3Q25 Review & Outlook

November 2, 2025

3Q25 HIGHLIGHTS                                                                   

Investor sentiment toward risk-taking remained strong in the third quarter of 2025, with momentum accelerating across some asset classes. U.S. Small Cap equities led domestic markets, advancing +9.11%, nearly doubling their +4.90% gain in 2Q25. Emerging Markets equities also delivered robust performance (+10.95%), while Gold was the standout asset, surging +16.4% to close at a record high of $3,898 per ounce.

The continuation of positive risk sentiment was underpinned by several geopolitical and macroeconomic developments including:

• June 22: The U.S. conducted targeted airstrikes on critical Iranian nuclear facilities, significantly degrading Iran’s nuclear capabilities and materially reducing perceived geopolitical risks. Notably, oil prices remained stable throughout the episode, suggesting confidence in global energy supply stability.

• September 17: The U.S. Federal Reserve announced a 25-basis-point rate cut and signaled openness to additional easing. Futures markets now anticipate the Fed Funds Rate to decline from approximately 4% to near 3% by October 2026. Combined with the recently enacted fiscally stimulative tax legislation, this monetary shift is expected to provide timely support to both the real estate and industrial sectors, which have shown signs of strain recently.

• September 29: The U.S.-led Gaza peace plan, involving nearly 30 participating nations, was formally announced after several weeks of negotiations. If successfully implemented, this initiative could bring a historic end to decades of conflict in the region. Yet again, oil prices stability following this announcement indicates that market participants do not anticipate adverse short-term outcomes, even if tangible progress may take time to emerge.

3Q25 MARKET SNAPSHOT

As highlighted earlier, gold’s performance was truly extraordinary. Its sharp rise occurred despite a strengthening U.S. Dollar Index (DXY)—a notable break from the inverse relationship between the two. This divergence has ignited discussions around the “Debasement Trade” , the notion that investors are seeking protection against declining confidence in fiat currencies.  While this narrative has gained attention in financial media, we remain cautious in accepting it. If confidence in fiat systems were genuinely eroding, we would expect weakness in USD-denominated fixed income assets as well, yet many such instruments appreciated during the same period. Our interpretation is that safe-haven

buying early in the quarter gave way to momentum-driven retail inflows, fueling gold’s outsized gains.

DXY (USD Index) vs. GLD (Gold ETF) – Returns:               

Gold’s surge also appears disproportionate even after accounting for the ~5% decline in the USD over the past five years, supporting the view that recent price action was more technically driven than fundamentally anchored.

PERFORMANCE REVIEW

All OppoQuest Strategies outperformed their respective benchmarks during the quarter. The strongest relative performance came from the Conservative Strategy, which outperformed by +198 bps, followed by the Moderate Strategy (+116 bps) and the Growth Strategy (+13 bps).

Major positive contributors included:

1)     Content Creation & Streaming: Warner Bros. Discovery (WBD)

2)     Artificial Intelligence Software: Palantir Technologies (PLTR)

3)     Semiconductors: ARM Holdings (ARM), NVIDIA (NVDA), Marvell (MRVL)

4)     Data Infrastructure: Oracle (ORCL), Corning (GLW)

5)     Healthcare: UnitedHealth Group (UNH) and Biotechnology ETF (XBI)

With respect to portfolio reallocations, there were two major actions:

·        Solar Sector Exit: We exited solar-related positions following the passage of the new tax bill, which failed to extend expected subsidies for the industry. Given the diminished policy support, our conviction in the sector weakened, and we reallocated capital to higher-conviction opportunities.

·        Health Insurance Entry: We have built a full-size (~5%) position in UnitedHealth Group (UNH) amid a broad selloff in health insurance stocks. Market concerns originated in 2024 when CVS Health reported elevated medical claims. Initially perceived as a company-specific issue, similar claim trends emerged across the industry this year. We believe these pressures are transitory rather than structural and can be addressed through sound management and operational adjustments. UNH’s recent leadership transition and its clearly articulated turnaround strategy reinforce our confidence in its long-term recovery and growth potential.

OUTLOOK

Our 12-month outlook remains constructive, supported by easing monetary policy, structural Tax Bill incentives, and U.S. favored Trade Agreements. However, we are adopting a cautious near-term stance due to uncertainty surrounding the upcoming Supreme Court case on presidential tariff authority. 

Recall that, on April 2, 2025, President Trump imposed broad-based tariffs under the International Emergency Economic Powers Act (IEEPA). Two Illinois based family-owned businesses subsequently filed a lawsuit, challenging the President’s authority.  The case was titled Learning Resources, Inc. v. Trump.

On May 29, 2025, the U.S. District Court for the District of Columbia granted a preliminary injunction in favor of the plaintiffs.  Then, on August 29, 2025, the U.S. Court of Appeals for the Federal Circuit upheld the injunction but stayed remedial action pending appeal.  The U.S. Supreme Court has scheduled oral arguments for November 5, 2025.

This case carries significant implications for executive authority over foreign and economic policies. An adverse ruling could limit future administrations’ ability to:

·        Encourage domestic reshoring of manufacturing,

·        Negotiate reciprocal market access with foreign partners, and

·        Protect domestic industries from predatory dumping practices.

Each of these outcomes would be unfavorable for the U.S. economy.  Markets have remained calm ahead of the hearing, suggesting confidence in a favorable ruling. We are less optimistic and believe risk of a negative surprise needs to be given at least some consideration. Accordingly, we plan to reduce select exposures opportunistically, although selling only into market strength. 

As of this writing, we have already generated at least 20% cash in all our strategies and believe we are well positioned in case volatility picks up.  We will reassess portfolio positioning after the supreme court decision.

Sincerely,

For OppoQuest

PARESH JAIN

Managing Member & Portfolio Manager