Want to know what the stock market is going to do in 2025, especially with all the big changes the new administration is making?
I can tell you exactly what is going to happen. The stock market is going to go up and the stock market is going to go down. When and how much is anyone’s guess. I use the word guess as that is all that it would be. Just look at this chart showing where every single analyst on Wall Street ‘guessed’ the stock market as measured by the S&P 500 would end the year. For an astonishing 5 years in a row, the stock market has either ended lower than the lowest ‘guess’ or higher than the highest ‘guess.’
People that are highly paid to predict what the stock market is going to do being very wrong is nothing new. For 13 out of the last 15 years the stock market ended higher than the highest ‘guess’ or lower than the lowest ‘guess.’ One of those two years the stock market was just barely below the highest ‘guess,’ which means just one time out of the last decade and a half did the stock market do what most so called experts were predicting. Being consistently this wrong on ‘guessing’ isn’t a problem just with the stock market either as these same analysts have been wrong at a fairly similar frequency when it comes to other financial market predictions, such as interest rates as I highlighted in an article in 2023.
Trying to ascertain what any financial market may do in the short run is like trying to guess which raindrop might make it to the bottom of a window first. It is simply impossible to do with any sort of accuracy, even for those whose primary job it is to do so. Despite this, many financial TV shows, newspapers, websites, and even portfolio managers are constantly trying to forecast the next short-term move. Everyone likes certainty and to know what’s next, which is why this practice of wildly inaccurate guessing continues and why people keep listening. If you want to be successful financially, though, you need to ignore the noise. Basing your financial future on what someone said is going to happen in the short run is a surefire way to find yourself facing negative results.
A smarter course of action is to create a plan where short-term financial market movements and all the uncertainty surrounding them can be ignored. If you’re sure you’re going to have ever increasing income in retirement to overcome ever increasing prices regardless of what any financial market (be it stocks, bonds, real estate, precious metals, etc.) might do over the next month or year then it is much easier to ignore those that are more often wrong than they are right.
The next time you hear someone say where they believe the stock market, interest rates, oil prices, etc. are going in the near future, remember this article and chart. Then remember to ignore them. If any short-term movement of any asset is going to make or break your retirement you either have no plan or a poor one. If you’re feeling the urge to act on a prediction you’ve recently seen or heard or have concerns with how the newly elected administration may impact financial markets with some of the actions they’re undertaking, you should instead consider speaking with a financial advisor that can help create a comprehensive strategy that not only eliminates these worries, but helps with tax reduction, Social Security timing, pension decisions, and inflation fighting income streams.
Material discussed is meant for general/informational purposes and is not intended to be used as the sole basis for any financial decisions, nor be construed as advice to meet your particular needs. It is also not a recommendation to buy or sell any particular investment. Investing in securities involves risk and profit cannot be guaranteed. Please consult a financial professional for further information.
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