The S&P 500 has experienced remarkable gains over the past two years, prompting concerns about unsustainable growth rates. Investors are advised to remain focused on long-term strategies while preparing for increased volatility in 2025. As companies adapt to changing economic narratives, particularly in relation to tariffs and artificial intelligence advancements, certain stocks like CVS and Berkshire Hathaway have demonstrated resilience and potential for continued performance despite external economic pressures. Strategic rebalancing may be necessary as markets shift back toward their historical averages after prolonged growth periods.
It's quite rare to have two consecutive years of gains north of 20%, but the S&P 500 has soared close to 50% in just two years, showing unsustainable growth.
Long-term investors should remain focused on the long-term game and preparing for more volatility in the market after two years of euphoric gains.
CVS and Berkshire Hathaway have shown resilience in the first half of 2025 and could continue to outperform, given their modest valuations and promise.
Markets tend to revert back to the mean after prolonged periods of either overexuberance or pessimism, indicating a potential rocky year ahead.
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