“Remember when we all used to be into nostalgia? Gosh, I miss those days.”
—Bill Murphy Jr.

In wishing you a Happy New Year and a Hello to 2025, I glanced through my quote archive.  After difficulty deciding which one to include, I determined I might go with MULTIPLE.  I wish you WELL for the New Year and I acknowledge that, for you, reading this is optional. I have no illusions of literature awards here and that’s okay with me.  I enjoy the composing of a few thoughts and it indeed helps ME to kick off the new year with perspective, optimism and with gratitude that I hope we all have – that we are here, that we have the opportunity to start another year, and for the blessings we do have in an imperfect and sometimes tough world.

I also acknowledge the very recent passings of a couple of much loved long-time friends/clients and I wish their families well and pray for their peace.

The markets have given us consecutive good years.  After a difficult 2022 for both bonds and stocks, we’ve settled in with bond yields at more historically normal levels, an economy that is less about Covid recovery and more about the true economy and normal spending patterns, and stocks that have risen. . .and then risen some more.

“The early bird gets the worm, but the second mouse gets the cheese.”
—Steven Wright

The pioneers of AI were the first to the game and have enjoyed success beyond any expectations.  Congrats to the few.  For this new world influenced by artificial intelligence, we have not even begun to see the NEXT wave of companies that will help bring AI to our individual and collective lives. This will be, over time, a profound change to our culture that we cannot even begin to see yet.  It will be fun to see many new companies take off like rockets (and a few already are) as we figure out what fits and what works and what pieces are needed.  There will also be many that do not make it. As an investor and advisor on investments, I am reading every month about companies that have found their way onto this spectrum either by design or by luck. . .or in most cases a combination of the two. No doubt a fun future ahead, but not one without risk.

“If I had more time, I would have written a shorter letter.”
—Mark Twain

Most of what we in this industry say can be said 11 different ways and is likely already being said.  I don’t believe in pontificating lengthy market analysis here – There’s plenty of that available.  Raymond James has useful reports that I am always happy to share, as do other firms of strong reputation.  Be wary of the media’s versions and experts. The media typically has agendas geared toward drama and increasing viewership.

I’ve also commented many times that there’s little reason to do “announced” market predictions, though many try. Predictions have the potential to be invalidated about 15 days into January. (Literally true most years) Warren Buffet used to attest that his predictions wouldn’t be any good anyway.  He advises to search for compelling value in the market, rather than chasing ideas or using predictions of the future.

What’s in favor of continued good markets:

1. The financial markets have lots of liquidity in present times. This is good, but it can change quickly.
2. Interest rates are “reasonable”.  The FED is gently trying to stir the housing market (lowering the Fed Funds rate recently) without disrupting the overall economy. Recent days suggest the markets think things are overheating again, but this can also change quickly.  A very fine line and also takes time. 
3. Honestly, a lack of attractive alternatives.  This market and these tech stocks will not go up forever. But how can anything else look more appealing right now. The “story” is about technology and AI. I do not disagree, but I believe that exercising caution makes the most sense. We have a continuing goal of managing downside risk as importantly as achieving upside appreciation. 
4. A FED that is willing to act.  They have demonstrated time and again that they are ready to protect against “derailment”.

What’s in favor of volatile and more challenging markets:

Not much.  But that’s the possible challenge.  It is like a tightrope. After a broadening in the markets in 2024, we have seen a narrowing recently – into the same few tech leaders.  If everything goes swimmingly, then we are good.  But any surprise gust of wind or ripple and the result can be that substantial money can move around and alter these markets. 

Whenever most all “prognosticators” align and think things are a certain way (in either extreme), then history says we can look out for the surprise to the herd mentality.

A couple of additional exhibits of this year’s markets:

35% of S&P 500 stocks are up over 20%.

32% of S&P 500 stocks are down for 2024.

A year of dispersion, no doubt.  (Data from CNBC on December 26, 2024)

“You pray for the hungry. Then you feed them. That’s how prayer works.”
—Pope Francis

Love this quote.  We can all do something more for those less fortunate somewhere in our reach.  I challenge myself to do more this year than last. I’ve already committed what that will be. Those of you that can and do – I hope you will continue.  Those that are less “mobile” can say a prayer.

With the day comes new strength and new thoughts. 

—Eleanor Roosevelt.

I will take the bold liberty of replacing “day” with “year”.  We can gain new strength and new thoughts with the start of a new year.  I think it wise to allow myself (and encourage you) to experience both.  I challenge myself to thinking differently.

We are here to continue serving you in ways that assist your investing, planning, mapping, and giving away. I look forward to the conversations anytime and we are here and up to the task.  I wish you a healthy and peaceful and uncommonly good year 2025! 

With good regards,

Key

Okay, last one:

“Don’t walk in front of me… I may not follow
Don’t walk behind me… I may not lead
Walk beside me… just be my friend”
― Albert Camus