The S&P 500's high valuation of 27 to 28 times earnings renders it vulnerable to potential drops of 10-15% due to geopolitical or economic events.
If the Federal Reserve raises rates again amid persistent inflation around 3%, it could significantly disrupt markets, leading to notable sell-offs.
Economic protectionism and tariff policies may exacerbate inflation concerns, compelling the Fed to tighten further and prompting considerable market declines.
The S&P 500 has performed well in 2024, but upcoming stocks, like those akin to Nvidia, are expected to outperform even more in 2025.
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