High valuations may lead to S&P 500 decline in 2025, but quality stocks can still win.

From Nasdaq: 2024-12-19 04:15:00

Stocks have had a great year, with the S&P 500 up 27%, Nasdaq up 34%, and Dow Jones up 15%. Investors bet on interest rate cuts and the growth of AI. Valuations have soared, with the Shiller CAPE ratio hitting a peak not seen since 67 years ago. Will the S&P 500 fall in 2025?

Despite high valuations, not all stocks are expensive. Alphabet and Meta Platforms remain reasonably priced. History shows that when valuations peak, the S&P 500 declines, but it doesn’t mean it will happen next year. By investing in quality stocks at reasonable prices, investors can still win in 2025 and build wealth over time.

Consider investing in the 10 best stocks identified by the Motley Fool Stock Advisor team. Alphabet may not be on the list, but historical returns show the potential for significant gains. The Stock Advisor service has outperformed the S&P 500 since 2002, providing investors with a blueprint for success and regular stock picks.



Read more at Nasdaq: Could This 1 Thing That’s Happened Only 3 Times in the Past 67 Years Halt the S&P 500’s Gains in 2025? Here’s What History Says.