Sigh, the best laid plans…….foiled again. Not knowing exactly who was in charge of informing 2025 that the financial markets were supposed to leap to new highs (again) with the turn of the calendar, it’s hard to assign blame. But, what the h*** happened?
Spending time reading several ‘respected’ and well known financial “experts” and their yearly forecasts is “a fool’s game.” Obviously nobody has a crystal ball to see the future, but so wrong in the first two weeks? Interest rates are not going down even after the Fed (curiously) cut rates in their last meeting in December. Bond holders ain’t happy. Rates were supposed to keep easing this year. Nope, at least not yet.
Stocks were supposed to celebrate the new year and new presidential administration with a resumption of rallies of the past two years. Oh sure, can’t expect 25% returns a year but maybe 10%-15% for sure(?). But, now down on the year? Where did all the buyers go? Stocks don’t go down. Right?
Certainly a lot of anticipation of the new administration’s policies were “baked” into last year’s rallies. But it looks like the “2025’ers” may have overlooked a simple common sense reality. Policies and new ideas may, or may not, actually be implemented. Even if they are, it will take some amount of time. With stocks sporting unusually high valuations, time is not a “friendly thing” and risk will weigh on investors’ minds.
The first wild card event of 2025 is still playing out. The fires in Los Angeles. A truly ongoing tragic event. The fires will eventually be put out. Then what? What will be the cost of cleaning up and rebuilding? What will be the legal fallout and against who? Obviously no one knows yet. But that’s the point. Rest assured, those costs will include taxpayer participation.
So here we are a couple weeks into the new year and still nobody has come forth to fully inform 2025 that investors are waiting (and expecting) blue sky, warm weather, positive investing returns and reduced inflation. Get the memo. What could possibly go wrong?
