Remember, Every Year Is Different!

End of 2024: DJIA 42,544; S&P 500 5882

1/31/25 – Previous Close: DJIA 44,545; S&P 500 6041

When our children were growing up, our family developed an important saying. They would have such a good time doing something – summer vacation, a particular trip or event, even a school year – that we needed to help them stay grounded and manage their expectations for the next summer, etc. That birthed a phrase that we still use to this day: “Remember, every year is different.” It’s now said as a joking reminder but back then it was an important concept to drill home over and over.

During 2024 nearly all domestic stock market indices had positive returns. The Dow Jones Industrial Average (DJIA) was up 15.0%. Even small cap stocks (as measured by the Russell 2000) were positive, along with broad-based international stocks (as measured by the EAFE index). During 2023, those same indices also had positive results. FUN!! As a result, it has become far too easy to forget the carnage of 2022, when all those same measures were in the red – some dropping 18-20%! Ouch! Or how about the 2020 “COVID Bear Market” – when the S&P 500 fell 34% in 5 weeks?! Double ouch!!! After times like that, I had to say to myself “Remember, every year is different!”

Over the past 35 years, the S&P 500 has had an average annual return of 10.6% -- but actual yearly returns have varied greatly – from a best of 37.6% (1995) to a miserable -37.0% (2008). Yes, every year IS different.

So, what about 2025? With all the usual caveats about “opinions” and “subject to change”, here are my best guesses for the coming year:

• The U.S. economy avoids a recession due to lower inflation and a resilient consumer base.
• Stocks (again) outperform bonds.
• Various market indices could return 8-10% - more if a few things go right, less if a few things go badly.
• Value stocks outperform growth stocks. (I’ve been wrong about this recently but…)
• Volatility returns. It has been over a year since we’ve experienced a 10% pullback. I suspect we will have at least one in 2025 – but I have no idea when or from how far up.

Those are my best guesses for 2025. My best advice for 2025 should sound familiar to long-time readers:

• Abide by “Herb’s Three Rules of Equity Investing” – own quality, be diversified, and invest in patience.
• Remember that “Investors must always be prepared – financially, mentally and emotionally for at least a 10% correction at any time.”
• Abiding by our “Five-year Rule” should prove helpful. (More details are available upon request.)
• Ignore the gloom and doom media. They are hazardous to your wealth!
• If your financial picture changes, let us know so we can adapt accordingly.

And finally, remember, every year is different – just ask our kids!

H. L. Ormond & Company, LLC (“HLO”) is a Registered Investment Adviser. HLO offers advisory services only to clients or prospective clients where HLO and its representatives are properly licensed or exempt from licensure.

This information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of HLO and are subject to change without notice based on market and other conditions. Diversification does not assure a profit or protect against a loss. Keep in mind that individuals cannot invest directly in any index. Individual investor’s results will vary. Past performance does not guarantee future results.

The information used in this market letter has been obtained from third-party sources considered to be reliable, but we do not guarantee that the material is accurate or complete. Investing involves risk and you may incur a profit or loss regardless of strategy selected.

The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stocks of companies maintained and reviewed by the editors of the Wall Street Journal. The MSCI EAFE (Europe, Australasia, and Far East) is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the United States & Canada. The EAFE consists of the country indices of 22 developed nations. The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index, which represent approximately 8% of the total market capitalization of the Russell 3000 Index.

Additional important disclosures about HLO may be found in our Form ADV Part 2A. For a copy, please email our firm’s Chief Compliance Officer, Sharon Dew at sharon@hlormond.com