Stock Market Forecast 2025: Beyond the Consensus

Before giving you my views about where stocks are headed in 2025, a timeless, fundamental truth: Forecasting correctly requires knowing something important that other people somehow missed. That flows straight from core finance theory.confidence is poison. So, I confess: Despite trying hard, I don’t know much now that other people don’t know about how 2025 will unfold …Good forecasting takes three steps. First, assess possibilities. Then, look for what other forecasters miss or can’t fathom.

The sharp plunge on Dec. 18 soon after a global bull market high is majorly bullish. Since the Second World War, losses exceeded 2.5 per cent on 114 plunging days shortly after bull market highs. In the following year, however, the S&P 500 rose more than 85 per cent of the time, with average returns exceeding 20 per cent. I’ll bet no one ever told you that.

Stocks preprice, always – then do what few investors expect. With politics, stocks “perversely invert.” Generally, investors lean conservative, viewing Republicans as pro-business, anti-regulatory and small-government, and Democrats as the reverse. Hence, in presidential-election years when Democrats won, caution kept returns below average.

So, I watch and wait for signs tilting one scenario to dominance. Maybe U.S. Senate confirmation hearings for Mr. Trump’s voluminous lesser appointees . Or the severity of Republican House bickering in January. Or how a miserable month for Prime Minister Justin Trudeau resolves, along with political chaos in Germany, France and beyond.

Meanwhile, investors who seek long-term growth need stocks. The riskiest possible move is selling out and then having stocks skyrocket. That would cost you returns that otherwise compound thereafter – impossible to recoup without taking crazy risks that could break you.

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