Without going into ‘accurate’ predictions for several indices in 2025, which you can easily find in abundance via a Google search, we have highlighted two outlooks / investment advices for 2025. At a more macro-level.
Let’s start with Catherine Brock from yahoo!finance (https://finance.yahoo.com/personal-finance/article/stock-market-outlook-2025-183956903.html).
“The year ahead promises to be interesting for investors. In the U.S., a business-friendly administration, lower interest rates, and possible corporate tax cuts may support earnings growth. But high valuations have many investors on edge. Let's explore what experts say about these competing dynamics and their impact on different areas of the stock market in 2025.
S&P 500 in 2025: Modest returns expected
The S&P 500 (^GSPC) should produce modest returns in 2025, with volatility along the way. Marta Norton, chief investment strategist at retirement plan provider Empower, expects large caps will benefit from improving macroeconomic conditions and the ongoing adoption of artificial intelligence.
Norton cites valuation as an "important countervailing force." Valuation in this context refers to stock prices relative to earnings and other business fundamentals. When valuations are high, investors are paying more for earnings — usually with the expectation of strong growth. If the growth disappoints, volatility can result.
Small- and mid-cap stocks may outperform in 2025
Small- and mid-cap stocks may outperform the S&P 500 in 2025. The driving force will be the outsized benefits smaller companies should see from lower interest rates and possible corporate tax reductions.
According to David Rosenstrock, director at Wharton Wealth Planning, small and mid-caps are more likely to rely heavily on variable-rate debt, while larger companies favor fixed-rate facilities. Variable-rate borrowers benefit immediately from rate reductions because their obligations get repriced quickly. Existing fixed-rate debt does not adjust to lower interest rates until refinanced.
Tax cuts can favor small and mid-caps because most of their revenues are usually earned in the U.S. Rosenstrock explains, "Reducing the corporate tax rate may provide greater relief for these asset classes than for large caps, whose geographic revenue sources are more diversified."
Growth stocks may underperform in 2025
Growth stocks may underperform in 2025. Crit Thomas, global market strategist at Touchstone Investments, cites high valuations and slower earnings growth as factors to watch. "These stocks may need to pause and allow earnings to catch up with valuations," Thomas said.
Additionally, growth index investors should be wary of concentration risk. As Thomas points out, "The top five stocks in the Russell 1000 Growth Index comprise 45% of the market cap." When only a handful of stocks drive the group's performance, volatility can result.
Value stocks poised to outperform in 2025
Value stocks are poised to outperform in 2025. Value stocks are characterized by slow and steady growth and low valuation ratios. Many pay dividends and generate strong and rising cash flows.
Value stocks have largely underperformed their growth-oriented counterparts for the past decade. The year 2022 was the exception. James Lebenthal, partner and chief equity strategist at wealth advisor Cerity Partners, expects value stocks will shine again in 2025. "Their earnings growth rates are set to accelerate while their share prices have languished for most of the last 10 years," Lebenthal said.
Then Joe Wiggins, according to IEX Profs (https://www.iexprofs.nl/Nieuws/809861/behavioral-finance/Outlooks-lezen-mag-maar-handel-er-niet-naar.aspx).
“Joe Wiggins has flipped through quite a few market outlooks over the past few years. Some predictions consistently reappear and are mostly high on marketing value.
November and December are the months when investors are bombarded with predictions and outlooks for the upcoming year in the stock market. Some are thicker, others thinner. There are differences in tone and risk analysis. But if you line them all up, there are many commonalities that repeat every year.
At least, that’s the view of Joe Wiggins, a behavioral economics expert and author of several books. He’s probably read thousands of them, and the following elements keep coming up, often disguised as marketing for active asset management:
Expect more volatility. Wiggins can’t recall ever hearing an asset manager say that less volatility is expected. Volatility creates the illusion of opportunities that an active manager can capitalize on, while passive investing is portrayed as risky.
Investors need to be flexible because it’s a “stock picker’s market.”
Investors need to be selective and critical because it’s a stock picker’s market.
The traditional approach to portfolio management might no longer work. You need someone to advise and guide you.
Economic growth looks good, but there are downside risks. This gives the authors of the outlooks a couple of advantages. First, it’s usually true. Second, if the chance of a recession is real, it’s easier to downplay it.
The trend is your friend. What has worked in the past is likely to keep working. For an asset manager, this is a nice safe prediction. Typical momentum trades for 2025 might include outperformance of US stocks and technology. At the same time, it’s important to mention in the outlook that there is potential for market breadth to widen or even a crash... You never know.
Alternative investments (real estate, hedge funds, infrastructure, private markets, etc.) look attractive. Coincidentally, asset managers can often make the most money in these areas through high performance fees, and they can’t be replicated by index funds.
There is always a structural theme that will significantly influence the markets. For next year, that’s of course AI.
There’s also always an important cyclical development that will influence the markets. For next year, that’s Trump.
And there’s a risk that could have major consequences for the markets, but no one knows for sure. In many 2025 outlooks, that’s the high debt burden of governments.
Finally, there always has to be a positive message about stocks in the outlook, otherwise, investors will be overly deterred. Fortunately, this is almost always true, as stocks rarely decline over the course of an entire year.
It’s clear, Wiggins is quite skeptical about all these outlooks. They often state the obvious, while the truly market-moving events come out of nowhere. Reading an outlook isn’t harmful but using them to make portfolio changes is discouraged. They may offer some useful insights, but they have no real predictive power over what the stock market will look like in 12 months.”
Okay then, just for the fanatics, some S&P500 predictions by the large US banks (and how far they were off with their 2024 predictions) …

Sources: Catherine Brock (yahoo! Finance), Joe Wiggins, IEX Profs, Graphite, translation by ChatGPT
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