2024 and 2025 Investment Insights: The Magnificent 7 Stocks, Sector Growth, and Emerging Themes

“When the facts change, I change my mind.” -John Maynard Keynes

asset class returns

While many people were opening gifts over the last few weeks, I think it is time to wrap up 2024.

Looking back, 2023 and 2024 were wild in a few ways. 2023 had the S&P 500 return 23% and 2024 had the S&P 500 return 24%. While we can’t predict that 2025 will return 25%, the returns of the markets over the last few years have been very impressive, considering that the backdrop was a regional banking crisis and a crazy amount of geopolitical risk. U.S. stocks have been climbing a two-year wall of worry.

The why? There have been just four soft landings in history: 1968, 1985, 1995, and most recently, in 2024. Because soft landings are so rare, market participants don’t have a lot of data points to make bold predictions about the future. Going into 2024, investors were questioning whether the Fed could engineer a soft landing with this economy. Over the course of the year, market participants pointed to cracks in consumer spending, employment risks (we noted the 'Sahm rule'), and an inverted yield curve that had 'never been wrong' about predicting the next recession. None of these issues materialized, of course. The U.S. economy is on pace to post almost 3% GDP growth in 2024.

There is always a reason to sell your investments. Heading into 2025, the doubts in the market revolved around things like Trump Administration policy uncertainty, ex-U.S. growth, higher-for-longer rates, market concentration, and more. Here are a few of the questions we find ourselves asking as we close out another stellar year for stocks: