Is the Market Slump a Sign for 2025? - podcast episode cover

Is the Market Slump a Sign for 2025?

Dec 24, 20249 min
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Episode description

Welcome back to another clip from Market Mondays, your go-to source for insightful discussions on the stock market, investing, and economic trends. In today’s episode, hosts Troy Millings and Rashad Bilal, along with guest Ian Dunlap, tackle the pressing issue of last week's market performance. With stocks taking a downturn, many are asking, "Is this an early warning sign of what could happen in 2025?"


Ian Dunlap starts off by simplifying the situation. According to Ian, there's no need to panic. The recent market slump can be attributed to several factors such as the end of the Christmas trade, tax loss harvesting, the Federal Open Market Committee (FOMC) announcements, and futures expirations. Essentially, people are taking profits after a generally strong year, resulting in a slight market slide. Ian firmly believes that this is the opposite indicator of what will happen in 2025. He offers practical advice on tracking point totals daily, likening it to maintaining a Farmers Almanac for the market to set expectations better.


Troy Millings adds more context, emphasizing that the recent pullback was expected when Powell spoke about rate cuts, hinting there's more rumor than fact at this stage. With quadruple witching occurring on the third Friday of December, many options and futures contracts expired, contributing to the market's dip. Troy highlights the extraordinary performance of major indices like NASDAQ, S&P, and the Dow this year, arguing that such impressive gains naturally lead to sell-offs but aren’t necessarily an omen for 2025.


Diving deeper, Troy discusses potential growth for 2025. With expectations moderating, he proposes that growth in the lower double digits, between 11 to 15 percent, is both realistic and satisfactory. Ian advocates for long-term holding strategies, pointing out that early worries dissipate over time when you maintain your investments in top tech and index funds.


Rashad Bilal brings an interesting angle by discussing the political cycle’s impact on the market. Referencing investment advisor Josh Brown, Rashad explains the typical stock performance during different years of a presidential term. The first year is usually weak, the second most volatile, the third the strongest, and the fourth good but not as strong as the third. Applying this to the current Biden administration, he attributes the bear market in Biden’s second year in office to this cycle, observing the strong performance in the subsequent years.


However, Rashad also notes the unprecedented political situation with Donald Trump, implying that historical trends might not hold. He underscores the need to stay informed and adaptable to the unique circumstances shaping the market landscape in the coming years.


In conclusion, while recent market downturns can be concerning, the insights shared by our hosts and guest should offer some reassurance. The market's cyclical nature, influenced by various external factors, doesn't diminish the long-term growth potential. Make sure you're tuned in for more expert advice and subscribe to our channel for consistent updates!


*#MarketMondays #StockMarketAnalysis #Investing #FinanceNews #EconomicTrends #DowJones #SNP500 #NASDAQ #StockMarketTips #InvestingStrategies #MarketInsights #FinancialAdvice*


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Disclaimer: The information provided in this video is for educational and informational purposes only and should not be construed as financial advice. Always consult with a financial advisor before making any investment decisions.


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Transcript

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Speaker 3

The dal Jones last week kind of covered a little bit, but last week if it was a down week for stocks last week, So is this an early warning sign of what could potentially happen in twenty twenty five with the market.

Speaker 1

Nope, I'm gonna make this very simple, very short. The Christmas trade is over. People have taken profits. People have been up all year, some tax loss harvesting, but also too with the FOMC announcement that had an effect. Also, futures expirations happened that Friday as well. So mark off every month when expiration begins to happen. But for those of you who are like, hey, the market is Cumberland.

The market's been doing great all year, one of the best years that I can remember as an investor, So I think this is a sign of the opposite of what's going to happen in twenty twenty five. But the Christmas rally trade as we've known that maybe how it was ten years ago traditionally is over, and not as many people are into the market. And lastly, there's no asymmetric risk to the upside. A great place to buy that's going to give me an amazing return in twelve

to thirteen months. So that's why the market slid a little bit so, But also to a homework assignment that I put on IG right down what the point totals are every day and if you were trading twenty nineteen, twenty eighteen off the FMC announcement was very similar to

what happened this past Friday. So if you know what the point totals are positive and negative for each day, you can go through your calendar like your own farmer's almanac for in the market and have an expectation for what the market should do.

Speaker 2

Yeah, this is this is easy. No, like you said, when Palell spoke, we saw a pulled back, and we kind of alluded to it last week when we were talking about rate cuts, how they've kind of been quiet about how many they were going to be in twenty twenty five. There's now rumors that there's only going to be two, which is a decrease from what we had

in twenty twenty four. Well slight pulled back, but it always I mean, and I'm glad that that crashed out to Chris Johnson in that episode of y'all didn't check it out, and he said, look, man, people are going to take profit. In fact, if things don't sell off, there won't be new buyers to come in to add liquidity to a position. And so you kind of saw that when Powell spoke. But also right we talked about

quadruple witching. We talked about when it happens. Quadruple witching happened on Friday, and so the end when we're talking about options contracts, when we talk about futures contracts, they expire on the third Thursday of the last month of the quarter, right, So it's four quarters each year. So we have March, we got June, you got September, and you got December. The third Friday of those months is

quadruple witching when most contracts expire. And so you take that with the amount of increase that the NASACK has had, I think up thirty percent this year, thirty two percent.

Speaker 1

Amazing, which is ridiculous.

Speaker 2

Because it was thirty two percent last year, which is like, you don't really see that, and Pe up twenty six percent, which is absolutely incredible. The doubt itself is up twenty five percent. These are ridiculously impressive years.

Speaker 1

Right.

Speaker 2

To have them back to back is incredible. To have them as a single event would be incredible. To have them back to back is just absolutely incredible. So, I mean, you're going to see so lovely into twenty twenty five. But does that mean is it an indication of what twenty twenty five is gonna look like. No, I think we still see growth. I don't know if it's in the twenties. I don't know if it's in twenties, but I think we could be okay with anywhere between eleven

to fifteen percent growth in all the major industries. I'll be interested to see that at least for the first half of the year. We'll see what happened in the second half. For the first half of the year for sure. Yeah, so I'm not too worried about twenty twenty five.

Speaker 1

Yeah, don't me worried on put hold for a long period of time, and I'm gonna I know not the answer everyone once, but if you hold for a long period of time, these worries go away. Think about it. When we first started to show, the expectation for the indexes were seven to twelve percent. Right now, you could double your money in four years just by holding two Tech two and Dexo stress. Hold for the long term. Please, I think it's also broke.

Speaker 3

It's also for to think about cycles. So shout out to Josh Brown when he came on a long time ago. We talked about and we talked about this for a few other people as far as the political cycle h what it had done for market. So traditionally, usually in political cycles, the first year of a presidency is relatively weak. The second year is the most volatile to the downside, the third year is the strongest, and the fourth year

is strong as well. It's good, but not as strong as third year, And that's kind of exactly what's happened with Joe Biden. Remember when we had that bear market that was in year two of his presidency, and then yet three of his presidencies when stocks went crazy, and then year four of the presidency this year with stocks they want, they didn't good as well. So if if that's an indicator, then stocks would be it'll be a

weaker year for stocks. But of course it's an unprecedented situation with Donald Trump coming in and so many new changes that's going to happen on a political landscape that that could potentially you know, not carry suit, but traditionally that has happened. That's that's what usually happens with the situation, is that the first year of a presidency's the first year of a president's term is a weaker year for the stock market. That's just the historical if that means anything to you.

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Speaker 2

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