The Intelligent Investor's Almanac
Your Bi-Weekly Guide to Markets, Movements, & Money.
Presented By Ken Majmudar & Ridgewood Investments
Issue 19 • December 04 to December 15, 2025
Never miss another valuable edition of The Intelligent Investor's Almanac again.
✦ TL;DR — Your Institutional Intelligence in Minutes
We cover two major wealth dynamics in this issue:
Why Market Corrections Are Normal
Market Insight: Market corrections often remove areas of froth and excess in the market, and lead to allocation of capital into more productive assets.
Additional Insight: These periods help reset expectations and allow investors to make more rational long-term decisions.
Next Step: Instead of panicking or worrying about market trends, it is important to assess the goals your portfolio is trying to achieve. For long term investors, market corrections often provide a great entry point and opportunity.
✦ Action: Schedule a Private Consultation to review how your portfolio is positioned for changing market environments.
Q3 2025 Earnings: Summary & Review
Core Insight: Q3 earnings showed steady growth and resiliency despite ongoing noise about the macro-environment.
Additional Insight: Earnings performance was widespread: nine of eleven sectors grew profits, revenue increased ~8%, and net margins reached about 13%.
Next Step: Given Q3’s robust margins and varied sector results, review whether your portfolio reflects balanced exposure across market segments with stable fundamentals.
✦Action: Schedule a Private Consultation to review your portfolio positioning given market conditions and Q3 earnings trends.
The Value Investor
Ken Majmudar, CFA & Founder of Ridgewood Investments
“History has shown that the same things happen again and again because human nature doesn’t change.” – Ray Dalio
Periods of volatility are often influenced by short-term sentiment rather than business fundamentals. For value investors, such periods distinguish fundamental value from short-term noise. In this issue, we outline why corrections are a normal feature of investing and how they can improve future opportunities. We have also summarized and reviewed the Q3 earnings season to outline the key developments.
Why Market Corrections Are Normal
Market corrections are a recurring part of broader market cycles. As Howard Marks observes, financial markets move in periodic cycles driven by shifts in human psychology, oscillating between optimism, pessimism, fear and greed.
What Is a Market Correction?
A market correction is normally defined as a decline in a bull market. While this drop can be challenging for investors, it is important to distinguish between different types of market declines. Like a market correction, a short-term dip is a decline of less than 10%, often seen as a temporary drawdown within a prevailing bull market. A bear market, on the other hand, signifies a more prolonged downturn, with declines of 20% or more from earlier peak levels.
Source: Fidelity Investments
Why Corrections Happen
Market corrections can occur due to a variety of reasons, ranging from global events and changes in market sentiment to earnings results that come in below market expectations. When investors recognize that stock prices have increased faster than the underlying business fundamentals, a correction is needed as it helps narrow the gap between price and intrinsic value.
Even though volatility can be challenging, short term corrections are often driven by:
Sentiment shifts after prolonged periods of gains.
Policy uncertainty, especially around interest rates.
Inflation (above- or below-expectation) or macro data declines.
Geopolitical events or election cycles.
Short-Term Market Drivers vs. Impact on Long-Term Fundamentals:
How Corrections Realign Valuations and Market Conditions
1. Multiple Expansions & Contractions: during periods of sustained market performance, valuation multiples such as price-to-earnings ratios can often rise by too much. A correction helps bring these measures back toward long-term levels.
2. Speculative Excess Diminishes: As markets rise steadily during a bull phase, investors frequently increase their exposure to short-term trading, momentum activity, and leverage which exacerbates price increases in the short term. Market corrections are especially helpful in eliminating these behaviours.
3. Focus Returns to Fundamentals: During market corrections, investors increasingly focus on business fundamentals; earnings stability, cash-flow predictability, and balance-sheet position.
Why Corrections Create Opportunity for Long-Term Investors
High-quality businesses can decline along with weaker ones during a broader market correction.
Sudden changes in investor sentiment can create temporary disconnects between market price and intrinsic value.
Expected long-term returns improve when valuations decline while fundamentals remain stable.
Notable superinvestors such as Warren Buffett and Howard Marks have historically taken advantage of market corrections to buy high-quality businesses at prices below their intrinsic value.
When sentiment changes rapidly or capital becomes less available, even companies with proven fundamentals may trade at valuation levels that are less common in bull markets, not because their fundamentals have changed, but because they declined with the broader index.
These temporary inefficiencies create opportunities for long-term investors who can distinguish short-term market movements from the business fundamentals.
As Buffett said:
“When hamburgers go down in price, we don’t stop buying. We buy more.”
Analytical Framework for Investors During Market Corrections
1. Stay Consistent With Contributions: Dollar-cost averaging by allocating capital at regular intervals such as every month helps in buying high quality companies at cheaper prices.
2. Focus on Fundamentals: Review the consistency and resiliency of earnings and cash flows, the quality of the balance sheet, and the competitive position of a company.
3. Maintain Portfolio Structure as Markets Shift: Portfolio rebalancing is helpful to ensure that the portfolio’s long-term objectives are not affected by short term market movements.
At Ridgewood, we help investors stay focused in a long-term perspective, make prudent decisions, and use periods of volatility to position their portfolios for better outcomes over time.
Corrections are temporary. Compounding works over time when you stay invested.
Dynastic Wealth – Tips on Preserving and Building Your Legacy
Q3 2025 Earnings: Summary & Review
A company’s long-term value is influenced by two primary components: how fast its earnings grow and how the market values those earnings. While valuation multiples can fluctuate with changes in investor sentiment, interest rates, and macroeconomic conditions, earnings growth is driven by more stable, business-specific factors such as competitive strength, demand, and management quality.
This makes earnings season a useful framework for understanding a company’s fundamental growth while differentiating it from short-term market noise.
How Companies Performed in Q3
Q3 reflected a period of stable business performance. Across the S&P 500, earnings increased around 13% – 14% from a year ago, marking the fourth consecutive quarter of double-digit earnings growth.
Revenue grew roughly 8%, among the highest year-over-year results since Q3 2022, and about eight in ten companies exceeded earnings expectations. These results highlight the underlying strength of core operating performance even in a higher interest-rate environment.
Importantly, this quarter’s growth was driven by multiple sectors. Technology remained a key driver, but earnings gains extended across industrials, healthcare, and several financial companies. Financials was one of the leading contributors to overall earnings growth, with sector earnings rising about 23% year over year, while Healthcare recorded double-digit revenue growth and Industrials continued to show steady operating performance.
Q3 also improved compared with previous quarters. Earnings growth in the low-double-digit range outperformed the previous two quarters with revenue growth accelerating.
Q3 Earnings Key Trends:
All eleven S&P 500 sectors reported year-over-year revenue growth, indicating widespread sector participation.
The aggregate earnings growth rate was 13.4%, reflecting the fourth consecutive quarter of double-digit growth and the ninth quarter in a row of earnings gains.
The S&P 500’s net profit margin reached about 13%, the highest level seen in over a decade, despite higher input costs and tariffs.
At the sector level, Q3 earnings revealed several important insights:
1. Growth Extended Across Most Sectors
Nine of eleven sectors posted earnings growth, with only communication services and energy declining. The IT sector led at +28%, driven by semiconductors. Financials grew 23%, and Consumer Discretionary returned to 8% growth.
2. Consumer-sector – Early Signs of a Shift in Spending Patterns
A number of large consumer-facing companies, including Kraft Heinz and McDonald’s reported a slowdown toward the end of the year, with signs of reduced discretionary spending despite strong headline earnings results.
3. Goods Producing Companies Underperformed Services and B2B Businesses
Companies selling goods, including manufacturers such as Ford and General Motors, posted moderate growth this quarter, while services and B2B firms delivered more resilient performance, highlighting an important divergence within the US economy.
4. Performance Supported by Secondary Growth Drivers
Many companies successfully managed tariff pressures and were supported by increased activity across dealmaking, financial market activity, and margin expansion in power, real estate, and industrials, contributing to one of the highest earnings outperformance rates in 25 years.
A Brief Note on AI’s Growing Role in Long-Term Wealth Creation
Corporate adoption is rising: Nearly half of S&P 500 companies highlighted AI-driven productivity in Q3, indicating that AI is moving from early trials toward practical business and enterprise use cases.
AI infrastructure spending is accelerating: AI Infrastructure spending contributed to half of US GDP Growth in the latest quarter. Hyperscalers such as Amazon, Microsoft, and Alphabet have increased 2026 capex expectations from $467B to $533B during Q3 alone.
Source: Goldman Sachs Global Investments Research
AI-enabled beneficiaries are expanding: A recent survey shows 37% of large firms now use AI in regular operations, positioning companies with high labor-cost exposure to benefit from future productivity gains and efficiency improvements.
Here’s to building lasting wealth,
Ken Majmudar, CFA
Founder & Chief Investment Officer Ridgewood Investments
P.S. If you’re ready to explore how our institutional-grade investment approach can work for your portfolio, let’s schedule a time to talk below.
Gain Industry – Level Intelligence For Your Investment Strategy
Transform your approach to wealth building with institutional-grade insights. Schedule a private discovery call with Ken and the Ridgewood team to:
- Analyze your current portfolio positioning
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- Design your personalized wealth architecture
Building generational wealth requires institutional-grade thinking. Let’s discuss how our sophisticated approach can work for your family’s future.
Important Disclosure: Ridgewood Investments is a registered investment adviser. This newsletter is for informational purposes only and does not constitute investment advice. Past performance is not indicative of future results.