As we dive into 2025, we’re excited to share our outlook on the markets. While many are fixated on pessimism, we’re taking a fresh approach: focusing on what could go right.
5 Key Takeaways:
- Strong jobs numbers signal economic resilience and potential for growth.
- Inflation has stabilized significantly, dropping to an annualized rate of 2.4%.
- Market corrections are overdue but are part of normal cycles.
- There’s still significant cash on the sidelines waiting to re-enter the market.
- We’re predicting mid-to-single-digit growth for 2025—around 5% to 9%.
Let’s embrace the opportunities 2025 has to offer. As always, we’re here to help you navigate the year ahead. If you’d like to discuss your portfolio, reach out—we’re happy to chat.
Watch our 2025 Market Outlook video now!
Transcript
Happy New Year to our Solidarity Wealth family. We intentionally waited until the New Year to record our 2025 Outlook video because we wanted to let some of the election noise and the euphoric rise in the Trump trade die down. As I’ve been reading, studying, and digesting the endless sources of 2025 Outlooks offered by anybody and everybody, I wanted to take a little different twist on our video.
Moving Past the Pessimism: What Could Go Right?
The prevailing theme of seemingly every 2025 message was one of pessimism and what could go wrong, so I wanted to take a twist on this and focus on what could go right in 2025. Let’s start with the sell-off today. This came on the much stronger jobs report.
Stronger Jobs Report: A Positive Signal
I don’t want to get too granular, but the jobs numbers came in roughly a hundred thousand stronger. In other words, more people working, and for an economy that is two-thirds dependent on consumerism, more jobs equals more money, which equals more consumption. The fear of spikes in inflation is just that in our opinion, fear.
Inflation Trends Show Progress
Inflation has come down solidly from the 9% range to an annualized rate of about 2.4% currently. We look at the PCE rate because that’s the Fed’s preferred gauge. We’re due for a correction.
Market Corrections Are Normal (And Overdue)
On average, the market experiences a 10% drawdown roughly every 360 days. It’s been longer than that since we’ve had a correction, so if all of the volatility that we’re processing now is working itself through the system, that means that we’re closer to the end of that and on to brighter times.
The Case for Optimism: Cash on the Sidelines
Some of the other things to remember are that there’s a lot of cash still on the sidelines that needs to find a home, and the market can handle much more breadth in terms of market participation. Believe it or not, there are great companies outside of Apple, Microsoft, Amazon, and Google.
Back-to-Back 20%+ Gains: A Rare Market Feat
Also, stop and enjoy the fact that we’ve had back-to-back 20% plus gain years. That’s only happened three times prior.
For those keeping track at home, there really isn’t a way to gather a trend in this because of the three instances that this has happened, the next year’s performance was as follows. The first year was down, the second time was flat, and the third time was up. You can see why making predictions isn’t a sustainable way to feed your family.
2025 Market Predictions: A Bumpy But Positive Year
So with that said, here are our feelings for the market in 2025. It’ll be a bumpy year, but keep in mind that’s actually normal. We’ll have more bumps and bruises along the way, and frankly, that’s as it should be.
We still feel that the market will be positive in the mid to single-digit increase. Think of 5% to 9% by year-end from where we’re at now. We are still in a bull market, and this is the shakeout year of that bull cycle.
A Final Thought: Invest with Confidence
I’ll leave you with one of my absolute favorite quotes from Sir John Templeton regarding bull markets. Sir John Templeton is regarded as one of the greatest investors of all time, and he said, “Bull markets are born in fear, grow in skepticism, mature in optimism, and die in euphoria.” I’d say we’re in the skepticism area, but peeking around the corner at the optimistic side of things.
In other words, we still have time to go in this current bull market. As we always say, when you put good into a portfolio, you get good out. We wish you a wonderful year, and we look forward to our conversations throughout 2025.
