Market Performance in 2024: Key Investment Lessons

January 8, 2025

Markets delivered remarkable returns in 2024, with the S&P 500 gaining 25.0%, the Nasdaq up 29.6%, and the Dow Jones advancing 15.0%. International markets also posted positive results, as emerging markets rose 8.1% and developed markets added 4.3%. These gains came despite persistent worries about inflation, recession risks, monetary policy, and electoral uncertainty.

The year demonstrated why maintaining market exposure during uncertain times is crucial for long-term success. While cash positions may feel safer, they often result in missed opportunities.

The current bull market showed continued strength through 2024

In the fixed income markets, policy rates declined by one percentage point due to Fed actions, though the 10-year Treasury yield remained elevated between 3.9% and 4.7%, ending near 4.6%. The broad bond market posted a modest 1.3% gain for the year.

Market gains were broadly distributed in 2024, with ten of eleven S&P 500 sectors posting positive returns. While technology and AI-related sectors maintained leadership, other areas including Financials, Utilities, and Consumer sectors also delivered strong performances.

This broad participation highlights the value of diversification across market segments, as sector leadership often rotates unpredictably throughout the year.

Market timing proves challenging at record highs

While markets reached new highs throughout 2024, investors wondering about "waiting for pullbacks" faced a common dilemma. Though volatility is natural, timing such movements consistently proves difficult.

Looking ahead to 2025, markets will likely face various challenges, from monetary policy concerns to valuation questions and geopolitical issues. However, history suggests that maintaining a disciplined, long-term investment approach remains the most reliable strategy.

The bottom line? 2024's performance reinforces that maintaining investment discipline through market uncertainty is crucial for long-term success. This principle will remain relevant regardless of what challenges emerge in 2025.

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