Welcome to 2025, where one of the most talked about topics in the headlines is artificial intelligence (AI).

We won’t claim to fully grasp the nuances of the ongoing race for AI supremacy, but since ChatGPT’s launch in November 2022 there is no denying its impact on the valuations of technology sector companies.

Like the internet boom of the late 1990s, AI will produce both winners and losers, with periods of extreme overvaluation as investor enthusiasm occasionally outpaces reality.

At Proquility, our approach remains simple – own AI-related companies in proportion, without making large speculative bets. We want to participate in the opportunity AI presents, but we won’t let short-term market swings (such as Nvidia’s volatility this week) interfere with our primary objective: helping our client families achieve their long-term goals.

AI’s ability to enhance academic research has allowed us to extend historical return data on stocks and bonds as far back as 1800, confirming a fundamental truth:

• Stocks(1800 thru 2023): 8.2% annual nominal return less 1.6% inflation = 6% real return

• Bonds (1800 thru 2023) 5.2% annual nominal return less 1.6% inflation = 3.6% real return

That additional 3% return after inflation from stocks is your reward for enduring those frequent but historically temporary declines.

We’re pleased to report another successful year in our shared pursuit of your most cherished lifetime financial goals. Our plan and portfolio remain guided by those objectives, not by predictions about the economy or markets. This principle will continue to guide us in 2025 and beyond.

Proquility is a long-term, goal-focused, plan-driven wealth management advisor. Our core investment policy is to build broadly diversified portfolios of high-quality businesses. Capturing the long-term premium return of equities requires the discipline to ride out the inevitable – but historically always temporary – declines.

Tax Season Reminder

After another strong investment year in 2024, our attention now shifts to tax season.

For those eager to get ahead on tax preparation, we have one word of advice – wait!

Most early February tax documents are subject to amendments – sometimes as late as the March 15 deadline. To avoid unnecessary revisions, we recommend scheduling waiting until mid-March or later before scheduling your tax preparation meeting (and gathering that proverbial electronic shoebox full of documents).

To our clients and friends – because to us, they’re one and the same – we wish you a healthy, happy, and prosperous 2025. As always, we’re here to answer your questions and support your financial journey.

Thank you for the privilege of serving you.

Andy, Patty, and the Proquility Team