Year-end is a time for holiday cheer, introspection, and Wall Street strategist predictions for the market. As I try to emphasize to my clients, these analyst projections are nothing more than guesses, wishful thinking, and marketing. They should not be viewed as investment advice.
A more practical outlook for 2025 is to focus on events that have a high probability of coming to fruition. Preparing mentally and positioning your portfolio accordingly will help set folks up for financial success in the year-ahead. Below are predictions that will likely occur.
1) There WILL be unpleasant news: When bad things happen, the media loves to drum it up. After all, negativity attracts many more clicks than positive news. More eyeballs mean more ad revenue. It’s a simple business model. The financial media is no different than traditional news outlets. The talking heads will repeat the same bad inflation numbers or stock market declines ad nauseum until there is a fresh piece of negative news they can share with their audience.
Investors should remember that despite what is happening in the world, the markets and humankind have always prevailed. Obsessing over every scary headline will not change that reality. Stay optimistic and, in time, life and your portfolio will get better. They always do.
2) There WILL be major global events that nobody predicted: Record high inflation, war, a global pandemic, the implosion of a cryptocurrency, a global pandemic and so on. There are many things that will take place in 2025 that are unpredictable. These may be negative events, like I just mentioned. It may also be positive news, like a strong economy and a record-setting year in the stock market. It’s not the investor’s job to foresee these big events. That’s impossible. Rather, investors should focus on structuring their portfolio to withstand whatever awaits them and keep their emotions at bay. Doing so will position investors for long-term financial success.
3) Your know-it-all brother-in-law/friend WILL have a great investment opportunity that they can get you access to: The question I receive most is whether someone should participate in an opportunity suggested by someone close to them. The answer is almost always NO. Envy and speculation are two things that keep the world turning. This won’t change. In social settings, whether it’s on the golf course or a dinner with friends, it is common for people to want to share their investment winners, while conveniently leaving out the losers. These stories make others jealous. It’s important to remember that you don’t need “access” to anything special to achieve your goals. Your process should be boring, plain vanilla, and consistent over time. If your strategy represents that level of dullness, then you are likely to minimize your mistakes and build wealth overtime. Don’t let anyone with a hot deal try to convince you otherwise.
4) Your know-it-all brother-in-law/friend WILL tell you what y