Mark on the Markets
November 2025

Q4 Bull Market & Wall of Worry

The timeless Wall Street saying, "Every bull market climbs its own wall of worries," seems to capture the essence of today's market landscape perfectly. With the fourth quarter underway, we urge investors to stay vigilant and avoid assuming the recent gains will persist without turbulence. Factors like market breadth, sector concentration, and elevated valuations all point to the need for a measured, cautious strategy in the months ahead. Historically, October is thought to rank among the year's most unpredictable months, a notoriety shaped by decades of market lore.

The Crash of 1929 (a 13% selloff on Black Monday and 12% on Black Tuesday, according to Federal Reserve History), the Crash of 1987 (a 22% selloff in October per MarketWatch data), and the financial crisis of 2008 (a 17% decline in October) have all contributed to the month’s spooky reputation.

But does perception match reality? Since 1970, October averages a 0.91% return for the S&P 500 Index (dividends not reinvested), according to S&P 500 data from the St. Louis Federal Reserve. Between 2010 and 2024, October sports an average monthly advance of 2.13%, which is eclipsed only by November and July.

Last month’s action was generally in line with the long-term averages.

More impressively, the major market averages—the Dow, the S&P 500 Index, and the Nasdaq Composite—have all been up in each month—six straight monthly gains—since May.

As we briefly noted last month, government shutdowns typically have little impact on equities, and last month was no exception. Broadly speaking, the absence of all but essential government services does not have a lasting impact on the economy.

We did, however, experience a brief bout of volatility during the month when the president threatened punitive tariffs against China, which was primarily in response to China’s decision to tighten export controls on rare earth minerals and related technologies.

Rare earth minerals are crucial for manufacturing various high-tech products and military equipment, and China dominates the global supply chain.

However, cooler heads prevailed. As part of the truce, China agreed to delay its new export restrictions, and the president lowered some tariffs.

Major Catalysts Behind the Ongoing Rally

• The government shutdown has delayed key economic data, but investors aren’t flying blind. In addition to private sources of data, investors are carefully combing through Q3 corporate profits, which have been quite strong overall, according to LSEG.
• The ongoing boom in AI continues unabated and has been fueling investor enthusiasm.
• The Federal Reserve delivered a widely expected quarter-point rate cut.
• While Fed Chief Jay Powell tempered market enthusiasm by signaling that a December cut is far from certain, investors chose to focus on the generally favorable economic fundamentals, including solid corporate profits and the expanding economy

Overall, October was positive, but it was a mixed bag with some sectors gaining and other losing ground. However, there was a combination of solid economic fundamentals, a stable interest rate environment, and the ongoing AI revolution which remained a key catalyst for gains among large-cap tech firms.

Energy Sector: A Mixed Bag Amid Divergent Commodity Trends

As many of our clients work in the energy sector in Texas and Louisiana, I wanted to give my thoughts on the trends I am seeing in oil & gas markets.

October 2025 delivered a tale of two commodities for the U.S. energy sector, resulting in uneven returns that highlighted the sector's vulnerability to price swings and broader economic signals. The energy sector lagged the overall market significantly, posting a modest gain of just 1.2% in the S&P 500 Energy Index. This underperformance stemmed from crude oil's persistent downward pressure, offset partially by a late-month rally in natural gas prices.

Crude oil's bearish trajectory dominated early returns, with West Texas Intermediate (WTI) prices averaging around $68 per barrel before sliding to $59 by month-end—a roughly 13% monthly decline. This erosion shaved about 4-6% off the value of integrated oil majors and exploration & production (E&P) subsectors, as oversupply from non-OPEC+ regions flooded inventories and dampened demand forecasts from key importers like China. Producers in these areas faced squeezed margins, with many opting for restrained capital spending to preserve cash flow rather than aggressive drilling. The result was a cautious investor sentiment, where even temporary geopolitical events—such as the recent Middle East tensions—failed to sustain any upward momentum.

In contrast, natural gas provided a bright spot, with Henry Hub spot prices dipping initially on mild weather but rebounding sharply by 14% in late October to $3.44 per million British thermal units (MMBtu). This surge, fueled by record liquefied natural gas (LNG) export volumes and anticipatory winter demand, lifted returns in midstream and gas-focused production segments by 8-12% for the month. Pipeline operators and LNG infrastructure players benefited from steady throughput fees, underscoring the sector's pivot toward export-driven stability amid domestic abundance. Overall, midstream assets, with their fee-based revenue models, outperformed broader energy peers, delivering annualized yields that appealed to income-oriented portfolios.

Divergent Returns - Deeper Structural Shifts

Oil's glut from record U.S. output clashed with softening global growth, while gas's export boom—up 15% month-over-month—capitalized on Europe's diversification away from traditional suppliers. Year-to-date, midstream has surged over 25%, while E&P trails at around 19%, illustrating how commodity-specific tailwinds can insulate certain niches. In a market climbing its "wall of worries," energy's October snapshot reminds us that commodity cycles reward patience over speculation.

