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👉 Happy Holidays from the Grit Family

& three things to watch as we enter the new year!

Merry Christmas, Happy Hanukkah, and Happy New Year from our entire team.

This holiday season — we hope you make an effort to flip your phone upside down, set that computer to sleep mode, and connect with those that matter most to you.

Moving forward in your personal finance and investing journey is incredibly important, but money is just money. We hope this time of the year brings you peace, perspective, and plenty of rest. The money can wait.

Typically, this post would be the Investing Week Ahead. However… there’s obviously not much to talk about for this week.

Instead — we’re sharing three things that we’re watching in 2025.

1) Volatility

Just last week — the S&P 500 swung from its worst breadth day in months to its best within 3 sessions.

This has only happened 21 times since 1950. Historically, the market is +14% higher a year after this phenomenon takes place.

Does that mean we’re destined to go higher? Who knows — but it shows that volatility is officially BACK.

The S&P 500 has averaged gains of +8-10% over its history, yet it’s up +85% over the last 5 years. It’s natural to expect a 2025 pullback, but we eager to see if the start of the Trump presidency, rate cuts, and even a strengthening crypto market will make “this time different.”

“While a handful of forecasters stick their necks out each year with predictions that stray far from the mean consensus, it’s relatively rare.

But even when more did than usual in recent years, the market swings were still larger than predicted.

In seven of the past eight years, the market’s returns were outside the range of all forecasts compiled, often collectively underestimating the index’s return potential.”

— Bloomberg

2) Economic Growth

The Atlanta Fed’s GDPNow Model currently projects Q4 GDP growth to be +3.1%.

This came after the Bureau of Economic Analysis (BEA) reported that GDP grew at a rate of +3.1% in Q3 — well ahead of +2.8% estimates.

Consumer spending growth was also adjusted to +3.7%,the fastest pace since early 2023, while exports also expanded more quickly than previously estimated.

In the December Fed meeting, it was very clear that slowing economic growth over the coming years was a slight concern to the committee. If 2025 shows that the American economy is more resilient than is currently priced into the market — then it could be a bullish catalyst.

GDP hasn’t seemed to be overly important to stock market performance over the last few years. When the broader market is in the middle of a massive bull run — these retroactive economic data points just don’t pack the same punch.

In 2025, we expect a lot more weight to be on assessing U.S. economic growth via GDP readings.

When the S&P has had a long-term winning streak like the one we’ve experienced — it’s time to pay closer attention to our quarterly economic “heat checks.”

3) American Tech Runs the World

Over the last five years…

  • Nvidia is up +2,153%

  • Tesla is up +1,457%

  • Apple is up +284%

  • Google is up +186%

  • Meta is up +184%

  • Microsoft is up 177%.

  • Amazon is up +152%.

American tech companies have dominated the world. So our question is quite simple — will this stay the norm?

On one hand, these companies have held up the S&P 500 for quite a while and it’s reasonable to expect some pullbacks. On the other hand… free cash flow is being printed and margins are expanding.

For goodness sake — Elon Musk himself has even become the right-hand man of the United States’ President-Elect. The power remains with Big Tech, and we’re curious to see if there will be a “changing of the guard” at all.

Over the last few years, the quarterly reports for each of these companies have become more and more monumental to the broader market.

In 2025, we’d expect them to have even more importance.

They’re the most powerful companies in the world for a reason — they’re changing the world. Let’s just hope that they keep printing cash and bursting through expectations.

Cheers to a fun 2024 and more adventures ahead in 2025.

Happy Holidays to each of you!

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Calling all Canadian GRIT Subscribers! The first 20 to reply with their favorite finance movie will snag 2 free tickets to BABYGIRL courtesy of Elevation Pictures — a steamy thriller starring Nicole Kidman as a high-powered CEO in a forbidden affair.

You can click here to watch the trailer on YouTube.

📅 It hits theaters across Canada on December 25th.

Don't wait — reply now and claim your free tickets! 🍿✨

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