## [# 2025 Investing: What’s the Last Factor Standing? ](/sections/podcasts/2025-investing-whats-last-factor-standing)
# 2025 Investing: What’s the Last Factor Standing?
If you listened to *Click Beta in 2025*, first, thanks! Second, you know we don’t do scripted or "talking points" or googling for facts to sound smarter. What we do is hit record and try to figure out what the heck is actually going on in the markets this last little while.
[](/contributors/dave-nadig)
[By Dave Nadig ](/contributors/dave-nadig)
Dec 23, 2025
Edited by: ETF.com Staff
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For our Episode 11 year-end spectacular of *Click Beta*, Cam Dawson, CFA, CIO of NewEdge Wealth, Matt Zeigler, Managing Director and Wealth Advisor at Sunpointe Investments, and I looked under the hood of 2025. And honestly? The engine block is cracked. The old manuals—Modern Portfolio Theory, the 60/40, the efficient frontier—seemed almost quaint as markets seemed to change costumes every 3 days.
We spent an hour debating whether asset allocation is dead, why "quality" was a trap, and why momentum is the only factor left standing. If an hour of us talking is just too much (I understand), here is the cheat sheet. These are the nine quotes that I think best capture the bizarre, momentum-driven reality of the 2025 market landscape—and what they mean for your portfolio in 2026. And some Q4 indie songs to match.
---
## Part I: The Shredding of the Textbooks
### The Death of the Efficient Frontier
> "The last 10 years, it may I even argue 15 years, have taken the efficient frontier, the modern portfolio theory, efficient market hypothesis, and absolutely shredded it." - Cam
We all learned MPT in school—the free lunch idea that a pile of uncorrelated assets reduces risk without killing returns. But as Cameron points out, the "Mag 7" era has turned that logic on its head. For the last 15 years, the "free lunch" of diversification has actually been a drag. If you did the responsible thing and diversified away from US Large Cap Growth, you lost. The math isn't necessarily broken forever, but the psychological toll of being a responsible fiduciary in a concentrated market has never been higher.
*Pairs with:* **"Taxes" by Geese.** *"Nobody deserves this" captures the angst of the well-meaning fiduciary pretty well.*
### The "Sell America" Whiplash
> "Whether you got this call right or wrong, if you flipped your entire asset allocation in and out, 70% in six to eight months, you're a terrible fund manager." -Dave
Remember April 2025? The Bank of America survey screamed "Sell America," and investors piled into gold and international stocks. (I [wrote about the impact](https://www.etf.com/sections/equity/did-sell-america-win-after-all), which was positive if you called it perfectly, [here](https://www.etf.com/sections/equity/did-sell-america-win-after-all).) Six months later, the U.S. market was ripping higher again. My point here isn't about predicting the future; it’s about the "behavior gap." If you let a few scary media headlines about "Sell America" drive 70% swings in your equity allocation back and forth, inside a year, you aren't investing—you're just churning. Conviction (or benign neglect) beat the "smart money" pivot this year.
*Pairs with:* **"Bitter Everyday" by Wednesday.** *Swimming through cold spots while the easy things keep getting harder.*
###
The Problem With "Vibe Checks"
> "The fund manager survey tells you all the cool kids are obsessed with Rocky Road, but there ain't a lot of signal there." - Matt
We obsess over things like surveys because what other people are doing feels like inside information, and as humans, we always want to know what our social peers are up to. It's genetic. But Matt nails the reality: a sentiment on a survey isn't the same as capital deployment. Just because managers *say* they are worried about inflation or love wheat futures doesn't mean they are actually moving their billions. In 2025, the "vibes" were consistently bearish while the flows were consistently bullish. Watch what they do, not what they say.
*Pairs with:* **"Berlin TV Tower"** by Blondshell. "*Relax, you don't shrink anymore"—good advice for survey respondents and the people reading them.*
---
## Part II: The Identity Crisis of Asset Allocation
### Zero-Based Portfolio Budgeting
> "Nothing has a right to exist in the portfolio. Nobody has a manifest destiny to be part of your strategic allocation." - Cameron
This is a call for "Zero-Based Budgeting" in asset allocation. For decades, we’ve given automatic slots to asset classes like Emerging Markets or Small Cap Value purely because history would suggest we "should." Cameron’s challenge is stark: lagging asset classes (or wildly speculative ones) need to prove they belong. If an asset isn't providing genuine diversification or alpha, it doesn't deserve a participation trophy in your client portfolios.
