Market Outlook: A Bullish Stance for 2025
As we step into the new year, our strategic asset-allocation models, tailored to individual risk tolerance, are poised for growth. With three distinct models – Conservative, Growth, and Aggressive – we make tactical adjustments based on our market outlooks.
Navigating Challenging Times
December proved to be a difficult month for investors, with the S&P 500 declining 2.4% and the fixed-income benchmark ETF AGG dropping 2.3%. However, looking at the bigger picture, equities saw a remarkable 25% return in 2024, while bonds struggled with a 2% loss.
The Stock-Bond Barometer: A Balanced Approach
Our proprietary model suggests a slight bias towards bonds in long-term portfolios, driven by the recent surge in interest rates. This means that both asset classes should be near their target weights, with a moderate tilt towards bonds.
Large-Cap Frenzy: A Focus on Growth and Strength
We’re overweight on large-caps, drawn to their growth potential and financial stability. While small-caps offer value, our recommended exposure is capped at 10%-15% of equity allocation, below the benchmark weighting.
U.S. Stocks: A Beacon of Strength
The U.S. stock market has outperformed its global counterparts over the past one and five years. We expect this trend to persist, given the volatile global economic, political, and geopolitical landscape. Nevertheless, international stocks present attractive near-term valuations, and we target 5%-10% of equity exposure to this group.
Growth vs. Value: A Rebound in 2024
After a sluggish performance, growth stocks rebounded in 2024, outpacing value stocks. Looking ahead, we anticipate growth will continue to dominate over the longer term.
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