The beginning of the year is an ideal time for investors to reassess their portfolios and identify fresh opportunities. In this edition of Steady Investor, we explore three compelling themes to guide your investment strategy for 2025:
- Santa Claus rally disappoints
- What’s fueling the U.S. dollar’s strength?
- Why breakfast is busting your food budget
The Santa Claus Rally That Wasn’t – The post-election rally had many investors anticipating a strong finish to 2024, with expectations for a “Santa Claus rally” that would lift stocks in the last five trading days of the year (and the first two trading days of 2025). Looking back to 1950, the Santa Claus rally has delivered average gains of +1.3% for the S&P 500 over this seven-day trading period, rising 77% of the time. Not so for 2024. In the final five trading days of 2024, the S&P 500 fell by -1.5%, and as we write, stocks are slipping slightly in the first trading day of the new year. Our takeaway from this pullback in stock prices: don’t read anything into it. The concept of the Santa Claus rally may have some interesting statistics showing it as a seasonal trend, but any stock market ‘pattern’ that spans only seven days should not be of any significance to long-term investors. Case-in-point: the Santa Claus rally also failed to deliver positive gains at the end of 2023 and into 2024, and the S&P 500 still finished +23% higher last year. Financial media has been quick to provide explanations surrounding the absence of this year’s Santa Claus rally—the Fed potentially pausing rate cuts, uncertainty over tariffs, the possibility of inflation’s return, etc.—but the real explanation is far simpler. Markets are unpredictable over short stretches of time.1
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Will the U.S. Dollar’s Impressive Strength Continue? – The U.S. dollar has been surging over the past few years. In 2024, the dollar notched gains against every major peer country’s currency, rising especially sharply against emerging markets countries. The greenback enters 2025 at a multi-year high against other currencies and could stand to benefit further if the U.S. economy accelerates as the rest of the world continues growing at a more modest pace.3
The U.S. Dollar Has Been in a Strengthening Trend Since 2021
The post-Covid global economic landscape has favored the U.S. versus the rest of the world. Europe has notably struggled to gain growth momentum since the pandemic, and China has been wrestling with the fallout from its ailing real estate market. Looking ahead to 2025, the Trump administration’s policies of looser regulation, lower taxes, and across-the-board tariffs could bolster the dollar further if the policies translate to growth and higher inflation, since a Fed ‘pause’ on lowering interest rates would raise incentives to hold dollars. Insofar as the U.S. becomes a more desirable place to invest in the new year, the dollar is likely to maintain its position of strength.
The Most Expensive Meal of the Day – Americans have been frustrated with higher prices in recent years, particularly at the grocery store. At the end of last year, average prices for food at home rose at their fastest annual pace since 2023. There may not be much respite on the horizon for one meal in particular: breakfast. The prices of coffee, eggs, and orange juice have seen substantial increases over the past year, and there may not be much policymakers can do about it. For coffee, futures prices for high-end arabica beans blew past a record set in April 1977 and were up over 30% in Q4 2024, owing largely to a spell of hot, dry weather in Brazil this summer. According to the Labor Department’s latest inflation data, store-bought ground roasts rose 11% year-over-year. For eggs, the deadliest outbreak of avian (bird) flu took place last year, which lowered the U.S.’s domestic flock of laying hens by 10 million year-over-year. Tight supplies of eggs led grocers to stock up, which sent prices higher. For orange juice, the average cost of frozen orange-juice concentrate has risen by approximately 90% over the past five years, and 2024 saw the worst outbreak of citrus greening in Florida in the last 90 years. Rising prices in all these cases were in effect tied to natural disasters, which is hard if not impossible to fix with economic and trade policy.5
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This guide offers actionable insights on:
- Accurately forecasting your retirement income needs
- The two phases of determining your asset allocation
- Developing an investment discipline that allows you to get good results over time
- Avoiding self-sabotage—what you need to know
- Plus—our views on key steps to create and maintain the ultimate retirement portfolio
If you have $500,000 or more to invest, get this guide to learn our ideas on the step-by-step process of building and maintaining a retirement portfolio that will potentially help you reach your goals and enjoy a secure retirement.
Disclosure
2 ZIM may amend or rescind the “7 Secrets to Building the Ultimate DIY Retirement Portfolio” guide for any reason and at ZIM’s discretion.
3 Wall Street Journal. December 31, 2024. https://www.wsj.com/finance/currencies/why-the-dollars-epic-rally-could-have-a-little-further-to-run-680354f6?mod=djemMoneyBeat_us
4 Fred Economic Data. December 30, 2024. https://fred.stlouisfed.org/seriesBeta/DTWEXBGS#
5 Wall Street Journal. January 1, 2025. https://www.wsj.com/finance/commodities-futures/why-breakfast-is-busting-your-food-budget-a52165e7?mod=djemMoneyBeat_us
6 ZIM may amend or rescind the “7 Secrets to Building the Ultimate DIY Retirement Portfolio” guide for any reason and at ZIM’s discretion.
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