THE year 2024 was marked by significant growth in the US stock markets, with the S&P 500 surging by 26%, driven by a robust economy, cooling inflation, and an AI boom.
Tech leaders like NVIDIA, Google, Tesla and Palantir led the charge, showcasing the power of investing in fundamentally strong companies. For Zimbabwean investors, this year’s performance offers valuable lessons on navigating market resilience and volatility.
Market highlights of 2024
Robust growth: The S&P 500 soared by 26% as of December 23, marking one of its strongest performances in recent years, driven by a robust US economy, cooling inflation and an AI boom.
Tech titans lead: Several tech stocks have been at the forefront of this rally. I choose a few to illustrate the power of investing in fundamentally strong stocks:
NVIDIA (NVDA): Up 190% Year to Date (YTD), NVIDIA’s rise was fuelled by the increased demand for AI and machine learning technologies. The company’s continued innovation in GPU technology has positioned it as a leader in the AI revolution.
Google (Alphabet Inc. — GOOG, GOOGL): Google’s stock also saw substantial gains,going up by 40% YTD driven by advancements in AI, cloud computing, and the expansion of its digital advertising market.
Tesla (TSLA): Tesla’s shares climbed 73% YTD as the company expanded its production capabilities and ventured further into autonomous driving technology, despite facing some regulatory and competitive pressures.
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- 2024 US stock markets year in review: Navigating through growth and volatility
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Palantir (PLTR): Palantir’s stock rose 387% YTD due to its unique position in providing AI-driven data analytics solutions to both government and commercial sectors, especially in a year where data security and efficiency became paramount.
Macro-economic outlook for 2025
Forecasting the US stock markets for 2025 is fraught with challenges due to multiple influencing factors:
Inflation and interest rates: With inflation showing signs of stabilisation yet remaining a concern, the Federal Reserve’s actions on interest rates will be pivotal. There’s a balanced risk of rate hikes if the deficit continues to expand, which could counteract earlier predictions of rate cuts.
Political influence: The incoming Trump administration, often referred to as “Trump 2.0”, might replicate policies from his first term, which included tax cuts for corporations and less stringent regulations, potentially favouring sectors like energy, finance and defence. However, these policies could also lead to increased volatility due to heightened trade tensions or fiscal policy changes.
Economic growth: The US economy has shown resilience, with GDP growth and low unemployment, but the sustainability of this growth amidst global trade dynamics and domestic policy shifts remains uncertain.
Investment strategy for Zimbabwean investors
Given the landscape,here are some strategies I will be taking for 2025. Keep in mind this is not investment advice:
Balanced portfolio: With the volatility expected, a conservative approach might be wise. Holding about 40% in equities with the rest in cash or cash equivalents would provide the flexibility to capitalise on opportunities or safeguard against downturns.
Sector focus: I have some stocks on my radar that I consider to be in undervalued sectors that could benefit from policy changes. Sectors like energy, infrastructure, and possibly defence might see advantages under the new administration, but due diligence is essential.
Swing trading: For those with a higher risk tolerance, swing trading could be an avenue to exploit short-term market movements, particularly in stocks that have potential to react to policy announcements.
However, data shows that 90% of the traders blow 90% of the accounts within the first 90 days of them starting to trade.
If you’d like to learn how to trade profitably, book a paid session via www.streetwiseeconomics.com.
Risks and opportunities
Risks: Inflation spikes, sudden policy shifts, and geopolitical tensions could all contribute to market corrections or increased volatility.
The rising national deficit might also push for tighter monetary policy contrary to current expectations.
Opportunities: On the flip side, continued innovation in technology, especially AI, and potential policy-driven sector growth offer avenues for investment.
Companies that are currently undervalued but have strong fundamentals in sectors likely to be favoured by the new government could be golden opportunities.
As we look towards 2025, the US markets face a landscape filled with both opportunities and risks, influenced by potential policy shifts, inflation, and global economic dynamics.
For investors from Zimbabwe, adopting a balanced investment approach, focusing on undervalued sectors, and considering swing trading with caution could be key strategies.
Understanding these complexities, staying informed, and managing risks will be crucial for success in this ever-evolving market environment.
Remember, while opportunities are plentiful, the guidance of a financial advisor is invaluable for personalized investment decisions. I wish you all a successful 2025.
- Isaac Jonas, a Canadian economist and consultant at Streetwise Economics, simplifies investing for everyone, offering practical guidance on navigating US and Canadian markets. His insights are shared through social media and his YouTube channel, Streetwise Economics. Please remember, his content is educational and not personalised advice. Investing carries risks, so consulting a financial advisor before decisions is advised. For tailored coaching on investing and trading, visit www.streetwiseeconomics.com or email isacjonasi@gmail.com to schedule a time slot for consultation.