Mark on the Charts

I believe the S&P 500 equally weighted index gives us the best and broadest picture of the overall market. We finally see a pause and consolidation in the trend of the market. As you may remember, in August the market began flattening out, only to move higher in September. I do not see any reason to exit the market at this time, and there are no warning signs that things could go south. However, it could change overnight, so we’re ever watchful. And it’s why I employ a disciplined, multi-stage technical strategy to systematically reduce equity exposure during early warning signs of market downturns while progressively re-entering on confirmed bullish reversals to capture recoveries and optimize long-term portfolio performance. As I said last month, it’s another major differentiator of Financial Cornerstone from other financial firms.

Timely Tax Tidbits

Understanding Modified Adjusted Gross Income (MAGI): A Cornerstone of Wise Stewardship

At Financial Cornerstones, we view financial planning through the lens of biblical wisdom—stewarding the resources God has entrusted to us with diligence and foresight.

Proverbs 21:5 reminds us: "The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty." In this spirit, we offer comprehensive tax planning services to help you navigate the complexities of the federal tax code, always in alignment with your unique God-given circumstances. Please note that while we provide insightful tax planning strategies, we do not offer formal tax advice; for that, we encourage consultation with your trusted tax professional.

One foundational concept in this landscape is Modified Adjusted Gross Income (MAGI), a key metric used by the IRS and other federal agencies to determine eligibility for benefits, tax breaks, or additional surcharges. As faithful stewards, understanding MAGI empowers you to make informed decisions that honor your calling to manage resources responsibly.

MAGI's relevance has grown even more pressing in recent years, particularly with the enactment of the "One Big Beautiful Bill" (OBBB), which ties qualification for several new tax incentives directly to your MAGI level. Yet, true to the intricate design of the tax code—much like the layered wisdom in Ecclesiastes—we must approach it with care. There isn't a single, universal definition of MAGI; it varies based on its purpose. What remains consistent is its starting point: your Adjusted Gross Income (AGI), reported on Line 11 of your Form 1040 or 1040-SR.

From there, the calculation branches into specifics. Let's explore common scenarios where MAGI plays a pivotal role, so you can prayerfully consider how these might impact your family's financial health:

1. New OBBB Tax Deductions 

• MAGI helps assess eligibility for enhanced deductions like the $6,000 senior deduction (for those 65+), the $40,000 cap on state and local taxes (SALT) via Schedule A, and write-offs for up to $12,500 in overtime pay, $25,000 in tips, or $10,000 in car loan interest. 
• Here, MAGI equals AGI plus exclusions for foreign earned income, foreign housing, and certain income from U.S. territories (Puerto Rico, American Samoa, Guam, or the Northern Mariana Islands).

2. Family-Focused Credits: Child, Adoption, and American Opportunity 

• These vital supports for growing families and education use the same MAGI formula as the OBBB deductions above. As Proverbs 22:6 urges, "Train up a child in the way he should go," these credits can be a blessing—provided your MAGI aligns.

3. Education and Housing Breaks: 

• Student Loan Interest, I-Bond Interest, and Rental Losses These phase out at higher income levels, requiring a more expansive MAGI calculation that includes additional items like tax-exempt interest or passive income adjustments. Thoughtful planning here can preserve these opportunities for debt reduction and homeownership.

4. The 3.8% Net Investment Income (NII) Surtax 

• For joint filers with MAGI over $250,000 (or singles/head of household over $200,000), this surtax applies to the lesser of your NII or the MAGI excess above thresholds. MAGI here is AGI plus excluded foreign income— a reminder to balance investment growth with prudent tax foresight.

5. Medicare Premium Adjustments 

• Most enjoy the standard Part B premium of $185/month in 2025, with optional Part D coverage. However, higher MAGI triggers surcharges: for joint filers over $212,000 (singles over $106,000), premiums rise progressively. These are based on your most recent tax return (2025 uses 2023 MAGI; 2026 will use 2024). MAGI includes AGI plus tax-exempt interest, underscoring the value of holistic planning.

Wise Tax Planning

As Ephesians 5:15-16 exhorts, "Look carefully then how you walk, not as unwise but as wise, making the best use of the time." The nuances of MAGI can feel overwhelming, but they also present opportunities for strategic alignment. At Financial Cornerstones, our tax planning services are designed to illuminate these paths, integrating your faith-driven goals with practical steps toward abundance.

We invite you to schedule a complimentary review today—let's prayerfully map a plan that reflects God's provision in your life. 

Through faith-based guidance, we help your review and refine your strategies, ensuring preparation for your children’s education will build lasting legacies, honor God, and secure financial peace for future generations.

We’re committed to helping you experience financial contentment and peace through a plan that’s right for you, and by aligning your investment with your Christian values. It’s about understanding how you want to live and what you want to do. Whether you want to spend time with family or volunteer to make the world a better place, we help you prepare to spend your time, talents, and resources on what matters most to you.

Implementing faith-based investing begins just like any other investment 
management process – we’re looking for great investments!

I hope you’ve found this review to be educational and helpful. Our goal is to be a guide to you as you run the race and keep the faith. 

"The fear of the LORD is the beginning of knowledge; fools despise wisdom and instruction." Prov 1:7

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