DSF Quarterly Investment Outlook - January 2025

Ryan M. Franks, CFP^®, ChFC^®, CLU^®

January 29, 2025

The views stated in this piece are not necessarily the opinion of Cetera Wealth Services, LLC and should not be construed directly or indirectly as an offer to buy or sell any securities. Due to volatility within the markets, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.

As we wrap up the first month of 2025, we are excited to share key updates from our January Investment Committee meetings. Let’s take a moment to reflect on the results and developments from 2024 and explore what lies ahead for the remainder of this year.

Here’s a ten-minute video from my colleague, Kyle J. Kyper, CFP®, MBA, CERTIFIED FINANCIAL PLANNER®, and check out the summary below:

What We Are Watching:

The U.S. economy grew at a strong pace in 2024, once again avoiding the long-anticipated recession.
The S&P 500 has become increasingly concentrated, with the top 10 companies comprising nearly 39% of the index and contributing approximately two-thirds of its 2024 returns.
Investor optimism has grown, with higher valuations being placed on earnings than historical norms.
International economic growth and market performance continued to lag behind the U.S.
Despite the Federal Reserve cutting short-term interest rates, 10-year Treasury yields increased in 2024.

What We Are Doing:

We are reducing our international stock exposure and reallocating some of that to U.S. stock positions.
We are incorporating actively managed strategies for our Small Cap U.S. Stock exposure, aiming to invest in companies poised to benefit from economic policies emerging from Washington.
We are maintaining effective diversification to avoid overexposure to the “Magnificent 7” stocks.
We continue to utilize bond strategies with a duration of 1–3 years to mitigate the interest rate volatility associated with longer-term bonds.

Why We Are Optimistic:

U.S. consumers experienced 3.9% wage growth in 2024, with unemployment remaining near historic lows at 4.2%.
U.S. corporate earnings growth is projected to reach double digits in 2025 and 2026.
The Trump administration is expected to support business growth, enabling large U.S. companies to maintain a competitive advantage internationally through favorable tax policies.
Since 1970, the U.S. economy has experienced 41 non-recession years (2025 is expected to follow this trend). During those years, S&P 500 returns were positive 88% of the time, with only 5 negative years.
Returns from investments outside the market remain attractive for income-seeking investors.

A Balanced Perspective
While we remain optimistic about continued growth, it’s important to set realistic expectations following consecutive years of over 20% growth in the S&P 500. Although further market growth is possible, we are mindful of the risks of speculation and are committed to maintaining a balanced approach to portfolio management. Stock market corrections can occur at any time, and our financial planning strategies are designed to prepare for and withstand such events.

As always, if you would like to set up a call to discuss this or any other topic, please see my contact information below.

Best regards,
Ryan

Ryan M. Franks, CFP^®, ChFC^®, CLU^®
CA Insurance License #0F03577
rfranks@dsfwealthgroup.com
(412) 564-5526 x 6003
http://go.oncehub.com/FinancialPlanningReviewwithRyan

Registered Representative offering securities through Cetera Wealth Services, LLC, (doing insurance business in CA as CFGAN Insurance Agency LLC: CA Insurance License #0644976), member FINRA/SIPC. Advisory Services offered through Cetera Investment Advisers LLC, a registered investment adviser. Cetera is under separate ownership from any other named entity. DSF Wealth Management Group, LLC is not a subsidiary of nor controlled by Cetera. CA Insurance License #0F03577.

Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.

All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful.

A diversified portfolio does not assure a profit or protect against loss in a declining market.

Additional risks are associated with international investing, such as currency fluctuations, political and economic stability, and differences in accounting standards.

Sources: