American Resilience Model Portfolio

Monthly Portfolio Review: October 2025

Publication date: November 3, 2025

Current portfolio holdings

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Executive summary

• Tech stocks led the market in October, even as investors struggle to understand the impacts of AI on the stock market and the economy.

• The Nasdaq Composite advanced 5%, while the average stock in the S&P 500 posted declines and most industry sectors were negative.  

• The American Resilience portfolio generated a moderately negative return.

• The top performing stock in the portfolio was Thermo Fisher Scientific (TMO), which advanced 17% after a reassuring update on health care end-market demand.

• NVIDIA (NVDA) also performed well this month following disclosures at an industry conference which boosted the growth outlook.

• The portfolio was held back by stocks like Texas Instruments (TXN) and Roper Technologies (ROP), which saw share-price pressure following modest reductions to forward guidance.

• While investors chased the market leaders this month, lower valuations and reduced expectations create an attractive setup for stocks across sectors that are long-term plays on AI adoption.

Performance review

The American Resilience portfolio produced a total return of -2.9% in October, versus the S&P 500 Index return of 2.3%. On a year to date basis through the end of the month, the portfolio has returned 12.1%, versus 17.5% for the S&P 500.

The top performing portfolio positions in October were Thermo Fisher Scientific (TMO), which returned 17%; NVIDIA (NVDA), which returned 9%; and GXO Logistics (GXO), which returned 6%.

The worst performing positions in the portfolio were Texas Instruments (TXN), which declined 11%; Air Products & Chemicals (APD), which declined 10%; and Roper Technologies (ROP), which declined 10%.

Tech dominant again

We noted last month that the tech sector significantly outperformed. This trend continued in October.

The tech-heavy Nasdaq Composite Index returned 4.7% this month. Large-cap tech stocks helped drive the performance of the market-cap weighted S&P 500 into positive territory. Meanwhile, the S&P 500 Equal Weight Index, which essentially reflects the average stock in the index, declined, returning -1.0%.

S&P 500, NASDAQ, S&P 500 Equal Weight

Total Return (9/30/25 - 10/31/25)

Positioning around AI

Stock market activity in October struck us as somewhat unusual and potentially impacted by mutual fund “window dressing” in the final ten days of the month.

We can see in the chart above that through October 22, the Nasdaq, S&P 500 and S&P 500 Equal Weight had generated similar performance. Relative performance then began to deviate sharply as the Nasdaq surged.

Window dressing is a phenomenon that can occur in any month or quarter. The general idea is that fund managers have an incentive to end the period with winners in the portfolio rather than losers. Portfolio holdings are only revealed at the end of these periods.

October 31 is a particularly significant date, because many mutual funds use that as their fiscal year end (approximately half of all stock funds). The IRS requires funds to distribute nearly all of their realized capital gains through November 1, so October 31 is a natural cut-off date.

The annual reports of mutual funds provide full disclosure of portfolio holdings and get filed as of the fiscal year end cut-off date. So if there is ever a moment that fund managers want to make their portfolios look pretty, it is at the end of the fiscal year.

This activity can put pressure on stocks and entire sectors that were laggards over the prior year and elevate stocks and sectors that have performed well. However, the impact is temporary, as this source of market distortion goes away once the new fiscal year begins.

To the extent fund managers are worried about optics, their incentive is to move money into the best performing stocks prior to the books closing. This may have played a meaningful role in October, especially at the very end of the month.

The Technology sector generated a total return of 7% in October, while the majority of other industry sectors produced flat or negative performance.

Source: FactSet

Sorting AI winners and losers

AI continues to occupy the focus of most investors. There is a general concern about an AI bubble, which we recently addressed in the 76report (“So, Are We Headed for a Crash or What?”)

There are several dimensions to this concern. Investors are in part anxious because AI plays, like NVIDIA (NVDA), which now has a $5 trillion market cap and represents 8% of the S&P 500 Index, have become such a huge component of the overall market.

Investors seem to toggle between anxiety around AI overvaluation and fear of being underinvested in the market leaders of the technological trend that is reshaping the entire economy.

With so much uncertainty around AI, there is also a great deal of trepidation around whether any particular stock will ultimately benefit or suffer from the technological changes that are underway. No company wants to be perceived as an AI victim, and no fund manager wants to own one.

Meanwhile, stocks that are simply not seen as central to the AI theme, even ones that may be longer term AI beneficiaries, are arguably being neglected.

Broader economic concerns

As investors focus on the trajectory of AI and the best way to play it, they also have a lot of questions about what is going on across the rest of the economy.

AI-related capital spending is driving growth, but it is also diverting funds from hiring workers. On top of that, as AI actually gets implemented, it will inevitably replace workers.

Although classified within the Consumer Discretionary sector, Amazon (AMZN) is a tech stock that performed especially well in October, delivering an 11% total return.

