Chris Reilly’s note: Cornerstone, our rules-based investing system that takes emotion and guesswork out of investing, just wrapped up an A+ 2025.
So, I asked RiskHedge publisher Dan Steinhart to walk me through how this simple, disciplined approach will continue to beat the market in 2026…
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Chris Reilly: Dan, gold was the place to be in 2025. It soared 64%, for its best year since 1979. Tell us how Cornerstone members profited from this.
Dan Steinhart: Cornerstone has been in gold since early 2024, at around $2,240/oz. It’s now over $4,600/oz. So, we’ve more than doubled our money by getting in when the uptrend started and staying long the whole way up.
Chris: How did you know to buy gold in early 2024? And to hold on that whole time?
Dan: I didn’t, I just followed the rules. Gold entered the top six of Cornerstone’s ranking system, which means it’s time to buy. And it has stayed there ever since, being ranked #1 or #2 most months as the best-performing asset on Earth.
Chris: You’ve been talking about $5,000 gold for years, even when gold was below $2,000.
Dan: I did say when it finally breaks above $2,500, it’s going straight to $5,000. But my views are separate from how Cornerstone operates. Gold started climbing long before it made headlines, and that’s when Cornerstone got involved.
Chris: Of course, gold wasn’t the only thing that worked last year...
International stocks quietly had a strong year, too.
Dan: That surprised a lot of people, huh? If they even know about it. Big foreign stocks were up about 35% in 2025. Emerging markets were up around 26%. Both beat the S&P 500.
Most US investors are still heavily concentrated at home, especially in large-cap growth. That worked for a long time. Cornerstone doesn’t have a home-country bias. When international stocks moved up the rankings and into uptrends, Cornerstone bought them.
Chris: Let’s talk about what Cornerstone avoided: bonds and REITs.
Dan: That helped a lot, too. Bonds were a drag in 2025. Long-term Treasurys barely moved. REITs went nowhere. Many balanced portfolios underperformed because they were weighed down by assets that simply were not contributing.
Diversification is good, but it can also leave you with a lot of exposure to things that aren’t working.
Cornerstone approaches diversification differently. Rather than owning everything all the time, it only owns sectors in uptrends.
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Chris: Let me pull something up from your most recent issue so people can see this more clearly.
You compared Cornerstone to a traditional 60/40 portfolio over the last five years.
In 2025, Cornerstone returned 21% versus about 14% for 60/40. Over the full period, total returns were similar, but the drawdowns were not.
Cornerstone’s maximum drawdown was about 14%, compared to roughly 21% for 60/40:
Dan: That difference matters. In March of last year, the S&P 500 fell around 6%. Cornerstone did not fall at all on a monthly basis. That wasn’t because we predicted a pullback. It was because the portfolio had already shifted away from weaker areas.
People underestimate the importance of avoiding drawdowns. It makes consistency easier. It makes it easier to stick with your investing plan.
Chris: You gave Cornerstone an A+ for 2025. What earned that grade?
Dan: It beat its benchmark, the 60/40 portfolio. And it beat the S&P 500, which is not easy to do in a bull market. And it did both while avoiding a lot of volatility.
But more important, it did what it was designed to do.
I use this system because I do not want complexity or constant decisions in my personal financial life. Tomorrow morning, I’ll wake up and coach my sons in basketball. I don’t want to face the dilemma of choosing between that or managing my investments. I want something I can rely on without having to think about it every day.
Chris: What about folks who look at last year’s winners and assume that’s the playbook for 2026?
Dan: We’ll see. Gold continues to surge. The portfolio today looks different than it did a year ago though, and it will continue to change as leadership changes.
That adaptability is the whole point.
Chris: Which sets up something I want to dig into next time. If this approach is simpler and often more effective, why do so few people invest this way?
Dan: That question has very little to do with markets and a lot to do with human behavior.
Chris: We will get into that next time. Congrats to Cornerstone members.
Dan: Thanks, Chris.
Chris: And right now, Cornerstone is available at a limited-time “New Year’s” discount for readers who want a calmer way to invest without making it a full-time job. Details here.
Chris Reilly
Executive Editor, RiskHedge