Stock Market Predictions for 2025

Author

Ayrat Murtazin
January 13, 2025

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S&P 500 growth for the past 30 years

The S&P 500 gained 23% in 2024 and it grows 686% over the past 30 years.

Over the past 10 years since 2015, the market has gained 4,000 points, compared to a 1,200-point increase over the 20 years from 1995 to 2015.

The acceleration is undeniable — it’s fair to call it a rocket soaring. 🚀

It scares many people, including me.

There’s an old observation that markets tend to experience a recession every 10 years. We humans tend to rely on instincts shaped by past experiences, but this extraordinary surge shows no signs of slowing down anytime soon.

Does this economy pattern not work any more?

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Possibly, there are reasons supporting this judgement:

#1. Inflation

According to U.S. inflation data, the average monthly growth rate is 2%. Over 30 years, the compounded impact of this growth becomes substantial.

Let’s take the Toyota Corolla as an example. Why? It’s a classic model that has been around for decades and serves as a reliable benchmark. Unlike items like milk or eggs, which may be subject to price controls or subsidies, the price of an economy car like the Corolla more accurately reflects a typical family’s significant but essential expenses in the U.S.

Corolla’s price in 1995 is about $3500, it is $22000 in 2025, regardless how much the produce has improved its quality (hence cost), this is about 528% increase in 30 years.

Toyota Corolla price grew 528% in the past 30 years

Pretty close, right?

#2. Key Drivers of U.S. Economic Growth

Corporate earnings become stronger than ever — especially those mega-cap tech companies, just name a few: Nvidia, Apple, Microsoft, Google, Meta, Amazon.

Take Microsoft as an example —

Microsoft annual revenue in 30 years

The AI wave is revolutionizing industries across the board, significantly boosting overall economic growth in the United States. Once again, the U.S. is taking a decisive lead in this transformative era. Nasdaq and S&P 500 are poised to reflect this momentum.

The adoption and expansion of AI are expected to unlock opportunities across various sectors, driving increased investments and fostering innovation at unprecedented levels.

#3. Global Economy Shift

Over the past 30 years, emerging economic giants like China have contributed significantly to global economic growth.

However, a fundamental issue lies in their inability to cultivate a robust middle class. In other words, the economic gains have not been distributed in a way that secures wealth within the population, leaving the broader economy vulnerable to instability.

Especially in the post-COVID era, the factors driving its growth have shifted to other regions.

Money is like water — it flows to stable and reliable ground. It avoids uncertainty, gravitating toward predictable markets that offer safety and consistency.

The U.S. market, as a fundamentally free and open system, fosters startups, innovation, and wealth creation. These qualities not only drive current growth but also lay a strong foundation for future prosperity.

Prediction

Considering all factors, I believe the stock market will maintain positive growth overall in 2025. For those looking to invest, allocating funds to an index fund, such as the S&P 500, could be a prudent choice — echoing Warren Buffett’s timeless advice for non-professional investors.

That said, the steep upward trajectory of recent years suggests the likelihood of a temporary retreat. Similar to the adjustment seen in 2020 during the onset of COVID-19, I predict a pullback may occur around May to June, possibly after five months of Trump’s return to office. However, I am confident the market will recover and continue its upward momentum in the long term.

Caution: The information shared here is for informational purposes only and should not be considered as investment advice. You are solely responsible for your own decisions.