TiltFolio in 2025: A Year-End Review and What Comes Next

TiltFolio’s first full year as a newsletter has been an excellent one by almost any measure. Both core strategies significantly outperformed their long-term expectations, benefiting from an environment that strongly favored holding financial assets rather than cash.

TiltFolio 2025 Equity Curves

Equity curve generated via TiltFolio Calculator

TiltFolio Balanced, our diversified buy-and-hold strategy, delivered returns of more than 20% in 2025. This is well above its long-term expected range of roughly 7 to 9 percent. TiltFolio Adaptive, our trend-following strategy, performed even better, delivering returns in excess of 33 percent, compared to a long-term expectation of around 14 to 17 percent.

While these results are gratifying, they should not be taken for granted. As I have written repeatedly, periods of strong performance tend to coincide with environments where there is broad demand to hold financial assets. When that demand fades, returns become harder to come by. The purpose of this review is therefore twofold: first, to explain why 2025 was such a strong year, and second, to assess whether those favorable conditions are likely to persist.

Why 2025 Was Such a Strong Year

A useful starting point is the equity curve of TiltFolio Balanced itself. Over long periods, this curve serves as a reliable barometer for financial conditions more broadly. When TiltFolio Balanced is rising, investors are generally comfortable holding assets such as stocks, bonds, and gold. When it is falling, investors are rotating into cash, sometimes voluntarily, and sometimes under pressure.

Historically, the most attractive long-term buying opportunities have occurred when TiltFolio Balanced approaches its long-term trendline, measured by the 200-week moving average. This happens rarely, but when it does, it tends to coincide with periods of acute stress. In response, policymakers typically deploy aggressive fiscal and monetary support.

This was exactly the setup in October 2023. Following the outbreak of war in Israel and Palestine, financial markets weakened, and TiltFolio Balanced made contact with its 200-week moving average. Historically, this level has marked periods where the balance of risk and reward strongly favors asset holders. Buying financial assets during such moments has, over decades, been a highly profitable decision.

October 2023 Performance

Equity curve generated via TiltFolio Calculator

The results since then speak for themselves. From October 2023 through the end of 2025, TiltFolio Balanced grew at an annualized rate of roughly 19.4 percent. TiltFolio Adaptive grew at an annualized rate of approximately 33.1 percent. Even the S&P 500 performed extremely well over the same period, compounding at about 24.9 percent annually.

In short, financial assets have enjoyed a powerful tailwind over the past two years. The more important question now is whether that tailwind is likely to continue.

TiltFolio Balanced and the Distance From Its Long-Term Trend

The first reason for caution is simple, even if it sounds imprecise. TiltFolio Balanced is now trading far above its 200-week moving average.

TiltFolio Balanced Distance from 200-Week Moving Average

Markets are probabilistic systems, not precision instruments. While moving averages are not crystal balls, they are useful for identifying environments where optimism may be stretched. When a diversified portfolio trades far above its long-term trend, future returns tend to be lower, and risks tend to be higher.

Anecdotally, this aligns with the current market narrative. The belief that “cash is trash” has become widespread, as has the conviction that central banks will always step in to support markets. Even with frequent public pressure on the Federal Reserve, financial assets may struggle to continue rising at the pace seen in recent years.

There are two broad scenarios in which cash becomes attractive relative to financial assets. The first is a debt-driven deflationary panic, such as 2008. The second is a period of monetary tightening, when central banks raise interest rates or withdraw liquidity from the financial system, as occurred in 2022.

In a deflationary bust, bonds typically perform well, while risk assets struggle. In an inflationary environment, if central banks fail to respond aggressively, precious metals tend to surge as currencies are debased. Elements of both dynamics are visible today, which makes the outlook unusually uncertain.

Here in early 2026, it is not yet clear whether deflation or stagflation poses the greater medium-term risk, nor how policymakers will ultimately respond. At some point, deflationary forces are likely to reassert themselves, at which point bonds should finally deliver meaningful gains after years of disappointing performance. Timing that transition, however, is extremely difficult.

This difficulty is precisely why TiltFolio Adaptive exists.

Gold and the Limits of Strong Trends

TiltFolio Adaptive has been allocated to gold since July 1, 2025. Gold performed exceptionally well throughout 2025, benefiting from concerns about currency debasement, geopolitical risk, and fiscal dominance.

Gold Distance from 200-Week Moving Average

However, gold is now also trading far above its own 200-week moving average. As with TiltFolio Balanced, this does not mean that an immediate reversal is inevitable. Strong trends can persist longer than expected. But it does suggest that the risk-reward balance is no longer as attractive as it was earlier in the cycle.

After a stunning multi-year move, it is difficult to be as enthusiastic about gold in early 2026 as it was in mid-2024 or mid-2025. Periods of consolidation or sideways movement would not be surprising, even if the longer-term trend ultimately remains intact.

TiltFolio Adaptive and Its Own Equity Curve

In addition to monitoring individual asset classes, TiltFolio Adaptive’s equity curve itself provides valuable information. Unlike TiltFolio Balanced, which is a static buy-and-hold strategy, Adaptive can enter and exit entire asset classes on a monthly basis. For this reason, its relevant trendline is shorter-term, measured by the 200-day moving average.

TiltFolio Adaptive Distance from 200-Day Moving Average

Equity curve generated from the Performance page

Like most well-designed trend-following systems, TiltFolio Adaptive is constructed to rise smoothly over time. As a result, its equity curve rarely spends extended periods below its 200-day moving average. When it does approach or dip below that level, future returns have historically been more favorable.

Today, however, TiltFolio Adaptive’s equity curve is trading well above its trendline. This again suggests that recent gains have been unusually strong. Since the current allocation is heavily influenced by gold’s strength, there is a meaningful risk that the system experiences a period of sideways or declining performance until either gold resumes its uptrend or the system reallocates to a different asset class.

What Comes Next

At some point, cash will become an attractive asset to hold. This typically occurs through one of two pathways. The first is deflation, often triggered by a debt crisis. The second is stagflation, often triggered by sharp increases in commodity prices that compress real economic activity.

When this transition occurs, financial assets broadly defined will tend to struggle. As a buy-and-hold strategy, TiltFolio Balanced would likely experience a period of weaker performance. As a trend-following strategy, TiltFolio Adaptive may continue to perform reasonably well, but that outcome will depend on how cleanly trends emerge and how quickly the system can adapt.

Both strategies ultimately perform best when there is a strong tailwind supporting financial assets as a whole. The past two years provided exactly that environment. The coming years are unlikely to be as straightforward.

Timing regime shifts is notoriously difficult. Many observers expected a major downturn at the start of 2025, which never materialized beyond brief weakness in March and April. This uncertainty is precisely why TiltFolio Adaptive relies on objective rules rather than subjective forecasts.

As of today, those rules still indicate a broadly risk-on environment. However, the strength of that signal is gradually weakening. This does not mean that a major downturn is imminent. It does mean that forward-looking returns are likely to be lower, and that discipline will matter more than ever.

As always, TiltFolio exists not to predict the future, but to navigate it with humility, diversification, and rules that can be followed even when conditions become less favorable.