Welcome back, old and new plebs. Fall is upon us, and the last quarter of 2025 has started. With this article, we recap our Q3 results and set our sights on what’s to come.

Quarter in Review – Q3 Performance

The end of Q3 ’25 marks a special moment for the Plebdex, officially joining the 100 Club. Since launching the portfolio in January 2023, the Plebdex has doubled in value, posting a cumulative return of +100 % relative to our S&P 500 benchmark’s 81% return for the same period.

What began as a simple experiment — demonstrating that those of us in the 99% can build and grow wealth through discipline and simplicity — has evolved into a full-blown demonstration of what patient, theme-based investing can achieve.

Past performance is not indicative of future returns, but we remain confident in our methodology for long-term outperformance.

What Worked (and What Didn’t) from Q2 -> Q3

* Prices below are reflective as of September 30th, 2025.

Top Performers

• Kratos Defense & Security (KTOS): +97% (246.5% YTD) – the drone defense company has attracted heavy amounts of investor attention—the 2025 Plebdex’s best performing asset. We recommend trimming this position back to its original 2.5% stake over Q4.
• Intel (INTC): +50% (66% YTD) – the government’s strategic stake in Intel has encouraged more firms, such as Nvidia, to invest.
• Google (GOOGL): +38% (27.5% YTD) – a favorable Q3 DOJ ruling has brought more investors in from the sidelines. Shares have returned to their mean valuation.

Laggards

• Cybersecurity (CIBR): +0.57% (18% YTD) – cybersecurity stocks had a stellar first half. The third quarter served as a consolidation for these names.
• Amazon (AMZN): +0.08% (-1.11% YTD) – consumer discretionary names have been under pressure as consumer sentiment degrades. Oracle, Nvidia, Microsoft, and OpenAI’s data center and spending deals have made investors cautious about whether AWS can continue to grow at the rate of Azure and Google Cloud Platform (GCP). We see Amazon as undervalued.
• PayPal (PYPL): -9.77% (-22% YTD) – also affected by waning consumer strength and continued bearish sentiment, PayPal remains a disappointment. We recommend patience with this name. In a market filled with wildly expensive names, PayPal trades at 13 times forward earnings and returns 11% annually to shareholders via share repurchases.

Market Backdrop – How We Got Here

A strong rally in equities defined Q3 2025 as anticipation for the first rate cut of the cycle approached, and Q2 earnings continued to be strong, with over 80% of S&P companies beating EPS estimates.

The Fed cut its borrowing rate by 25 basis points to a range of 4.0%–4.25%. The Fed has a dual mandate (ref): to maintain price stability (low inflation) and to maximize employment. In its September meeting, it chose the latter, a weak jobs market, to justify a rate cut. This is in the face of sticky inflation hovering near 3%. Perhaps 3% inflation is the new benchmark after years of 2%.

Tech stocks continue to lead the market higher. Apple, Nvidia, and Google led the megacaps higher, along with momentum names like Palantir.

Precious metals and commodities soared: Gold (+16%), SLV (29%), Uranium (26%). Gold is now up 47% YTD. Generally, rallies of the precious metal are a warning sign for the times to come and reflect continued fiscal and monetary mismanagement.

Looking Ahead to Q4 and Beyond

Sticky inflation, weakening employment and real estate markets, the rapid rise in equity and precious metal prices, and extended valuations (see Shiller CAPE ratio & The Buffett Indicator) have left us uneasy. To quote JP Morgan’s Jamie Dimon, “there are storm clouds on the horizon.”

We view the market as being in the middle to late stage of a bull market, starting in 2020, in the final leg of its journey. Markets can often stay irrational longer than one can remain solvent, so it’s best not to short it. This market will likely climb the proverbial wall of worry in the short term, but we recommend exercising caution farther out.

We anticipate the final leg of the market to last 12-24 months as fundamentals detach from reality, fiscal and monetary policy measures are fully reflected in corporate earnings, and the massive $7.4 trillion in money market assets (ref) move out onto the yield curve as equity dips are bought and consumer savings are depleted.

Many market analysts remain bullish, continuing to raise their price targets as previous targets are surpassed. Companies are likely to continue growing earnings over the next few quarters, but growth scares are likely to arise when rapid 10-20% drawdowns occur. These dips will be bought before a final secular record is reached in late 2027 or early 2028.

What we are watching:

• Fed policy: With a new Fed chair on the way, will we see a dramatic shift to dovish policy or a more measured response to the dual mandate?
• Jobs Numbers: How weak is the labor market? A government shutdown will muddy the data for a few months (bls ref).
• Electricity/Energy prices: inflationary and concerning for the most vulnerable, demand for electricity to support the AI Capex wave will drive up prices (ref).
• Holiday spending: this will be a tell-tale sign of consumer health. Did consumers deplete their personal savings (ref) and/or are consumers fleeing to credit (ref)?
• Market breadth: a rotation out of the Magnificent 7 and speculative AI/Quantum names into under-owned names would be a sign of good market breadth. We would like to see less concentration at the top and in unprofitable companies.
• Credit Spreads: the 10-year/2-year treasury spread (ref) would be the canary in the coal mine for a looming recession. We fear that while the Fed will have control over the short-term rate via the Fed Funds rate, the U.S. government’s debt borrowing will force the Fed into a situation where it will need to buy long-dated U.S. Treasuries as rates rise, because there will be fewer buyers of U.S. debt.
  • A run on the long-term treasury market would be a black swan event (ref) more severe than the 2008 financial crisis, and something we would coin the Great Financial Armageddon. U.S Treasuries are the backing asset for much of the world’s economy: credit of all types, long-term mortgages, bank reserves, stable coin reserves, most retiree 401ks, and the various derivative trading instruments attached to these vehicles.
  • It isn’t a matter of if any longer – it is when, and the timeline is narrowing. A mild recession could be necessary to prevent overheating.

We anticipate a rebalance for the Plebdex in late 2025 as we prepare for 2026.

Closing Thoughts

Returning 100% to the Plebdex’s followers is a great success. We aim to continue the trend, but fully recognize that there will likely be periods of underperformance.

If you’ve been following along since the beginning, thank you. If you’re new here, welcome — there’s plenty of room in the 100 Club for every pleb willing to stay the course. Stay invested, stay patient, and we look forward to seeing you in Q4. May the odds ever be in our favor!