The October 1 deadline has passed, and the U.S. government has shut down. While political gridlock is never ideal, history suggests that shutdowns tend to be short-lived and have minimal sustained impact on the economy or the stock market. They are largely about political posturing and therefore don’t take long to get resolved. Simply put, delaying Social Security checks is not a winning political strategy, so it almost certainly won’t happen (we can’t make guarantees, but this is close). Republicans do need votes from Democrats, and we know there hasn’t been much nice playing in the sandbox in Washington, D.C. lately, introducing the possibility of an extended shutdown. Democrats are seeking healthcare concessions, including reversing Medicaid cuts and extending Affordable Care Act subsidies. Meanwhile, the Republicans are threatening more public-sector layoffs in areas not aligned with the President’s priorities, as each side stakes out its position. Investors have smartly looked past budget disruptions throughout history, rightly focusing on traditional fundamental drivers of the economy and stock market such as corporate earnings, consumer spending, business investment, inflation, and interest rates. That said, sectors heavily reliant on government contracts — such as defense and life sciences — may experience some short-term volatility. An extended shutdown, which could delay key economic data releases, including the October 3 jobs report, could detract slightly from economic growth but is unlikely to be material, in our view. Since 1976, the U.S. has experienced 20 shutdowns, averaging just eight days in duration. The longest, in 2018–2019, lasted 34 days. Importantly, the S&P 500 has historically posted average gains of 1.2% and 2.9% in the one- and three-month periods following budget resolutions, underscoring the market’s resilience, though past performance does not guarantee future results. Even if investors ignore the government shutdown, a pause may be in order given how far stocks have come since April — even as more tariffs are absorbed. While we see rising odds of a 5–10% pullback, risk to this bull market appears low thanks to a resilient economy, strong earnings, the resumption of the Fed’s rate-cutting cycle, and long-term catalysts like AI-driven productivity gains and fiscal stimulus from the One Big Beautiful Bill Act (OBBBA). Against that backdrop, a pullback could offer an attractive buying opportunity. In short, while near-term volatility is possible, or perhaps even likely, the broader outlook remains constructive. We encourage investors to emphasize stock market fundamentals over political theater and consider pullbacks as potential buying opportunities. With October upon us, here’s wishing you a Happy Halloween filled with festive fun and sweet surprises—and may your portfolio enjoy a season free of fiscal mischief! |
As you may have noticed, we’ve been fortunate this year—many of the accounts you’ve entrusted to us have meaningfully outperformed their respective risk levels. We’re genuinely pleased that you’ve been able to benefit from these results, and we’re truly grateful for the continued opportunity to help steward your capital with care and intention. While tax efficiency is one of our core investment objectives, we’re also mindful not to let the tax tail wag the investment dog—especially when certain positions become what we consider overbought, elevating both the position’s and the portfolio’s overall risk beyond our comfort level. In such cases, it’s often in your best interest to trim or exit those holdings and reallocate into less risky opportunities—even if doing so results in a taxable gain. Our priority remains long-term performance and proactive risk management, even when that means accepting short-term tax consequences. For your and your tax advisor’s planning purposes, we encourage you to monitor both your short- and long-term realized capital gains through the end of the year. You can do this by logging into yourAccount Viewprofile and navigating as follows: To estimate your capital gains taxes, multiply your realized gains by your applicable federal and state tax rates. For example:
We recommend working closely with your tax advisor to estimate your 2025 capital gains tax liability ahead of the 2026 filing season. If you anticipate owing taxes and don’t have cash readily available, please consult your financial advisor. It may be appropriate to withdraw funds from the same investment account that generated the gain. |
Keep Well-Organized Records Well-organized recordkeeping makes it easier to prepare your tax return and provide evidence of tax deductions. According to the IRS, you're encouraged to keep records, such as receipts, canceled checks, and other documents that support an item of income, a deduction, or a credit appearing on a return, as long as they may become material in the administration of any provision of the Internal Revenue Code. Depending on the assessment, these limitation periods can range from 3 to 7 years. There are also periods of limitations for refund claims, which range from 2 years to 7 years. The IRS encourages keeping records of property, healthcare insurance, and business income and expenses, among other categories. Tip adapted fromirs.gov This tax tip is for informational purposes only and is not a replacement for real-life advice. Consult your tax, legal, and accounting professionals for more specific information. |
Think Before You Click—Avoiding Malware Malware often hides in email attachments, pop-up ads, and fake software updates. To protect your financial data:
A single click can compromise your entire financial portfolio—stay alert and stay secure |
A reservoir's water level doubles each day. It takes 60 days to fill completely. How many days does it take for the reservoir to become half-full? ___
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OCTOBER 2025 Newsletter: Government Shutdown
October 04, 2025
