Treece Talk Blog

Around this time every year, the question starts buzzing: What will the stock market do next year? 

Predictions roll in from analysts, pundits, and financial firms, and while some are insightful, others can be downright comical. I’ve been digging into the latest forecasts for 2025, and trust me, it’s a rollercoaster of optimism, uncertainty, and missed marks.

So, what can we expect for 2025? And how much stock should we put in these predictions? Let’s break it down together.

The Big Predictions for 2025

One prediction that caught my attention came from Morgan Stanley’s Michael Wilson, highlighted in a newsletter by Sam Rowe, a Chartered Financial Analyst. Wilson predicts the S&P 500 will rise about 10% by the end of 2025. Not bad, right? But here’s the catch—it’s just an average, middle-of-the-road estimate.

Wilson also outlined three scenarios:

Best case: The S&P 500 climbs 25% to reach 7,400.
Base case: A 10% rise to 6,500.
Worst case: A 22% drop to 4,600.

That’s a 47% range of possibilities, which is huge! Let’s be honest—how helpful is a forecast this broad? It’s like saying, “It might rain tomorrow, or it might be sunny.”

Adding to the drama, Wilson ties some uncertainty to the recent U.S. election, referencing potential economic impacts from policies related to immigration, tariffs, and geopolitical tensions. But honestly, the market has a funny way of shrugging off politics and doing its own thing.

How Accurate Are These Predictions?

Before we jump on the 2025 bandwagon, let’s rewind and look at how accurate these forecasts have been in the past. Spoiler alert: Not very.

Take 2023, for example. Major firms like JPMorgan predicted the S&P 500 would end the year at 4,200. Instead, the market soared, finishing around 5,900—a whopping 25% gain year-to-date. Most predictions were way off, with some missing the mark by as much as 30%. Even the most accurate estimates undershot by about 7.5%.

It’s a pattern. Predictions often fail to capture the full scope of market dynamics, and more often than not, they lean too conservative.

The Political Factor: A Recipe for Bias?

Here’s where things get even more interesting. Some forecasts seem less about market fundamentals and more about political narratives. For example, Brian Wesbury, Chief Economist at First Trust Portfolios, predicted a recession in 2023 and a lackluster stock market performance. Instead, the economy avoided a recession entirely, and the S&P 500 climbed by 24%, far surpassing his predictions.

Fast-forward to 2024, and Wesbury doubled down on his pessimism, forecasting another recession and predicting the S&P would end the year at 4,500. As of now, the market is up over 32% from his estimate.

How can someone be so wrong two years in a row? Politics might be the culprit. Wesbury’s forecasts seem heavily influenced by his interpretation of policies under the Biden administration. The takeaway? Mixing political biases with market predictions can lead to major blind spots.

Why Stock Market Predictions Often Miss the Mark

The truth is, predicting the stock market is incredibly complex. So many factors—interest rates, global events, consumer behavior, and yes, politics—play a role. But the key reason forecasts often fail is simple: uncertainty.

No one knows for sure what’s coming, and the market thrives on surprises. That’s why I always take these predictions with a grain of salt. They’re interesting to analyze but not something to base your investment strategy on.

My Advice: Stay Nimble and Focus on Fundamentals

As we look toward 2025, here’s my take: don’t get too caught up in the noise. Whether the S&P climbs 25% or drops 22%, the key is to stay focused on your long-term goals. Keep an eye on market fundamentals, stay diversified, and be ready to adapt.

And if you enjoy a good laugh, hold onto these forecasts and revisit them a year from now. Chances are, the reality will be very different.

So, what do you think? Will the market soar, slump, or surprise us all in 2025? Let’s keep the conversation going in the comments!

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The views stated in this blog are not necessarily the opinion of Cetera Advisors LLC. Due to volatility within the markets mentioned, opinions are subject to change without notice.

Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.

Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.