1-Minute Read: Raymond James' 10 Themes for 2025 [ADV]
Friends – As we move into 2024, I wanted to continue an annual tradition and share some highlights from Raymond James’ “Ten Themes for 2025” from our excellent Chief Investment Officer, Larry Adam and his team.
This year, after another strong year for the stock market in 2024, and with the election behind us and new policies beginning to take shape, Larry and his team’s list is particularly timely, with helpful perspective on how to capitalize on opportunities across various asset classes. I’ve summarized their themes below. If you’d like to view the full presentation, you can view a replay of a recent webinar where Larry presented these themes.
- Optimism Overload – Volatility, currently at historically low levels, will likely increase in the upcoming year. We caution investors from becoming overly complacent as the market is set up for disappointments.
- S. Economy – A resilient consumer, healthy job growth, and corporate and government spending all remain supportive of the economic expansion. Assuming the Fed cooperates, the US economy should remain a standout compared to other developed market economies.
- Monetary Policy – We expect the Fed to cut rates twice in 2025. As the soft landing remains intact, the economy and risk assets should do well regardless of the number of times the Fed cuts rates.
- Fixed Income – We believe longer-term interest rates will be range-bound for much of the year and end up only slightly higher by year end (2025 Year-end 10-year Treasury yield:
4.50%).
- Equities – We expect the S&P 500 to rise to 6,375 by the end of the year – driven in large part by earnings growth. However, volatility will likely be elevated throughout the year.
- Equity Sectors – Innovations in Technology and Health Care, along with continuing government spending and reshoring connected to Industrials, will be strong tailwinds for these sectors in 2025.
- Mid-Cap Equities – Relative to small-cap equities, mid-cap equities are a fundamentally more solid approach to play a potential broadening in equity performance in 2025.
- International Equities – We continue to prefer US equities over international in 2025. However, within developed markets, Japan should outperform Europe as an improving economy should support the Japanese equity market.
- Selectivity and Risk Management – We caution investors against taking on excessive risk across asset classes. Higher beta asset classes without a solid fundamental backdrop will likely face difficulties in the coming year. 2025 will likely be a year in which active management, especially in commodities, emerging markets, and small caps, proves its worth.
- Asset Allocation – America's wealth has grown to record highs. But don't spin the ‘Wheel of Fortune’ on your own! Your advisor is like the 'phone-a-friend' or 'lifeline' you can rely on to answer your questions and help guide you to your financial goals.
If you’d like to discuss how these themes relate to your personal planning, let’s connect. I’m happy to help.
Best,
CAMERON DIEHL, CFP®, CPWA®
Private Wealth Advisor
Private Wealth Advisor is a designation awarded by Raymond James to financial advisors who have demonstrated mastery in anticipating and managing the expansive financial needs of high-net-worth individuals, families and organizations. Any opinions herein are those of Cameron Diehl and not necessarily those of Raymond James. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. To opt out of receiving future emails from us, please reply to this email with the word “unsubscribe” in the subject line.