Even with this strong performance, AMZN has actually underperformed this year. It was essentially flat on the year until late October, when the company reported solid third quarter results.

AMZN showed acceleration in its cloud business, but what really caught the market’s attention was its announcement that it would be laying off some 14,000 workers, a move driven by its goal of becoming a leaner organization that is empowered by AI tools.

As the second largest private employer in the United States behind Walmart (WMT), AMZN is an interesting company to watch from a labor market perspective—a potential canary in the coalmine.

The Fed cuts again

Against the backdrop of this emerging trend of companies demonstrating healthy earnings growth and a shrinking employee base, the Federal Reserve moved to cut interest rates again at the October 29 FOMC meeting. The Fed funds rate was reduced by 25 basis points to the 3.75% to 4.00% range.

New Fed Governor Stephen Miran, on leave from his position as Trump’s Chair of the Council of Economic Advisers, dissented like he did at the prior meeting. He again wanted to see a 50 basis point cut.

Miran’s dissent reminds the world that a new regime at the Fed likely awaits us next spring when Jerome Powell’s term as Chair comes to an end. Under new leadership, the Fed will almost certainly be inclined toward lower rates and easier monetary policy to promote growth.

At the late October meeting, the Fed also indicated it would end Quantitative Tightening (QT) on December 1. This policy shift relates to how it manages its own balance sheet.

While the mechanics behind QT can be complex, the key point is straightforward: by slowing or ending QT, the Fed is signaling a willingness to increase liquidity in financial markets. This complements the move toward lower interest rates and indicates a broader policy shift toward easing financial conditions.

The 25 basis point rate cut was fully expected, however, and Powell’s tone on the path of future rate cuts was interpreted as slightly hawkish. So short-term Treasury yields rose slightly at the end of the month following the meeting, which may have also put pressure on stocks in cyclical sectors.

1-Year Treasury Yields

(Last 12 months)

The main topic for the Fed remains jobs. Even though inflation remains “somewhat elevated,” the Fed has been reacting to slowing job gains and an unemployment rate that “has edged up.”  

While the pressure on the labor market understandably makes many investors uneasy, as it historically correlates with an economic slowdown, we continue to view it as a net positive for investors in stocks because it is the necessary pre-condition for easier monetary policy.

To the extent unemployment rises, the Fed will remain inclined to keep rates low, given its full employment mandate. A weak job market also takes the edge off inflation pressures, as wages inevitably moderate with workers losing bargaining power.

Higher unemployment also dampens consumer confidence and spending on the margin, which gives the Fed yet another reason to keep its foot on the gas pedal.

A massive spike in unemployment, like was saw in 2020 when the economy got shut down, is an entirely different matter, but moderate slack in the labor market helps keep the Fed biased toward making monetary conditions “less restrictive.”

Out of favor opportunities

We like to compare the S&P 500 to the S&P 500 Equal Weight Index because it shows the extent to which performance is being driven by the very large market cap leaders.

Over long periods of time, the two indexes tend to deliver similar performance, but there are phases when large cap names, which are skewed towards the big tech platforms, significantly outperform. The past few months have been one of those phases.

S&P 500 vs. S&P 500 Equal Weight

Total Return (Last 5 Years)

Investments in broad, passive index strategies, especially those tied to the S&P 500 and the Nasdaq, tend to perform well during periods of market concentration, when a relatively small group of large companies drives the majority of returns.

In these environments, capital crowds into the biggest winners, pushing valuations higher and reinforcing the momentum. For investors who own high-quality businesses outside of the prevailing narrative, this can be frustrating.

Solid companies with durable earnings power may underperform simply because they are not aligned with the hottest themes of the moment.

Over time, fundamentals tend to reassert themselves: leadership rotates, valuations normalize, and neglected areas of the market reprice. Periods of dispersion therefore create opportunity for investors who are steadily accumulating ownership in strong, well-positioned businesses that may be temporarily out of the spotlight.

Portfolio highlights

The top performing stocks in the portfolio in October were Thermo Fisher Scientific (TMO), which returned 17%; NVIDIA (NVDA), which returned 9%; and GXO Logistics (GXO), which returned 6%.

The worst performers in the portfolio this month were Texas Instruments (TXN), which returned -11%; Air Products & Chemicals (APD), which returned -10%; and Roper Technologies (ROP), which returned -10%.

TMO is a good example of a high-quality stock, playing in an area that fell out of favor earlier in the year, that is now benefiting from a more reassuring outlook.

As a leading global provider of tools and equipment to the health care sector, TMO suffered from concerns around tariffs and reductions in health care spending.

In late October, the company reported strong third quarter earnings and provided reassuring commentary on end market strength, especially within academia and other areas of medical research.

NVDA broke through $200 per share in October after CEO Jensen Huang provided the market with a series of important disclosures at the annual GPU Technology Conference (GTC) in Washington, D.C. on October 28. GTC is now the world’s premier AI developer conference, attracting more than 20,000 attendees, while millions watch online.

Jensen projected $500 billion in cumulative sales from the Blackwell platform and early Rubin ramps through 2026. Over the longer term, NVDA now sees $3 to $4 trillion of annual AI spend by 2030. These figures were significantly higher than consensus forecasts and lifted the stock.

NVDA also announced a number of exciting strategic moves, including a major collaboration with the Department of Energy to build what will become its largest AI supercomputer; a strategic partnership with Nokia, including a $1 billion investment to deliver next-generation 6G wireless networks; and several industrial partnerships with leading global manufacturers in robotics.

GXO designs and runs highly automated distribution centers, using robotics, conveyor systems, machine vision and AI-driven software. It is benefiting from an improved outlook towards the logistics space, which is now gaining momentum after a long digestion period following pandemic era capacity expansions.

A relatively small name for the portfolio, with a sub-$10 billion market cap, GXO is also now attracting interest from investors as it sits at the intersection between AI and e-commerce.

TXN shares declined following its third-quarter earnings report. While results largely met expectations, management guided to softer demand in the industrial end market for the upcoming quarter.

In a market where many technology companies are reporting accelerating growth tied to AI adoption, TXN’s slower cyclical recovery has tested investor patience. The near-term backdrop remains mixed, but the long-term strategic position is still highly attractive.

TXN is a market-leading supplier of analog and embedded processing chips that are essential for powering and controlling real-world systems. These are critical to data centers, robotics, factory automation, electric vehicles, and autonomous driving—all of which are long-duration AI-driven growth trends.

TXN has the world’s most advanced and efficient analog chip fabs located within U.S. borders. This positions it to be the low-cost, high-reliability supplier of choice to manufacturers in these growth areas.

As the industrial cycle stabilizes, TXN remains well-placed to expand margins and move closer to its long-term free cash flow targets. For investors seeking long-term exposure to AI without paying premium valuations, TXN offers a compelling setup at current levels.

As the company’s major fab expansion cycle winds down, capital expenditures are poised to decline meaningfully. At the same time, revenues are expected to grow steadily as industrial and auto demand stabilize. Together, these dynamics support analyst forecasts that call for free cash flow to nearly triple over the next two years.

Looking further ahead, AI-intensive markets—data centers, robotics, factory automation, EVs, and autonomous systems—will represent an increasingly large share of TXN’s business mix. As this transition unfolds, TXN’s long-term growth profile should improve, with structurally higher margins and more durable long-term demand.

APD did not report results in October but drifted lower as investors pulled capital from cyclical industrial names. APD will report in November, at which point we will gain better insight into current business trends.

ROP delivered solid third quarter results, with 14% total revenue growth and strong free cash flow margins. However, in a market environment with little tolerance for below expectation growth, ROP was penalized for a slight reduction in its organic growth guidance.

This reduction was driven by temporary, timing-related factors linked to the government shutdown and copper tariffs, which affected certain customers—neither of which reflects weakening underlying demand.

The company’s diversified portfolio of mission-critical vertical software businesses continues to generate high recurring revenue and attractive margin expansion. Management also announced a $3 billion share repurchase authorization, which adds another lever for value creation alongside its consistent M&A strategy.

ROP is also beginning to see tangible benefits from AI-enabled product innovation across its portfolio. As these solutions scale and shutdown-related delays roll off, organic growth is positioned to re-accelerate in 2026, supporting management’s goal of compounding free cash flow per share at mid-teens rates.

Key metrics

Valuation detail

Performance detail

Company snapshots

Oracle Corporation (ORCL)

S&P Global (SPGI)

Stryker (SYK)

Texas Instruments (TXN)

Arch Capital Group (ACGL)

Air Products & Chemicals (APD)

Costco Wholesale (COST)

Eaton (ETN)

GXO Logistics (GXO)

NVIDIA (NVDA)

Roper Technologies (ROP)

Thermo Fisher Scientific (TMO)

Union Pacific (UNP)

Visa (V)

Vulcan Materials (VMC)

Williams Companies (WMB)

The 76research American Resilience Model Portfolio is designed to provide exposure to growth businesses that operate with competitive advantages in structurally attractive markets. The objective is to identify businesses that can survive and thrive across different macroeconomic environments and whatever geopolitical crises may unfold. The holdings are intended as long-term investments to drive portfolio compounding with minimal need to realize taxable gains. Emphasis is placed on critical markers of business quality such as barriers to entry, physical scarcity of assets, balance sheet strength, effective capital allocation and durable long-term growth drivers. These assessments are paired with careful consideration of valuation and risk.    

Disclaimer

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