November 8, 2025

My Thoughts on
the Market

Weekly Edition

How did the markets do?

• Stocks had a volatile week, with all major indices finishing lower.
  • Value stocks outperformed growth; the Vanguard S&P 500 Value Index ETF fell 0.72% compared to a 3.40% loss in the Vanguard S&P 500 Growth Index.
  • Value and growth have been in a tug-o-war for the past month as investors have become anxious over high stock prices.
• Bonds were flat for the week and provided stability relative to stocks.
  • Investors are beginning to think that another 0.25% rate cut in December is unlikely, but that could change if the government data blackout ends.

What headlines moved the markets?

• Big Tech earnings were mixed, causing investors to question sky-high valuations.
  • While companies like Amazon and Microsoft beat expectations, concerns are growing that these stocks have gotten too expensive.
  • I'm keeping an eye on whether this tech selloff spreads to other parts of the market, but remember that corrections in overpriced stocks can actually be healthy for the broader market.
• The government shutdown entered its fifth week and is having an impact on consumer confidence.
  • Consumer confidence dropped to near-record lows as the shutdown drags on, which could slow spending during the holiday season.
  • Many retail companies rely heavily on the holiday season for profits.

Personal Finance: Roth Contributions, the conventional method of funding a Roth IRA
Disclaimer: taxes are complicated and unique to each individual. Consult with your advisor before making any major tax decisions. This is general educational information and not intended as financial advice.

• A Roth IRA is a tax-sheltered retirement account where you contribute money you've already paid taxes on (post-tax dollars).
  • Your money grows tax-free, and when you retire, you can take it out without paying any taxes on the gains.
  • There are no required minimum distributions (RMD) for Roth IRAs.
• There are several ways to fund a Roth IRA; making annual contributions is the conventional method (I will cover the other methods in my newsletters over the next couple of weeks).
• For 2025, you can contribute up to $7,000 per year if you're under age 50, or $8,000 if you're 50 or older.
  • You can contribute to both a Roth IRA and your 401k/403b.
  • But there's a catch - the amount you can contribute phases out based on your income:
    • You must have earned income from employment to contribute.
    • Single filers’ contribution limit is reduced if their modified adjusted gross income (MAGI) is at least $150,000 and no contributions can be made if their MAGI is $165,000 or greater.
    • If you file jointly, then the same rules apply for MAGI starting at $236,000 and contributions are prohibited if over $246,000.
• Who should contribute to a Roth IRA?
  • Young professionals in their 20s and 30s whose income will rise later in life.
  • Folks who expect their taxes to rise in retirement.
    • RMDs from pre-tax retirement accounts (401k/403b/traditional IRA) can easily push retirees into a higher tax bracket after age 73.
  • People who want to maximize the amount going to their heirs due to the lack of RMD or income taxes on withdrawals taken by their beneficiaries.

Quote of the week
“Sometimes, we see bubbles. Sometimes, there is something to do about it. Sometimes, the only winning move is not to play.” - Michael Burry, hedge fund manager famous for calling the 2008 real estate crash (Christian Bale’s character in the movie The Big Short)

• On Monday, 11/3, Burry’s hedge fund disclosed a massive $1.1B short position (betting that the stock price will go down) on Nvidia and Palantir.
  • Burry clearly believes that AI stocks are in a bubble.
  • His recent “big short” position disclosure prompted murmuring across the financial world.
    • Coincidentally, or perhaps not, AI stocks Nvidia, Palantir, and Advanced Micro Systems all fell more than 10% this week.

Conclusion

• Although tech stock valuations are high, the AI bubble is probably not bursting just yet, however investors are getting nervous and looking for any excuse to take profits.
  • The fact that everyone is aware of a bubble actually makes me less concerned about the impact of the bubble bursting. It’s the unforeseen bubbles that hurt the most.
• The government shutdown is beginning to weigh on consumer sentiment, which could have economic repercussions for holiday shopping and cause a ripple effect across the stock market.
• There are more ways than one to fund a Roth IRA but contributions are the most common method. If you are a young professional in a low tax bracket, then you may want to consider contributing to a Roth IRA in addition to your 401k.
  

Have a nice weekend!

Kevin