*Pairs with:* **"Stainless Steel" by Glitterer.** *Nobody's stainless, not even your legacy EM allocation.*
### The "Anxiety Premium" of Crypto
> "I am 50 times more nervous for a hundred thousand dollars on chain than for a million dollars in a Schwab account." - Dave, summarizing a comment from Crypto traders
While *I* have never had more than a tiny percent of my net worth in Crypto, I know a fair number of folks who have been two-feet into crypto trading since before the pandemic. And even they're nervous about leaving too much money in a wallet. You can yell "Not my keys!" all you want, but more Bitcoin moved into ETFs this year than was actually mined. Turns out the TradFi boomers were the real diamond hands.
*Pairs with:* **"Watch It Die" by Home Front.** *Edmonton post-punk for 3 AM self-custody dread.*
### The Hardest Easy Strategy
> "It's another year of 'press rebalance.' It's probably going up. Buy the dips, rebalance." - Matt
It sounds like complacency, but "shut up and rebalance" was actually the hardest trade of 2025. When Nvidia is up 200%, selling your winners to buy losing bonds feels like financial insanity. But Matt’s reminder is crucial: until the corporate earnings story actually breaks, this simple discipline is probably the only thing that works. The urge to "do something" is your enemy, unless the doing is "hit rebal."
*Pairs with:* **"You Can Have It All" by Florence + the Machine.** *Don't get greedy. Letting go is the best strategy.*
---
## Part III: Big Mo
### Don't Confuse Beta for Alpha
> "The stock isn't going up because you are a genius. The stock is going up because it has the momentum factor." - Cam
Bull markets create a lot of geniuses. This is the most dangerous phase of any cycle, where we all eschew our inner Buddhas and lean hard into our sense of self and our brilliance. Cam's ego-hammer here is good. You're probably not the genius picking the winners; the liquidity cycle did that for you. Recognizing that your gains are beta—not your own personal alpha—is the first step to ensuring you don't give them all back when the big-mo inverts.
*Pairs with: "***Loser" by Tame Impala.** *Self-deprecation on a feedback loop.*
### The Momentum Monopoly
> "The only thing that hasn't stunk is momentum. We've been in a momentum market since '23." - Dave
Here's the chart, you make the call:
The power of momentum this year has been pretty hard to deny. Growth ([**IVW**](https://www.etf.com/IVW) in the chart) got you part way there, but depending on when you measured, at times momentum was more than double the return of the S&P 500, and as we close out the year, it's a solid 10% ahead. In 2025, most defensive factors failed while the "chase" trades kept working. The question for 2026 is simple: What happens if the music stops? Does momentum drag down just as hard as it's ramped?
*Pairs with:* **Fundraiser by Bar Italia**. *Driving hook, forward motion, just keeps going.*
### The Era of the Bespoke Portfolio
> "It feels like a year of validating what I'm gonna call bespoke asset allocation decisions." - Matt
The era of the cookie-cutter 60/40 model is officially fading, if in fact it ever existed. Whether it's a client with $5 million in legacy Nvidia stock trying to navigate [exchange funds](https://www.taxalphainsider.com/p/the-exchange-fund-7-year-lockup-is) or [tax aware long/short](https://www.taxalphainsider.com/p/tax-aware-longshort-reading-list), or a crypto native looking to diversify into farmland, 2025 proved that "standard" models break under extreme concentration. The value of an advisor this year wasn't picking funds—it was in managing the messy, bespoke reality of concentrated wealth. Customization is no longer a luxury; it's the baseline requirement.
*Pairs with:* **Trainers by They Are Gutting a Body of Water (TAGABOW).** *Desiring something wholesome while grappling with reality.*
---
That's it for this month. Thanks for reading and watching! Here's your playlist!
*Discover the news, data, and voices shaping the ETF community. Follow along* [***here***](https://www.etf.com/topics/equity?utm_medium=nav)*.*
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[ Dave Nadig President & Director of Research ](/contributors/dave-nadig)
Prior to becoming chief investment officer and director of research at ETF Trends, Dave Nadig was managing director of etf.com. Previously, he was… [View Bio](/contributors/dave-nadig)
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