As the current year comes to a close we have to wonder what’s waiting around the corner. Nothing is guaranteed but I think we’ll likely see some trends next year as we venture into a period of late economic cycle.
Housing
I think interest rates will continue to fall in both Canada and the US. And we’ll probably see the bottom of the real estate market in 2025.
Labour Market
Unemployment should continue to trend higher. This will likely be linked to some kind of economic slow down and maybe even recession.
Financial Markets
It’s not likely the S&P 500 will see another 20% plus return like we got this year because valuations have gotten quite high. If anything, small to mid cap stocks might finally outperform the larger companies. Trump’s tax cuts favor smaller businesses because most of their sales are usually earned domestically in the US, compared to large caps which have more diversified revenue streams internationally. The ETF to watch for smaller cap stocks is IWM, which tracks the Russell 2000 index.
I would also expect the bond market to perform quite well next year. Looking at long term treasuries it looks like the TLT ETF is still going down. But it may bottom at around the low $80s next year. Along with other bond funds that could be an interesting time to start accumulating some shares.
Whatever the market does next year, having a balanced portfolio is still probably the best way to go.
I will be updating my net worth soon to wrap up the year. 🙂
——————————-
Random Useless Fact:
\
The cartoon hits close to home. : O) We bought in 2003 but are hoping to move and everywhere we have been looking seems crazy expensive.
Have a great New Year’s.
Glad you are posting again and sharing your insights! Happy New Year!