Darwin Portfolio Review: 26 December 2025

Above the Clouds, Madeira, Portugal

As we head into the last few days of 2025, Santa’s Rally has taken us to new highs in the SPX (S&P 500 Index) with the Index closing the week 1.4% above last week’s Close:

We have about another week before the official end of the “Santa Rally” and we are still sitting below the 1.618 Fibonacci extension level that has been providing strong resistance for the past 3 months. After this we might look for evidence of the “January Effect” that is often considered to favor small-cap stocks – although the “effect” has not been consistent in recent years. However, small caps underperformed other stocks through December, so we may see a “catch-up” here. Volume was relatively low through the Christmas week (normal) so we’ll wait to see what happens when investors come back into the market after the holidays.

Relative to other major asset classes, US equities fared reasonably well:

but were again outshone by Gold and Emerging Market equities.

While I wait to finalize my new algorithm for 2026, the Darwin Portfolio sits and waits also:

with the “old” algorithm still confirming at least a Hold on current positions:

My most significant change will have to come from my asset allocation strategy since I have been significantly under-invested through 2025. I am ok with this since I am a little surprised at the relative strength of the markets and have been (sentimentally) expecting/anticipating a pull-back/correction before now. However, the purpose of a benchmark is to “beat” it – or at least keep up with it –  and this (generally) implies 100% investment of available funds (that I have certainly not been achieving). A “Cash” position is still a valid “investment”, but, again, this has not always been deliberate/calculated on my part – so I want to try to change this. The “model” itself is ok but how to allocate the funds is a different problem/issue – and what I need to finalize (or at least adjust to) in the next week.

I hope to be able to outline my new strategy/system for 2026 in the next week (but it’s tough going because the tests I want to make are slow/time consuming) 🙁