The Confident Chronicles: September 2nd, 2025
As we close the books on August 2025, I wanted to share a concise yet comprehensive review of how markets performed last month and what it means for our portfolios.
1. U.S. Equity Markets
Strong Monthly Gain Amid Late Pullback
The S&P 500 closed August with a 1.9% gain, marking its fourth consecutive monthly increase—a noteworthy streak of momentum AP News+2The Times of India+2. Despite ending the month on a softer note, the upward trend prevailed.Record-High Milestones
The S&P 500 reached an all-time closing high of 6,501.86 on August 28, 2025, followed by an intraday high of 6,508.23 BlackRock+15Morningstar+15The Times of India+15AP News+6Wikipedia+6The Times+6.Likewise, the Dow Jones Industrial Average closed at record levels: peaking at 45,636.90 on the same date Wikipedia+1.
Broadening Market Breadth—Small Caps Shine
August was particularly notable for the outperformance of “underdog” sectors. Small-cap stocks, represented by the Russell 2000, surged over 7.3%, marking their strongest monthly performance since November BlackRock+15MarketWatch+15AP News+15.Traditional cyclicals like materials (+5.6%), consumer discretionary (+4.3%), and financials (+2.6%) outpaced tech (+1.3%), signaling improved breadth MarketWatch.
Emerging Caution on Valuations
With markets elevated, experts are warning of potential volatility ahead. Historically, August and September have been the weakest stretch of the stock market, with average losses of 0.6% and nearly 1%, respectively businessinsider.com. Forecasts range from a 10% to 15% correction in the near term—though many see this as a potential buying opportunity businessinsider.com.
2. Intermediate-Term Core Bond Market (AGG)
Stable to Slightly Positive Performance
The iShares Core U.S. Aggregate Bond ETF (AGG)—a benchmark for intermediate-term core bonds—ended August near $99.46–$99.57, reflecting modest monthly gains or flat performance DC College Savings+8StockAnalysis+8BlackRock+8.Healthy Yields and Fund Structure
AGG offers a 30-day SEC yield of ~4.29% and an average yield-to-maturity near 4.45%, with an effective duration of about 5.8 years StockAnalysis+1BlackRock+1. The fund holds a broadly diversified mix of Treasuries, agencies, MBS, and high-quality corporates—with over 12,700 holdings—making it a cornerstone for core bond allocations StockAnalysis.
Summary & Outlook
In equities, August delivered continued upside and market-records, but with increasing signs of profit-taking and valuation caution.
The strength in small-cap and cyclical sectors suggests healthy internal breadth, but the mounting concerns over AI valuations and seasonal volatility signal a more guarded tone as we transition to fall.
Meanwhile, Intermediate Term Bonds delivered their characteristic stability and yield profile, reinforcing their role as a ballast in our balanced portfolios. The current yield levels and diversification provide resilience, especially in the face of equity market swings.
What This Means for Us
Stick to long-term allocation discipline. We’re seeing healthy momentum and still-low implied volatility—but with caution warranted in high-flying sectors.
Rotation toward value and cyclicals is constructive. Our positioning in value-oriented stocks may benefit from further breadth expansion.
Intermediate Term Bonds remains a key anchor. With rates still intact and yields favorable, these bonds support portfolio income and stability. However, this outlook may change if it appears there will be a Fed Rate cut in the near future.
Stay vigilant ahead of potential macro inflection points. If Fed action looms or market sentiment shifts, we may tactically adjust equity and bond exposure.
PLAN CONFIDENCE MODEL UPDATES:
FUTURE CONTRIBUTIONS:
Future contributions are monies that are added to your plan with every paycheck.
We monitor the future contributions monthly and are looking to direct these monies into investments that we hope to be “on sale” for the next 30 days.
If we are correct, this will allow you to buy more shares in your portfolio.
This month we are advising that you use the following:
· (Bonds) Long Government
· (Stocks) Small Value
· (Stocks) Foreign Large Value
“Future Contributions” are an optional feature in Plan Confidence, and you may or may not receive this advice.
Please discuss this with your advisor if you have any questions.
The exact amounts you should allocate depend on the model that you are using.
These categories may or may not be available in your plan. If they are not available in your plan, we will recommend the closest available asset class and label it as a “proxy”.
You can find all substitutions on your “Proxy Page” within your dashboard.
Please log into your Participant Dashboard to see the exact allocations you should be using as of today.
CURRENT ALLOCATIONS - STRATEGIC MODELS:
Current Allocations are the monies currently in your plan.
Making changes to this money is commonly known as a “rebalance”.
Our “Strategic Models” combine the benefits of asset allocation and “buy and hold” strategies.
These models rebalance quarterly back to their risk “targets” and remain fully invested through all market cycles.
Our Strategic Models rebalance the first trading day of every quarter.
Strategic Models – LAST UPDATED 07/01/2025
Please talk to your adviser if you have any questions.
The exact amounts you should allocate depend on the model that you are using.
These categories may or may not be available in your plan. If they are not available in your plan, we will recommend the closest available asset class and label it as a “proxy”.
You can find all substitutions on your “Proxy Page” within your dashboard.
Please log into your Participant Dashboard to see the exact allocations you should be using as of the last rebalance advice.
CURRENT ALLOCATIONS - TACTICAL MODELS:
Current Allocations are the monies currently in your plan.
Making changes to this money is known as a “rebalance”.
Some plans have trading restrictions on how often you can rebalance the money in your plan. Be sure to know your plan’s restrictions before implementing any tactical strategies.
Our “Tactical Models” combine the benefits of asset allocation and “momentum investing” strategies. These models rebalance periodically back to their risk “targets” and the targets can be changed at any time given the current market conditions.
These models may go through periods of time while holding larger amounts of cash than the Strategic Models.
Our Tactical Models may rebalance on any given day.
Please be sure to look for an email from support@planconfidence.com letting you know when to make changes.
Tactical Models LAST UPDATED 07/01/2025
The exact amounts you should allocate depend on the model that you are using.
These categories may or may not be available in your plan. If they are not available in your plan, we will recommend the closest available asset class and label it as a “proxy”.
You can find all substitutions on your “Proxy Page” within your dashboard.
Please log into your Participant Dashboard to see the exact allocations you should be using as of the last rebalance advice.
Please talk to your adviser if you have any questions.
This update has been written by Kevin T Clark, RF™.
All opinions expressed are those of the author and not that of Plan Confidence Corporation nor any other firm or individual.
Kevin T Clark, RF™ is the CEO and Co-founder of Plan Confidence Corporation.
Kevin is an “ERISA Nerd” and one of only a hundred(ish) Dalbar certified Registered Fiduciaries (RF™) in the United States.
He has been helping hard working Americans invest their money since 1997!
Plan Confidence Corporation is an SEC registered “internet only” investment firm specializing in providing advice to hard-working Americans investing in their employer’s retirement plans (401k, 403b, TSP, etc).
They have created proprietary software so hard-working Americans can receive professional, ongoing advice on their employer’s retirement plan from an adviser of their choosing!
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