For me, 2024 was the most successful year so far, not only because I significantly increased my savings rate, but also because the portfolio performance took off for the first time.
In the past year, I also became much more aware of economic and political issues, which is probably due to my daily consumption of various podcasts on the way to work. The older you get, the more active and involved you feel in many areas.
I feel closer to the market than ever before... as soon as I skip a day, I have the feeling of being left behind. I'll have to think about whether this can still be counted as a feeling of a lack of routine or whether it's already addictive behavior. The user-friendliness of Getquin certainly also plays a role here. 😅
Well, now to the topic.
After another year of exceptional market returns and an impressive rally, the question is what can we expect from 2025?
In this article, I therefore summarize some key findings from recent publications by Goldman Sachs and BlackRock, for example.
I have bundled the content thematically, enriched it with additional sources and added my own comments. In my opinion, the reports provide a good basis for thinking about market opportunities and classifying current trends without going into too much detail. Ultimately, they also give me the feeling that I am well positioned with my own portfolio approach. It goes without saying that the personal assessments I include are not intended as investment advice.
Overview of the topics:
1 . Introduction: Optimism and market rally
2 . Causes of returns: Valuation and earnings growth
3 . Valuations and future returns
4 . Market concentration and global differences
5 . Megatrends and their impact
6 . Political classification and protectionist trends
7 . Growing fragmentation
8 . Investment estimates for 2025
9 . Personal approach
tl;dr
Hopefully the tl;dr is not too tl;dr - the short version today is also a bit extended in bullet points.
Strong market returns since October 2023:
- MSCI World index: +40% since October 2023 (approx. +60% since low 2022).
- S&P 500: One of the strongest rises since 1928, strongly influenced by optimistic expectations of falling inflation and interest rates
Driver of returns in 2024:
- Approx. 50% of returns in USA, due to valuation increases.
- USA: S&P 500 with high P/E ratio (28.5 vs. 10-year average 22.7).
- Japan: Returns driven almost exclusively by earnings.
- Emerging markets: Negative valuation trend, limited growth.
Regional differences and outlook:
- USA dominates the MSCI ACWI (65% weight) with strong concentration on a few tech giants ("Magnificent 7").
- Europe and China: Moderate earnings, less valuation growth.
- 2025: Earnings growth should be the main driver worldwide, e.g. S&P 500 (+11% forecast return) and Japan's TOPIX (+17% growth).
Megatrends and AI investments:
- AI-driven developments remain central (data centers, chips, infrastructure).
- Investments in AI could account for around 2% of US GDP by 2030 -> USD 700 bn.
- Productivity increases through AI promote cross-sector growth.
Geopolitical and macroeconomic influences:
- Increasing trade restrictions (protectionism), shift in trade routes (e.g. Suez Canal).
- Political uncertainties in the USA (e.g. possible deregulation, tax cuts under Trump).
Investment assessments:
- Overweight: US and Japanese equities, especially technology and healthcare sectors.
- Opportunities in emerging markets such as India and Saudi Arabia with moderate weighting.
Long-term changes:
- Megatrends such as digitalization, AI and ageing societies are permanently shaping the economy.
- Geopolitical tensions (USA vs. China) and fragmentation make forecasts difficult, but also offer opportunities.
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- 1 . Introduction: Optimism and market recovery
Driven by optimism about inflation peaking and the prospect of a Fed pivot, the recovery began in October 2023. Since then, the MSCI World Index (see ex. $IWDA (+1.42%) ) alone has gained around 40% (and around 60% since the low point triggered by rising interest rates in 2022) [1].
The S&P 500 (cf. ex. $CSDX ) also had one of the strongest rises since 1928 in 2024 (see Fig. 1).
Fig. 1: Rise in the S&P 500 in 2024 is one of the strongest since 1928