Jeffrey Hirsch, Editor-In-Chief at the Stock Trader's Almanac, joins TheStreet to discuss what we might expect form the stock market in 2025.
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00:00What does history suggest about what is likely to happen to the stock market in 2025?
00:07I'm bullish. Post-election years used to be a negative year for the market, used to be one of the worst ones.
00:12Since World War II, it's been one of the better ones. Since 1985, it's been the best year of the four-year cycle.
00:18All the different averages or seasonal patterns that I'm looking at for 2025 have me forecasting about 8 to 12 percent for the stock market in 2025.
00:27Probably a little bit of a dip in Q1 as the new policies, the new initiatives get digested,
00:33and some disappointments with the new administration come through, and then usual weakness in the third quarter August-September period.
00:39Now, the benchmark is up about 20 or more percent in 2024. It was up 20 or more percent in 2023.
00:50What does history suggest about what is likely to happen in 2025 when you see such strong gains back-to-back?
00:58Yeah, I mean, gains beget gains. We've got momentum here. The economic numbers, the technical numbers, yeah, things are a little bit overbought or had been.
01:07This weakness in early December is very seasonally typical, probably some profit-taking and setting up the year-end rally.
01:14But it doesn't suggest that the gains are over. Third years of bull markets, which is what we're in right now, usually a little bit weaker, not quite as strong.
01:23So that's what gets me in that high-single-digit, low-double-digit area. I think we've got room to run here.
01:30I'm worried about 2026, the midterm year, but for 2025, I don't think being up two years in a row has any issues.
01:36I mean, we've seen lots of three years in a row of big gains.
01:40So to you, what gets us there in terms of this? I think you have low-single-digit return for 2025.
01:49High-single-digit.
01:50High-single-digit. What gets us there?
01:52Several things. I mean, there's a book I did and a forecast I made based on something my father did called the super boom.
01:59Back in 2010, I predicted that when the Dow was about $10,000, I predicted we'd hit $38,820 by 2025 based upon history, inflation, and politics and that sort of thing,
02:11as well as what I call a culturally enabling paradigm-shifting technology. AI fits that bill.
02:17We're at the early-middle innings in my book. I think that the tech boom is part of it. We're seeing some broadening.
02:23I'd like to see the Russell make a new high, confirm some of that broadening, even though there's a lot of selective small caps are doing well.
02:30The administration, pro-business policy is about to come in.
02:35The U.S. is strong. The economy is strong. I think the Fed kind of stuck the landing.
02:40So there's a lot of positives. A little geopolitical unrest is a risk, a little high valuations, but I think we can catch up to that with earnings and such.