An Uncertain Forecast for 2025

As the calendar flips to 2025, the excitement and uncertainty of what a new year will bring runs through our individual lives and the global capital markets. Projecting what will happen over the next 12 months is not an easy task, so I caution anyone from putting too much certainty in any one outlook for 2025. Where interest rates will trend and what level the stock market will end the year are difficult calls, but there are a few factors which may drive markets over the months (and years) to come.

Fiscal Policy

With a new administration comes new fiscal policies. Presidential candidates may campaign on a wide range of initiatives, but what ultimately ends up being implemented is often less than expected.

The current administration has pledged to reduce regulations, reduce individual and corporate taxes, and implement tariffs on U.S. trading partners. The size and duration of each new policy is yet unknown, which creates uncertainty for investors. Depending on if and how each new policy is implemented, the impact on market performance can be substantial.

Inflation

Coming out of a global pandemic in 2020, the world experienced supply chain disruptions, goods shortages, and ultimately the highest inflation most countries have seen in decades. This led to global interest moving substantially higher. Inflation has come down throughout the last two years but remains stubbornly above the long-term targets of policy makers. Introducing policies which encourage greater economic growth and/or tariffs which may increase the price of many products could lead to another increase in inflation. This would likely impact the valuations for both stocks and bonds in a negative way.

Geopolitics

The evolving relationship between the United States and trading partners around the world, ongoing global conflicts, and other regional disputes could impact supply chains and investor sentiment in 2025. As conflicts flair up or calm down and as trade relationships potentially take on a more protectionist stance, various industries and countries will be impacted differently. This may create opportunities as investors begin to rethink the current positioning of their portfolios.

Protect Your Capital

With so many moving pieces, the outlook for 2025 remains uncertain, bringing the potential for greater volatility in global capital markets. After strong equity returns in 2023 and 2024, the concentration of market leaders has increased, which can amplify price swings in both directions. While diversification may limit some upside, it remains a key strategy for managing risk in unpredictable markets. At ICS, our Strategic Investments approach prioritizes capital preservation—helping protect against downturns while maintaining a long-term perspective.

As we enter 2025, staying informed and adaptable will be essential. If you have questions about how to position your portfolio for the year ahead, our team is here to help. Reach out today to explore how a well-diversified strategy can support your long-term financial goals.