Anthony Brooks, Portfolio Manager, discusses the market's resilience in 2025, with stock prices supported by optimism around potential rate cuts and steady earnings, despite uncertainties around circular AI deals, geopolitical tensions, and political shifts. By year-end, more than 80% of S&P 500 companies beat earnings expectations, as real earnings growth rather than expanding valuations supported the majority of the year's gain. We expect investors' renewed focus on fundamentals to continue into 2026, creating significant potential for high quality stocks trading at below average valuations.

Liridon GIla, CFA, Portfolio Manager, discusses November's market broadening as defensive and value-oriented sectors outperformed the market's YTD leaders. Investor sentiment was tested by the government shutdown and mixed economic signals, however a strong start to the holiday shopping season solidified confidence that household spending power was intact. Looking toward 2026, Sawgrass expects quality companies could continue to outperform as the market broadens further, the Fed stays the course on easing, investors digest AI spending and near-term return expectations, and extreme relative valuations moderate.

Marc Davis, CFA, Co-Portfolio Manager, discusses how investors' fascination with Artificial Intelligence (AI) combined with continued hopes for further Federal Reserve easing has pushed equity markets to new all-time highs. However, valuations in many of these mega-cap companies appear stretched and with markets pricing in lots of good news, there is little room for error in both earnings and economic growth projections, thus increasing the potential for volatility at any time. Overall, despite these stretched valuations and uncertain fiscal and monetary policy, markets have continued to heed momentum, and we expect the continued chase by investors will likely lead equities higher and could keep a bid on any significant pull backs through year end.