In Markets "In a Nutshell"

Markets “In a Nutshell” for January 6, 2025

Investment Week at a Glance

Stocks finished lower for the week. The Dow Jones Industrial Average fell 0.6%, the S&P 500 was down 0.5%, and the NASDAQ fell 0.5%. Foreign stocks (MSCI EAFE) were also down, falling 0.7%. Bond prices were up for the week, with the 10-year U.S. Treasury ending the week at 4.60%.  (Data source: Wall Street Journal)

2024 Caps Historic Stretch

Despite the rough December to end 2024, equities still had a historically good year. The S&P 500 set 57 record highs throughout the year and for the first time since 1997 – 1998, two consecutive 20%+ years. The S&P 500 of course has a lot of tech exposure and “Magnificent 7” heavy, but the Dow Jones also had a strong year, up over 13%. Some of the reasons for strong market performance in 2024 were the Fed beginning their rate cut cycle while the economy staying strong. Employment remains high and GDP is estimated to have grown at 2.7% in 2024, down slightly from 2.9% in 2023 but above the long-term estimate of 2%.

2025 Outlook

Looking at the average of the past 10 bull markets, 3rd year returns tend to be subdued compared to the first two years. We are a couple of months into the 3rd year of this bull market as the current one started in October of 2022. The average return in the 3rd year is 8%, still good but nothing compared to the average of 36% the first year and 20% the 2nd year on average. Investors are also looking for market gains to broaden as earnings are estimated to narrow between the growth and values areas of the market throughout 2025 after growth earnings have outpaced value earnings in recent years.

Rivian Stock Has Best Day Ever

Rivian, an electric vehicle manufacturer, topped 4th quarter estimates of deliveries leading to the stock closing up more than 24% on Friday. Despite Rivian losing more than $5 billion a year, the company is valued at more than $16 billion in hopes of becoming the next big EV manufacturer. Rivian has gone from no revenue in 2020 to over $4 billion in annual revenue today. Despite this Rivian is still quite a way from becoming a profitable company and will continue to burn through cash. (CNBC)

Quiz:

How many straight years has Berkshire Hathaway been postive? (Scroll Down for Answer)

  1.    3 years
  2.    5 years
  3.    7 years
  4.    9 years

 

 

Answer below.

 

 

Have a Great Week!

 

 

 

 

 

 

 

Answer:

4.   9 years. Berkshire Hathway stock once again posted a positive year and beat the S&P 500. This performance is impressive as Warren Buffett is sitting on $325 billion in cash waiting for the right opportunity. Class A shares are now valued at nearly $700k per share.

 

 

 

 

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