Tuesday Dec. 31, 2024 - A look back at the 2024 market year and what may be on the horizon in 2025… Happy New Year
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Here is Professional Money Manager, Bill Gunderson.

Good morning and welcome to the year-end December 31st edition of the Best Docs Now show. I am Barry Kite, planner and analyst here at Gunderson Capital Management, giving Bill's voice a bit of a reprieve today, so we'll get his voice back on Thursday strong, so we'll

We'll power through on we get to go through the year-end stuff here today. So looking forward to this opportunity. But we've got green on the screen here at the moment. We've got the Dow up 158 points, up 0.37% at the moment. S&P up about a quarter point.

We'll be right back.

The green up almost 0.3% here at $2,614 an ounce. Bitcoin making a bit of a comeback after a couple of down days here, up 3.64% to $95,186. Again, good morning and welcome to the year-end, December 31st edition of the Best Docs Now show.

I am your host, Barry Kite, planter and analyst here at Gundersen Capital Management, sitting in for Bill today. And also excited to have a partner here, Jeff Webster, joining me on the show. Jeff, how's everything going? Hope you had a good bit disjointed holiday season, but hopefully everything went well. It did. Thank you. Happy to be here today and wishing everyone a happy holiday.

Early New Year. Looking forward to a prosperous 2025, whatever that might mean for us.

specific individuals for a lot of folks. It's not just about financial prosperity. It's about health, about feeling connected with your family, connected with your community, spiritually connected. There's lots of good things associated with prosperity. Yeah, lots of ways to measure wealth out there in a bunch of different fashions for sure. And

We made it to the end of 2024. It's been another eventful and thankfully profitable year for the equity markets. Of course, the market jumped a few hurdles along the way this year, and I must say,

Though, I mean, this December has been one of the kind of one of the more strange ones. I don't know if you kind of feel the same way there, Jeff, in terms of I've got my own suspicions as to why it's been a little odd. But, you know, it's just been one of those a bit disjointed. I think the main reason, at least first, is just the calendar.

We're, of course, having Christmas and New Year's falling on a Wednesday. It's kind of, you know, I guess if you had to do a wonder job-wise or like U.S. productivity-wise if there's a way to monitor, you know, my guess is at least from a Wall Street standpoint, probably one of the least productive kind of two-week periods that's probably been out there when you look at volume-wise.

It's just been a bit strange where you've got some low volume, and of course during low volume anything can happen. It's easy, of course, for sellers or buyers to wrestle with

uh away the upper hand on on low volume days but uh you know oddly enough it's kind of seemed there's been a few you know real high volume days mixed in mixed into the middle of this uh whole thing so it's been odd to kind of get a feel for what's going on i mean you had uh i think it was december 20th you had one of the highest volume days of the year i think that was a friday uh and then you had you know 23rd was you know about about

Sorry, I think we cut off there. But, yeah, I mean, 24th and the 26th were low-volume days. And then, you know, Friday, the 27th, you had one of the highest-volume days of the year.

And yesterday was about average. So I guess you've got folks, traders poking their head in to the office, getting a bunch of trades in maybe, and then kind of going back home to the family or what have you. But it's just been kind of disjointed from that standpoint from a calendar perspective. And then

You've also had these names in the market that have had long runs. I mean, you look at NVIDIA, Microsoft, them both kind of kicking off the whole AI boom, really in kind of that first quarter of 2020.

of 2023 and so you know look at long-term capital gains or you know you've got these mutual funds that you know are forced to kind of sell in terms of doing distributions to required to do distributions to their shareholders so you've got you know some of these names that have been performing well or kind of casualties can be casualties to rebalancing right where you've got

These companies are mutual funds forced to sell their winners. And then, of course, in the rebalancing phase, they buy their underperformers in terms of redistributing those proceeds. But all that kind of makes for this little bit kind of a sloppy, I think probably is a good way to put it, sloppy disjointed December. Not to mention you've got a lot of repositioning or positioning for investors

the incoming administration. You had, of course, Powell's hawkish tone at his remarks after the December Fed meeting. So you've had some actual events, right, pushed into the middle of this kind of

oddly in terms of volume market so it's been we'll be good to get to the finish line go ahead and put some of these numbers write them in stone and then see what the rest of the next leg of the race has right?

Absolutely. Yesterday, it started off very, very rough. It seemed like early afternoon there was a rally, and then it started trending a little bit more downwards towards the end.

towards the close of market. Yeah, and in volume yesterday was basically roughly about average, like I said, on the first day. On Friday, last Friday, it was, I think, one of the top 10 or so.

Volumes days of the year, I think December 20th was one of the top five volume days of the year. So it's like, I guess, get these trades in and then exit. But it's made for a bit of a mushy market yesterday. It was another example of a sloppy day, as you mentioned. Overall, you had the NASDAQ down about 1.19%.

