Mark Tremonti and Scott Stapp (1999) 
Higher

The end of October is an interesting time for many. Those who love the fall season are drawn to the changing colors and crispness of the autumn air. For others, it is a time of transition towards winter and an awareness that there are only two months left in the year — and even fewer holiday shopping days. And for kids and kids at heart, it is the arrival of Halloween — although based on the number of decorations every neighbor puts out, it has been Halloween time all month. For kids, Halloween is a time to put on a costume that reflects the latest trend (think KPop Demon Hunters), classic horror movies (Freddy Krueger), or funny puns (Barbie Que). It can also be a time for kids to learn about the economy and investing (really?).

Apparently, the surprise success of KPop Demon Hunters meant that supply chains could not deliver enough costumes to meet demand and prices on secondary markets reached insane levels. Try explaining that to an eight-year-old who wants to be dressed as a member of Huntr/x but must substitute and be a Swiftie (again). Another lesson can focus on the benefits of portfolio diversification. Every kid knows which houses are more likely to give out single full-size candy bars or which ones give out fun-size candies. Do they choose to focus only on the full-size houses, or do they go to more houses to diversify their bags with more pieces but in smaller sizes? Then there is the disappointment of houses that are not answering the door at all — which is a great time to explain opportunity cost. It would probably be a long walk home for the parents and kids if they tried this — but just wait until a kid goes out dressed as a Nobel prize-winning economist or hedge fund manager.

This October was an interesting time for investors. The month started with the U.S. government shutting down for the first time since January 2019. The length of the latest shutdown looks to surpass the 35 days of the 2019 shutdown. Any shutdown impacts people directly and indirectly and eventually it starts to hit the broader U.S. economy due to lower government and consumer spending, and an increased concern about potential recessionary impacts. Interestingly, one area of the economy that typically shows limited to no impact is the U.S. stock market. In prior shutdowns of any length, the stock market has delivered flat-to-positive returns in most instances. Investors focus more on corporate earnings, the broader economy, and monetary policy.

During the current shutdown, corporate earnings reports have been strong with positive surprises from most Mag 7 companies. The economy has continued to grow as measured by non-government data, and the Fed trimmed interest rates another 25bps at the end of the month. While it may appear to be business as usual for investors, there are growing concerns as markets turn toward the home stretch of 2025. Many Mag 7 stocks have reached multiple new highs, far outpacing the old economy stocks that are not linked to the dominant AI themes. With market caps of some Mag 7 companies exceeding $5 trillion, it is natural for investors to be asking “Can you take me higher”? Or should they be thinking about diversifying away from the full-size Mag 7 candy bars that every investor seems to want these days ‑and adding in a few different fun-size pieces to their portfolios. Most investors understand portfolio diversification but everyone — including costumed kids — can benefit from basic economic and market theory lessons.

Here are observations on what occurred across the investment markets in October:

Broad Market Performance¹

Domestic Equity²

• U.S. equity markets continued their months long rally in October, led again by bigger cap growth stocks in the Technology and Consumer Discretionary sectors.

• Small cap stocks did not maintain their torrid Q3 pace, delivering mixed results in the month and mid cap stocks were slightly negative.

International and Global Equities³

• Non-U.S. developed market stocks were up 1% in October, with Japan outpacing the U.S. and Germany a notable laggard in Europe.

• Korea was up 23% and Taiwan was up 10% in the month, driven by higher growth expectations linked to the AI theme. China fell back 4%.

Fixed Income Markets⁴

• U.S. bond market returns were modestly positive in the month as investors looked ahead to whether the Fed would continue to cut interest rates again in December. The lack of government data has clouded the discussion.

Specialty Markets⁵

• REITs sold off at the end of the month due to a small rise in longer term interest rates. Commodities were lifted by rising natural gas, gold, and copper prices.

Sectors⁶

• Growth sectors (IT, Consumer Discretionary, and Comm Services) were boosted by positive earnings reports. Financials and Materials were two of the weaker sectors in the month.

If you have questions or want to discuss the current state of the investment markets and their impact on your plan or portfolio, please do not hesitate to reach out to your advisor. Feel free to ask if they “can you take me higher?” but know that they may start with a primer on economics and investing principles to explain why portfolio diversification wins in the long-term.

^1-6 All data referenced in the table and comments supplied by Morningstar as of 10-31-2025

This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from HUB International or any of its subsidiaries to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision, and it should not be relied upon by you in evaluating the merits of investing in any securities or products. In addition, users should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine, together with their own financial professionals, if any investment mentioned herein is believed to be appropriate to their personal goals. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for informational purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. It should be noted that investment involves risks, the value of investments and the income from them may fluctuate in accordance with market conditions and taxation agreements and investors may not get back the full amount invested. Both past performance and yields are not reliable indicators of current and future results.
HUB Retirement and Private Wealth employees are affiliated with and offer Securities and Advisory services through various Broker Dealers and Registered Investment Advisers, some of whom may or may not be affiliated with HUB International. HUB International owns the following Registered Investment Advisers: HUB Investment Partners; HUB Investment Advisors; GRP Financial; RPA Financial; and Taylor Advisors. Additional information for each individual HUB International Registered Investment Advisor may be found in the respective Form ADV available on the SEC’s IAPD website at adviserinfo.sec.gov. Insurance services are offered through HUB International.