The author discusses the challenges of predicting the 2025 market direction and presents three equally likely scenarios: a significant boom, a slight dip, or modest gains. They explain their forecasting methodology, emphasizing the importance of identifying unseen forces and assigning probabilities. They also highlight the rarity of consecutive years of strong market performance and the possibility of a surprise surge if economic and political conditions exceed expectations.
When I am lucky enough to take advantage of this basic investing truth, I never fear sticking my neck out. I did it with my But overconfidence is always the enemy. So now I find myself in a slightly uncomfortable position during the thick of the holidays: After trying really hard, I haven’t yet found a basis for a definitive 2025 forecast. Still, some things are clear and more will be soon. Let me explain. Good forecasting hinges on assessing economics, politics and sentiment.
But stocks near instantly price in all such widely known information and opinions. Success requires vetting possibilities – finding big, definitive forces others don’t see. Then, assign probabilities. If and when one possibility’s probability dominates, that becomes the forecast.The truth about jobs, layoffs and unemployment — and why investors shouldn’t sweatThree 2025 outcomes now look similarly likely to me. Markets could boom another 20%-plus. Or dip slightly. Or just grind out low-single-digit gains. Early in 2025, one of those trends will emerge dominant. Thirty years ago, I proved that the consensus of professional forecasters’ forecasts reflects what has been pre-priced into stocks fully a year ahead – and, hence, doesn’t happen. That eliminates some possibilities. Currently their forecasts bunch around low double-digit returns. Eliminate that and my three scenarios remain in play, with no way to rank them – yet. Markets could boom another 20%-plus. Or dip slightly. Or just grind out low-single-digit gains. Early in 2025, one of those trends will emerge dominant.The happiest scenario, up 20% plus, would shock most investors. Three huge years straight? Legendarily rare. Yet with almost no one expecting it, if economic and political realities slightly top expectations, it could happen., while just one aspect, was super bullish. Since World War II, 114 S&P 500 days dropped 2.5% or more shortly after a bull market hig
MARKET FORECAST 2025 INVESTING ECONOMICS POLITICS
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