2025 Stock Market Strategy

With the new year beginning, and a new chapter in the US, here are the key items I am watching for the stock market in 2025

SPX 500 Daily Chart - 2022 to Present

What will happen with the stock market though 2025 and what is my stock market strategy for 2025? We have witnessed the stock market moving through an incredible bull market since 2022. This bull market is entering its 3rd year. And, if history repeats itself, according to MarketWatch, there will be a 5% decline in the current bull market, while also a potential bear market—a drop of 20%, or more. Not good news.

However, the above uses basic math and states if-then assumptions. The working assumption on this is that since we are entering the 3rd year, that alone, means there will be decline. And, although history tends to repeat itself, the truth is that this economy is showing signs of exhaustion–we likely will get that move lower in the stock market.

Simultaneously, the Federal Reserve is likely to put an end to this run. But, there is also an additional factor that any analysis needs to factor into the equation: A new Trump presidency.

Let’s look at where we are, then see where we could be by the end of 2025:

• The M2 money supply continues to grow sharply suggesting there will be future growth coming from business and consumer consumption;

• Employment remains firm and likely to continue so as long as there are no new catalysts for change; and,

• Inflation is starting to move back upward.

The above three factors are what to watch during 2025. This is my stock market strategy for 2025.