By Randy Brunson
SUWANEE, Ga. | How were the public markets in 2024? Another solid year, with the S&P 500 up 25 percent, its second year in a row with gains of more than 20 percent. The Fed lowered interest rates but the 10-year US Treasury yield moved in the opposite direction.
Brunson
The back-to-back 20 percent plus performance of the S&P 500 was the first time this has happened since 1998-1999. Returns were positive around the world though emerging markets lagged developed markets, with the All Country World Index up 17.5 percent in 2024. The NASDAQ was up almost 30 percent for 2024.
In the fall, the Federal Reserve cut interest rates three times for a full point reduction, to the 4.25-4.5 percent range, the first cuts since March 2020. U.S. bond prices rose for the year but Treasury prices were mixed. Official inflation is in the three percent range, though most households are still experiencing significant strain from the cost of food. The price of groceries is significantly higher than it was five years ago, having an outsized impact on many households. This is the second largest monthly expense for most.
Republicans control the White House and both houses of Congress. We suggest neither giddiness nor despair, depending on your perspective. We subscribe to George Friedman’s observations that a) the American system is designed to move and change slowly, and b) events more often make the president than the other way around.
2025 outlook? Statistically, the public markets should finish in positive territory. The government will continue to run up debt. Treasury bills, notes, and bonds will continue to be weak as a result. Wars will continue. Trump is a master at positioning and theatre. Border security and NAFTA renegotiation will be relatively simple after Trump’s comments regarding Canada and Mexico. And his comments regarding the Panama Canal and Greenland have put both China and Russia on notice that they may want to mind their manners.
But you can find those types of comments in any number of places.
My message today is to avoid both greed and fear. Continue to invest consistently and systematically for long-term wealth building. Don’t allow the fear of (your personal choice of fears) get in your way of a long-term game plan. We firmly believe though, that this isn’t the time to put 50 percent of your total assets into crypto, Nvidia, gold, or any other single position.
The men of Issachar’s era in the Bible were men known for understanding the times. And Solomon offered the counsel to divide what you have seven or eight ways, as we don’t know what may happen. Prudence, awareness, insight, and understanding are dominant themes for the remainder of the decade.
Bubbles and crashes are times when extreme events cause people to lose their objectivity and view the world through highly skewed psychology, either too positive or too negative. So. Just say no to both fear and greed, choose to forgo the Fear of Missing Out, just build cash, and continue to look for opportunity.
Personally, I believe commercial real estate and farmland may offer some outstanding opportunities over the next few years.
Stay the course, don’t worry about the gyrations in markets, politics, talking heads, or the other headlines which compete for your attention.
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