Cheers to 2025!
First, we want to extend our thoughts and prayers to everyone affected by the wildfires engulfing the Los Angeles area. It is an unfathomable tragedy, and we hope the fires are contained soon.
While we started 2024 facing many uncertainties, the stock market kept pace with expectations, and investors enjoyed another year of remarkable returns. In 2024, technology (with a lot of help from AI), financials, and communications led the way. In 2025, we hope to see a broadening of the growth we enjoyed in 2023 and 2024 - the Fed has started to lower rates which should mean that mid and small cap investments are better positioned to participate in the growth that large cap stocks have been enjoying. Along with our long-term, high-conviction ideas, a few other sectors that we are keeping a hopeful eye on are cybersecurity, energy, and fixed income.
Moving into 2025, we expect some volatility around the transition to a new administration as we gain clarity surrounding the anticipated changes. As with any new administration, policy adjustments are inevitable, and Purus will be ready to adapt our strategies, as appropriate, for our long-term vision. We will be reviewing 2024 and our expectations and plans for 2025 in more detail during our CLEAR Insights Partner’s Roundtable webinar on February 12th. We hope you will join us for this engaging discussion.
"The U.S. economy has demonstrated exceptional resilience since the pre-pandemic period. The level of real gross domestic product (GDP) has expanded by over 12% since 2019, driven by increasing productivity, exceptional profit margin growth at U.S. companies, and a virtuous cycle of wealth creation driven by housing and equity price gains.
There’s good reason to believe this strong and relatively steady growth can continue."
"Higher potential growth would justify a shallower easing cycle, as a more prosperous economy might sustain both higher interest rates and wage growth, without sparking inflation. As Paul Krugman famously stated in 1990, 'Productivity isn't everything, but in the long run it is almost everything.' By boosting productivity, an economy can enhance its standard of living by producing more with the same or fewer resources. In essence, productivity is a key driver of economic prosperity."
"In 2025, as tariffs fluctuate in the headlines, market opportunities may arise when tariff implementation and consequences are mispriced.
To conclude the year, tariffs have once again become a focal point, with google searches for the term spiking in November and December. The Federal Reserve is also paying close attention, as Chair Powell mentioned the potential inflationary effects of tariffs as a reason some FOMC members might have raised their inflation forecasts for the coming year and increased the perceived upside risks to prices."