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As the fourth financial quarter of the year draws to a close, the S&P 500 offers valuable insight into 2024’s market and a helpful look at what 2025 might bring. I have long suggested the S&P as a benchmark for prospects and clients alike to assess rates of return, particularly when compared to more “traditional” investments like gold, and this year is no different.
This year, the S&P is up 27.34% year-to-date, as of December 12, 2024.1 Both the S&P and Dow Jones indices saw four all-time highs last month. These results, experts believe, can be partially attributed to the incoming presidential administration’s economic agenda.
So as individual investors, why should we look at the S&P? As a benchmark index of 500 of the largest publicly traded companies in the United States, it tells us a lot about the economy as a whole. For example, although there were periods of volatility—such as the approximately $500 drop from mid-July to early August—the index nonetheless showed an overall upward trend. In November, it officially broke the $6000/share threshold: a first in an almost 70-year history.
This represented an approximation of the trends across the numerous sectors represented in the S&P. Technology stocks, including the Magnificent Seven, saw record highs in 2024.2 Healthcare and industrial stocks, though not quite as impressive as the Magnificent Seven, also showed resilience this year, with energy stocks following closely.3 Although energy experienced some fluctuation as a result of global oil supply concerns, renewable energy companies gained traction and performed well.4
The 2024 YTD S&P performance leaves us with several valuable lessons to bring into 2025. First and foremost, a diversified portfolio is one of the most effective tools you can incorporate into your financial plan. When you partner with GDS Wealth Management, our trained and knowledgeable financial advisers work closely with you to build a plan that is customized to your individual financial needs. If you do not currently work with a financial adviser, investing in an index like the S&P can be an effective option to ensure diversification, although it does not allow for a personalized approach.
The most important lesson the S&P 2024 returns reminded us of, though, is the value of keeping a long-term perspective. Those who invested in the S&P on January 1, 2024, have seen almost a 30% increase in their investments in just a year. Since January 1, 2020, the S&P has increased a little over 87%.5 Although 2020 was a year of high volatility, the market nonetheless provided positive results. As we look toward 2025, a year that could potentially hold unexpected fluctuations, this lesson is more important to remember than ever.
At GDS Wealth Management, we look to 2025 with great optimism and are excited to see what the year will bring. On behalf of our entire team, we hope you have a happy holiday season. In the meantime, don’t hesitate to reach out to one of our team members here at GDS if you have any questions about your portfolio. If you are not working with a financial adviser, we offer complimentary consultations and would be happy to speak with you about your financial situation. Call us today at (469) 212-8072 or visit www.gdswealth.com.
1 MarketWatch, 2024.
2 Investor’s Business Daily, 2024; Yahoo Finance, 2024
3 U.S. Bank, 2024
4 U.S. Bank, 2024; Morningstar, 2024
5 S&P Global, 2024
GDS Wealth Management (“GDS”) is an SEC registered investment adviser located in Flower Mound, Texas. Registration as an investment adviser does not imply a certain level of skill or training. GDS does not provide tax or legal advice. You should contact your tax adviser, accountant, and/or attorney before making any decisions with tax or legal implications. All information is provided solely for convenience purposes, and you should be guided accordingly. This blog contains general information that is not suitable for everyone and was prepared for informational purposes only. Nothing contained herein should be construed as a solicitation to buy or sell any security or as an offer to provide investment advice. For additional information about GDS, including its services and fees, send for the firm’s disclosure brochure using the contact information contained herein or visit advisorinfo.sec.gov. The information contained herein is based upon certain assumptions, theories, and principles that do not completely or accurately reflect any one client's situation or a whole exposition of the topic. All opinions or views reflect the judgment of the authors as of the publication date and are subject to change without notice. This communication contains certain forward-looking statements that indicate future possibilities. Due to known and unknown risks, other uncertainties and factors, actual results may differ materially. As such, there is no guarantee that any views and opinions expressed herein will come to pass.
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