As we begin 2025, we want to note the performance of the S&P 500 over the past two years, gaining over 20% in both 2023 and 2024. While we are pleased with these results, conflicting economic currents make for uncertainty in the new year. The possibility of tariffs and pro-business policy stymieing the Federal Reserve’s effort to curb inflation may lead to volatility in US markets. Just as well, recent comments from Jerome Powell indicate fewer rate cuts than expected, potentially disrupting the bullish trend.
Recency bias causes people to overweight the recent past in making investment decisions. Just because a trend persists for two years, does not mean it will persist for a third. Risk exists and markets can go down. To position ourselves for long-term success, it is important to take a broad view of the markets over time, and allocate dollars in a disciplined, calculated manner.
