Sweat Your Assets Monthly Digest - October 2025

1. Market Barometer
2. Quotes of the Month
3. Posts
4. YouTube Tutorial

1) MARKET BAROMETER - Global financial markets ended October on a high note. 

Hi everyone, how did October treat you? It’s been quite a month in the markets — the S&P 500 is up about 17 percent year-to-date, the Euro Stoxx 600 gained around 11 percent, and the MSCI World Index advanced nearly 13 percent. That’s one of the strongest runs we’ve seen.

The rally has been driven by a combination of resilient corporate earnings, falling bond yields, and growing expectations that major central banks, including the Federal Reserve and the European Central Bank, will cut interest rates in 2026. For investors, it has been a good year so far. I hope yours is too. Portfolios look healthy, indexes are glowing green, and confidence has returned.

But as I look around, I can’t help noticing a paradox.

Inflation has cooled across most advanced economies, finally moving closer to central banks’ comfort zones. In the United States, consumer prices are up 3 percent compared with last year. In the Euro Area, inflation is down to 2.5 percent, the lowest since 2021. The United Kingdom sits at 3.2 percent, helped by lower energy and food costs, while Japan is steady around 2.7 percent.

Labour markets remain strong almost everywhere. Unemployment in the U.S. is 4.3 percent, close to historic lows. Europe is stable at around 6.5 percent. Across Asia, especially in India and Southeast Asia, employment remains solid thanks to growing exports and infrastructure spending.

By most traditional measures, the global economy looks healthy. The IMF’s latest outlook still expects global GDP to grow by roughly 3.2 percent this year. That’s not spectacular, but it does represent stability after several turbulent years.

And yet, millions of people feel worse off.

Consumer sentiment remains weak. The University of Michigan’s survey in the U.S. shows persistent pessimism, and similar readings appear in Europe and the U.K. It’s not just a mood swing — it reflects something real.

For many, the wealth effect of rising markets isn’t showing up in daily life. Portfolios may be up, but cash flow is tight. Groceries cost more, rent is higher, and healthcare and education bills haven’t eased. Borrowing remains expensive, with mortgages around 6.5 percent and credit card rates above 20 percent. Younger people still find homeownership out of reach, even as property stocks soar.

This is the gap between Wall Street and Main Street, between market performance and lived experience. It’s not just emotional — it’s structural.

Even some of the world’s top bankers are uneasy. As recently reported by The Economist:
 

“A lot of assets,” warned Jamie Dimon in mid-October, “look like they’re entering bubble territory.” His voice carries weight because he runs JPMorgan Chase, America’s largest bank. But he’s not alone. David Solomon at Goldman Sachs has talked about “investor exuberance”; Jane Fraser at Citigroup about “valuation frothiness.” The Bank of England recently cautioned that “the risk of a sharp market correction has increased.” The IMF worries about a “disorderly” one, warning that risk asset prices are well above fundamentals.

They may have a point. Valuations are stretched. Investors are paying roughly 41 times cyclically adjusted earnings for the S&P 500 — a level surpassed only during the dot-com bubble. Corporate bond spreads are at their tightest in decades. Even gold, usually a refuge, looks fragile. It hit a record high on October 20th and then fell seven percent in just two days.

That’s the environment we’re in: markets that are strong but starting to look overextended.

At the same time, households and small businesses are still feeling the strain of several years of higher prices and interest rates. In emerging markets, capital has flowed back into places like India, Indonesia, and Mexico as investors chase growth. But in parts of Africa and Latin America, conditions remain tight and currencies are under pressure. China’s stock market continues to lag despite repeated efforts to restore confidence and investment.

We are living in a two-speed economy: one for financial assets, another for everyday life.

For me, this moment calls — and old readers will not be surprised — for discipline and perspective. It’s easy to be swept up by rising markets, but the real question is whether those gains make your financial life better in the long run. 

With a strong equity portfolio and an inevitable concentration in the U.S. and its AI-driven sectors, I can certainly feel the bull market. But the risk is there, and clearly summarized by Professor and Entrepreneur Scott Galloway:  

"The top 10 stocks in the S&P 500 account for 40% of the index’s market cap. Since ChatGPT launched in November 2022, AI-related stocks have registered 75% of S&P 500 returns, 80% of earnings growth, and 90% of capital spending growth. Meanwhile, AI investments accounted for nearly 92% of the U.S. GDP growth this year. Without those AI investments, Harvard economist Jason Furman noted, growth would be flat. As Ruchir Sharma concluded in the Financial Times, “America is now one big bet on AI,” adding, “AI better deliver for the U.S., or its economy and markets will lose the one leg they are now standing on.” This concentration creates fragility, and how the end begins becomes more visible".

That’s why I am open to enjoy the tail wind of AI, while still keeping a conservative share of my portfolio liquid and flexible, through cash-equivalent products such as short-term bonds with a maturity of six months or less. 

Like everyone, I want to be ready for a correction or for the unexpected.

As John Maynard Keynes once said, “The market can stay irrational longer than you can stay solvent.”

So I keep balancing my books, living mostly frugally but allowing space for the occasional moment of YOLO. Because financial freedom is never just about how well the markets do; it’s about how well our money serves our goals and our peace of mind.

2) SWEAT YOUR ASSETS - QUOTES OF THE MONTH

• An ironic and counterintuitive financial rule. To get a loan, you must first prove [to the bank] that you don’t need one. — John´s Law
• Solutions vs Practice. Most real challenges don’t have neat solutions. They require practices built on wisdom and steady management. Solutions are for crosswords. Anonym
• Follow the Rules until you Master them. The Japanese term Shuhari describes three stages of mastery: obey the rules (Shu), break them (Ha), and transcend them (Ri).”  Anonym

How did October look from your side of the market? I’d love to hear how you experienced it and what you’re watching next.

Until next month, Sweat Your Assets,

Alessandro Baroni

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