"It sets the stage for continued strength heading into 2025," Bassuk added. For 2024, the Nasdaq surged 28.6%, while the bellwether S&P 500 notched a 23.3% gain, marking the index's best two-year run since 1997-1998. The blue-chip Dow posted a 12.9% advance for the year.
On Thursday Goldman Sachs said it now forecasts a 30 per cent chance that there will be major stock market corrections in 2025.
Other long-term forecasts, compiled by Morningstar, show U.S. equities returning between 4-7% on average over the next 10-15 years, with higher expectations for international stocks. In most cases, these predictions still see U.S. stocks outperforming U.S. corporate bonds.
While the 2024-25 earnings growth of Nifty 50 is expected to grow at a modest rate, recovery is expected with the support of healthy domestic GDP growth rate, decline in interest rates and a stable policy framework.
On average, it takes around five months for a correction to bottom out, but once the market reaches that point and starts to turn positive, it recovers in around four months. Stock market crashes, however, usually take much longer to fully recover.
The Dow Jones did not return to its peak close of September 3, 1929, for 25 years, until November 23, 1954.
$3,000 X 12 months = $36,000 per year. $36,000 / 6% dividend yield = $600,000. On the other hand, if you're more risk-averse and prefer a portfolio yielding 2%, you'd need to invest $1.8 million to reach the $3,000 per month target: $3,000 X 12 months = $36,000 per year.
Key Takeaways
The stock market could see a cooling-off in 2025, led by tech firms, amid worries over AI adoption. Interest rates could decline less aggressively, settling into a range of 3.5-4%, making room for a recalibration of long-term interest rates to between 4.5% and 5%, or even higher.
Wall Street's 2024 projections for the S&P 500 reveal uncertainty, with the average forecast at 4,861, yet the index is trading at 6,014, 23% above estimates. Deutsche Bank predicts a climb to 7,000, driven by robust investor demand and corporate actions like buybacks.
If you're taking a long-term perspective on the stock market and are properly diversifying your portfolio, it's almost always a good time to invest. That's because the market tends to go up over time, and time in the market is more important than timing the market, as the old saying goes.
Can the rally continue? Wall Street thinks so. On average, analysts are forecasting that the S&P 500 will rise around 10 percent in 2025. That includes analysts at Morgan Stanley and JPMorgan Chase, who until recently were bracing for a downturn.
Based on December's S&P 500 monthly data, the market is OVERVALUED somewhere in the range of 111% to 187%, depending on the indicator, up from the previous month's 112% to 183% range.
U.S. equities outperformed other developed markets in 2024, driven by a strong economy and the outcome of the U.S. presidential elections. The S&P 500 Index rose by 25%, led by strong gains in communication services, information technology, and consumer discretionary sectors.
The market is entering the final two trading days of 2024, and stocks are set to post another strong year of gains. The Nasdaq Composite (^IXIC) once again led the charge in 2024, rising more than 30% thus far while the S&P 500 (^GSPC) has risen over 25%. The Dow Jones Industrial Average (^DJI) is up a more modest 14%.
According to the New York Fed's recession model, there is a 29% probability that the U.S. will enter a recession by the end of 2025. This is a dramatic decline compared to the elevated probabilities seen during the Federal Reserve's aggressive monetary tightening in 2022 and 2023.
Anticipated 10-year annualized returns for U.S. equities fell 0.4 percentage points as of November 8, 2024, to a range of 2.8% to 4.8%, reflecting hefty valuations.
Fixed Deposits (FDs): Safe but lower returns (7% return needs an 86 lakh investment for 50K monthly). Dividend Income: Invest in dividend-paying stocks (average 7% yield needs an 85 lakh investment for 50K monthly).
A $100,000 salary can yield a monthly income of $8,333.33, a biweekly paycheck of $3,846.15, a weekly income of $1,923.08, and a daily income of $384.62 based on 260 working days per year.
Bottom Line. If you can invest $200 every month and achieve a 10% annual return, in 20 years you'll have more than $150,000 and, after another 20 years, more than $1.2 million.
Could the Great Depression happen again? It could, but such an event is unlikely because the Federal Reserve Board is unlikely to sit idly by while the money supply falls by one-third.
The bounce-back from the 2008 crash took five and a half years, but an additional half year to regain your purchasing power.
If stock prices fall substantially, corporations will have less capacity to grow, resulting in insolvency. A demand reduction eventually leads to less revenue, which causes more people to be laid off, thus the decline continues and the economy collapses, leading to the formation of a recession.