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2024 Review and 2025 Outlook

By Chad Roope, CFA®, Chief Investment Officer 

2024 was a great year for the U.S. economy and equity markets. A strong economy, led by strong labor markets and significant investments in Artificial Intelligence, equated to double digit corporate earnings growth and thereby strong equity market performance. The U.S. was the clear economic leader globally and was why we had a strong overweight to quality, U.S. large-cap stocks all year. This overweight and our focus on active asset allocation, fundamental research and timely trade communications led to solid performance in our client portfolios in 2024, with most of our strategies strongly outperforming their benchmarks. Our proven process and seasoned team of Chartered Financial Analysts stand ready to navigate what is likely to be a dynamic environment in 2025.

We think 2025 may prove to be a more volatile year given several uncertainties and rich starting valuation levels, but we think the year should prove to be a solid overall. Below are our key views:

  • We expect U.S. outperformance compared to the rest of the world to continue amid solid economic growth, strong labor markets, lower inflation levels, a supportive Federal Reserve, and the potential for tax cuts and deregulatory policies.
  • We continue to prefer large-cap, high quality U.S. equities as we think this is where the strongest overall earnings growth will continue to be. In fixed income, we are prioritizing higher income, shorter duration exposures than the broader market.
  • Uncertainty associated with both trade and immigration policy could lead to slower growth, higher inflation – or both – over the course of 2025 and beyond. These are key areas we will continue to watch closely and make portfolio adjustments if needed as they evolve.
  • The stock market enters 2025 with fairly rich valuation levels. The S&P 500's forward P/E ratio of 21.5 is much higher than the 30-year average of 17. Should some of the aforementioned uncertainties turn out negatively, investors could call into question these valuation levels and create sudden pockets of volatility in 2025. Our diversification and fixed-income positioning should help during such periods. Still, we think any volatility is likely to be met with strong buying given the strength of the economy and given that cash holdings are near record levels as investors poured nearly $1 trillion into money market funds in 2024 alone. We think investors are likely to “buy the dip” with all this cash should pockets of volatility emerge.

Overall, we think 2025 will require investors to be more patient, disciplined and process focused than 2024 did. After strong equity market performance in 2023 and 2024, any volatility will undoubtedly feel bad. But we think a solid economy combined with our active asset allocation will lead to solid outcomes in 2025. John Meynard Keynes once quipped, “When the facts change, I change my mind”. For now, the facts have not changed enough with economic and corporate data for us to change our minds in favoring stocks over bonds, U.S. over international, large-cap over small-cap, growth over value. As facts around Washington and Fed policy, earnings, and the economy continue to evolve, we may change our minds and change our positioning. But for now, we maintain our positive equity positioning moving into 2025 while also positioning to capitalize on market volatility.

Sources: BlackRock, JP Morgan Asset Management, Factset

Most Recent

Changes approaching with TCJA sunsetting

Posted By Lineweaver Financial Group
March 11, 2025 Category: Tax

By Mark Sipos, Director of LFG Tax Services The Tax Cuts and Jobs Act (TCJA) of 2017 is the signature tax legislation from Trump’s first term in office, and it cut income tax rates for many taxpayers. Some provisions — including the majority affecting individuals — are slated to expire at the end of 2025. The nonpartisan Congressional Budget Office estimates that extending the temporary TCJA provisions would cost $4.6 trillion over 10 years. For context, the federal debt currently rings in at more than $35 trillion, and the budget deficit is $711 billion.  Below is an overview of anticipated changes for both businesses and individuals:  Business Reduce the current 21% corporate tax rate to 20% or 15%, with the goal of generating growth. Eliminate the 15% corporate alternative minimum tax imposed by the Inflation Reduction Act (IRA).  Individuals Eliminate the estate tax (which currently applies only to estates worth more than $13.99 million). Repeal or raise the $10,000 cap on the deduction for state and local taxes. Create a deduction for auto loan interest. Eliminate income taxes on tips, overtime and Social Security benefits. Possible Offsets The House GOP document outlines numerous possibilities beyond just spending reductions to pay for these tax cuts. These include:  Tariffs There is a proposed 10% across-the-board import tariff. President Trump, however, has discussed and imposed various tariff amounts, depending on t

Actively Managed Portfolios at Lineweaver

Posted By Lineweaver Financial Group
March 11, 2025 Category: Markets, Portfolio, Financial Planning, Managed Accounts

By Chad Roope, CFA®, Chief Investment Officer We recognize that the market is currently experiencing turbulence and volatility not seen in several years. Given the strong returns we experienced in 2023 and 2024, the instability of the last week feels particularly unsettling for most of us. Given this volatility, we’ve made recent trades and rebalanced our clients’ portfolios. Despite the current uncertainty, we anticipate that 2025 will be a reasonably good year for stocks. Our belief is that we will finish the year with returns in the mid- to upper-single digits. Over the course of the year, however, we expect the markets to be much more volatile than what we have experienced over the past few years.  Our belief that the economy is still fundamentally strong has three supporting points. The first is earnings, which are growing at a strong rate. In addition to good earnings, we're beginning to see the market broaden beyond just a few top tech stocks. Many other stocks are also trending higher as we enter 2025. Finally, while there’s a great deal of uncertainty in terms of policy, tariffs, trade deals, and other changes in Washington, we also think that these changes – and the volatility that comes with them – are creating opportunity.  Within our clients’ investment accounts, we've recently rebalanced our strategies. Some of the things that did so well last year were slightly above our target weights, leadi

Be Aware of Tax Fraud Schemes During Filing Season

Posted By Lineweaver Financial Group
February 12, 2025 Category: Tax, Scam, Fraud

By Mark Sipos, LFG Tax Director Tax season is here, and with it are scammers looking for their next victim. Scammers mislead you about tax refunds, credits, and payments, so it’s important to be aware of what their scams can look like.  Common schemes Scammers are always changing their tactics in hopes of exploiting you. There are a flurry of deceptive schemes that pop up and this year will be no different. Recently, the IRS has seen scammers do the following: Request gift cards over the phone through a government impersonation scam or by sending a text message, email or social media message. Remember, the IRS never asks for or accepts gift cards as payment for a tax bill. Pose as an IRS agent and call the taxpayer or leave a pre-recorded voicemail stating they are linked to some criminal activity. Threaten or harass the taxpayer by telling them that they must pay a fictitious tax penalty. Instruct the taxpayer to buy gift cards from various stores. Pressure the taxpayer to buy gift cards, then ask the taxpayer to provide the gift card number and PIN. To verify it’s the IRS, go to IRS.gov and verify the form or visit the Let Us Help You page to verify tax information with self-service options. Know who’s calling If the IRS does need to contact you, they will typically contact you the first time through regular U.S. mail delivered by the USPS. The IRS doesn't initiate contact with taxpayers by email, text messages, or social media channels

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Case studies are intended to illustrate the types of financial issues faced by actual clients. They should not be construed as a testimonial for or endorsement of Lineweaver Wealth Advisors. They do not represent the experience of any advisory client. Each client’s situation is different, and their goals may not always be achieved. Lineweaver Wealth Advisors, LLC, is not engaged in the practice of law or accounting. Tax information provided is general in nature and should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation. Tax rules and regulations are subject to change at any time.
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