from preparation and flexibility, not rigidity.

The Bottom Line At The Top: 

Volatility in November reinforced a familiar lesson for long-term investors. Short-term uncertainty around AI stocks, Federal Reserve policy, and delayed economic data is manageable with a disciplined investment approach.

At the same time, year-end presents a rare opportunity to strengthen your financial plan through strategic charitable giving, smart tax planning, and asset optimization.  Thoughtful planning today can support both your wealth management goals and your long-term legacy.

November Market Movements and What They Mean

November delivered a pullback as investors stepped away from higher-risk assets and reassessed expectations for interest rate cuts. Despite volatility, most major asset classes began to recover by the end of the month, underscoring the importance of well-constructed and maintained portfolios in any wealth management strategy.

Samuel Clemens once remarked that “History does not repeat, but it does rhyme.”This month’s volatility echoes many prior periods in which short-term noise temporarily overshadowed steady, long-term economic trends.

Takeaway: A balanced combination of stocks, structured income-producing strategies with downside protection, some high-quality bonds, and global diversification tailored to your specific portfolio needs remains the most effective approach for navigating the cycles and supporting long-term financial goals.  Often, what we find is an overly simplistic, overly complicated, or significantly outdated strategy, even among those who are highly successful in their own professions. 

Taxes Often Take a Bigger Bite Than Necessary

Year-End Giving as a Financial Strategy

The holiday season inspires generosity, but today’s environment also makes charitable giving a valuable financial planning tool. Winston Churchill captured this beautifully when he said,

“We make a living by what we get, but we make a life by what we give.”

Americans donated roughly $593 billion in 2024, reflecting both rising household net worth and a desire to contribute meaningfully to their communities.  This year, strategic charitable planning plays an even bigger role in wealth management and tax planning.

While some people may think that wealth management is only about investing, there is a lot more to it when you do it correctly.  Many tools in the proverbial toolbox can be used if you know they exist and how to use them effectively.  Before we talk about the market this month, let's go through a few ways to potentially save money in taxes, because it is not just what you make, it is what you keep that matters. 

New Tax Rules Create a Valuable Window

The ‘One Big Beautiful Bill Act’ introduced several impactful changes:

The SALT deduction cap rises from $10,000 to $40,000, which allows many taxpayers to itemize again.

Beginning in 2026, a 0.5 percent floor on adjusted gross income will apply to charitable deductions, meaning any portion above this threshold will qualify for a deduction.  In other words, you will only be able to deduct charitable gifts to the extent they exceed0.5% of your (AGI) Adjusted Gross Income. This creates a multi-year window through 2029 to optimize your tax planning and charitable giving strategy.  So, suppose you typically use the standard deduction but give at least 0.5% of your AGI. In that case, you can deduct it starting in 2026, so delaying that December gift until January may make sense if you are not itemizing.

Other potential Tax Reduction Ideas:

Donating appreciated securities This method provides three advantages that align with both wealth management and asset optimization.

• eliminates capital gains tax• removes future appreciation from the estate• generates an ordinary income tax deduction, especially helpful during high-income or high-capital-gains years. 

Donor Advised Funds DAFsDAFs hold more than 250 billion dollars and allow donors to receive an immediate deduction while granting strategically over time.

Qualified Charitable DistributionsFor individuals age 70½ or older, making a direct IRA distribution of up to $108,000 in 2025 can satisfy required minimum distributions while avoiding taxable income.  The caveat is that the funds must be transferred directly from your retirement account to the charity, and they cannot first go into your bank account.  This is one of the three ways you can never pay taxes on your money.  (Who said death and taxes were the only sure things?)

Charitable Remainder Trusts and other advanced toolsThese are just some of the powerful legacy planning structures that can reduce taxes, support heirs, and fund charitable goals, but require careful planning with a qualified advisor.

Wealth, Purpose, and Perspective

Financial planning is about more than reacting to the markets. It is about creating a structure that connects today’s decisions to tomorrow’s goals with clarity and confidence.

This past month’s market volatility highlights why diversified investment advisory strategies exist. They help portfolios bend rather than break during stressful periods. Charitable planning, meanwhile, can strengthen family values, reduce tax exposure, and support a long-term legacy.

As year-end approaches, consider reviewing.• your portfolio positioning for the next 12 to 18 months• opportunities for thoughtful tax planning• ways to align charitable giving with your broader wealth management strategy

Where are the markets headed as we move into year-end? 

This downside in November was, as always, disconcerting for many investors, even though the year has been a very positive one overall.   I don’t know many people who enjoy watching their gains disappear rapidly, but the reality is that this move down was typical of the markets.  Individuals with portfolios overallocated to the crypto space (down around 30% in November) or those overallocated to some of the great titans in the AI space were the worst hit. However, suppose they had cash-flowing assets in their portfolio and remained disciplined. In that case, they may have seen this as an excellent opportunity to purchase shares of quality companies at a discount.  Full disclosure: We do not have large crypto exposure, and some clients have none. We generally took this opportunity to realize tax losses on some of our Crypto (ETF) Exchange Traded Funds and immediately shift and increase those holdings into a comparable ETF.  This gives us a tax break while still maintaining, or in many cases increasing, our holdings of select crypto assets, even as prices remain depressed. 

While we remain bullish on the overall market we do see several areas where we are trimming some gains and reallocating to other better opportunities for our clients and if you follow us on any of our social media channels or you listen to the morning update you probably already guessed that yes, we have moved some of those profits we took in to cash flowing securities not associated with the bond market or traditional fixed income.  Constantly feeding our cash flow machine is a key part of our overall wealth management strategy, whether you are looking for growth or are more dependent on current income from your assets. 

We are a bit concerned about what we are seeing in the labor markets.  We have started to see proverbial cracks forming in the economy, and, as usual, the Federal Open Market Committee will be substantially late to the game; they are likely to cut rates next week.  Even with this concern, we still see the overall markets remaining healthy well into the new year.

We will continue to update you each morning for those of you who subscribe and listen to the morning update each trading day, and we will be back in January for the next monthly update.  Until then, enjoy the holidays with the people who are most important to you and do the things you love. 

Nothing in this communication should be construed as personal advice, and past performance is no guarantee of future results. There is a risk of loss associated with investing. No representation or implication is made that any methodology or system will generate profits or ensure freedom from losses. Guardian Rock LLC and its affiliates are fiduciary investment advisors. Please consult with us before making investment decisions and or attempting to implement the strategies and tactics we discuss in any of our publications.