I believe 10 out of the 11 S&P sectors were down. So it was kind of a broad-based market in terms of what was dropping out there. Dow was down, I believe, 0.97%. S&P was down a little over a percent at 1.07%.

So kind of limping across the finish line here, one headwind yesterday, at least in terms of market news, I guess was Janet Yellen warning about a potential U.S. hitting the debt ceiling limit in mid-January.

Did that really come as a surprise? I thought we were going to hit the debt limit, right? I thought that was the point. So I would expect them to hit that debt limit particularly right before they go out of office.

So, you know, to me, it kind of seemed odd that that would be, you know, maybe the only reason for the market decline yesterday. That wasn't a total big moving information there. Anything on your end, Jeff, in terms of?

Looking at the market, it's really probably just kind of a mid volume. The NASDAQ is flat right now. S&P is up a tad. Dow's up 32 basis points right now. So we'll see. We'll see what happens here over the next three hours and 45 minutes. Yeah.

Yeah, and talking about, of course, the market being closed tomorrow for New Year's, the market also, I guess, announced yesterday that they added another, I guess, holiday day to the equity market calendar, I guess the NASDAQ and the

The Dow or the New York Stock Exchange will be closed on January 9th, which I guess is going to be a...

Jimmy Carter National Day of Mourning. So the markets will be closed on that day. So pencil that into your calendar when you're Googling those holidays for the market in 2025. I don't know. I meant to look it up, but I don't know if that's... I think I heard that maybe it was Ulysses S. Grant that this was done for at some point in the past, but...

Don't quote me on that. But we're just getting started here on the year-end edition of the Best Docs Now show, and we'll be right back. I keep loving you. They call me free. I keep loving you. Keep going on.

And welcome back here to the Tuesday, December 31st edition of the Best Docs Now show. I am Barry Kite, planer analyst here at Gunderson Capital, taking the wheel for Bill today. And we also have Jeff Webster on the show as usual, vice president and advisor here at the firm.

Looks like market-wise, I don't think, it looks like NASDAQ's bumping back in the green. It was red here just a split second ago. So we're up pretty much green across the board. We've got the Dow up just under 0.4%, up 166 points at the moment. We've got the S&P up just over a quarter point.

quarter of a percent today. NASDAQ bringing up the rear up 11 basis points, 0.11%. Oil continues to stay above 70. It's up 0.85% today. Gold in the green and Bitcoin making a comeback again up 3.6% at 95,265. So

We've got some green on the screen here. I guess it was earlier today. Asia did not have, in most of your early opening world markets, did not have. We're not in the green today, basically kind of following the trend

sell-off in the U.S. markets. They're going to be closed coming up for the new year as well. But we've got, it looks like, I guess for the year, or for yesterday, it looks like, where did my number go? China was down 1.16%.

And Japan continues to, the yen continues to be under pressure. The yen was actually down 10% this year, and they were a lot of what Japan was trying to prop up, attempting to prop up the value of the yen, and the yen is still down 10% in 2024. So, fourth consecutive year for a decline there.

against the dollar. So that currency trade continues to go against what Japan has been trying to do, at least when looking at the yen. China did release some economic, I guess some relevant economic news. It's pretty much a quiet day data-wise today. Not much activity on New Year's Eve here, but we did have

China's factory activity grew slower this month than it had, I think, the last two months, but it was still up. I guess still a positive note. It's been interesting, I think, to note just how sluggish China has been in terms of getting out of the gates, Jeff. It seems like we've been talking about this story for a couple of years now of China

you know, China bouncing back from COVID and, you know, kind of becoming that, you know, growth engine as it had been prior. But it's been certainly a sluggish start for, you know, kind of out of the gates, even with some of the stimulus that the Chinese have done during 2024. I think the

Manufacturing PMI was at 50.1, so barely expansion. I believe above 50 is going to be expansion there. It's down from a seven-month high in November at 50.3, so barely over expansion. So even, I guess you could use the word expansion a little loosely, I guess, in terms of some of these things.

PMIs there. One bright spot, I believe, is the non-manufacturing PMI, which China's tried to continually kind of move their economy a bit more to a consumption economy, services economy, similar to a U.S. model economy.

just pure manufacturing, that did end up being the strongest service sector growth in nine months. So, you know, if you can get some green shoots in China a bit to where, you know, they would fuel, you know, other growth in other parts of the world, you know, right now it seems like

The U.S. is really the only game in town with Europe kind of faltering or just being barely above expansion. I think the U.K. has been in GDP decline or teetering along that edge as well.

It's just... Terry, I know you did a good job of, you know, you're talking about some of those things, but you outlined some pretty impressive, you know, stats for this year. I'd love to have you run through those, you know, with the audience to... Oh, yeah.

outline some of the things that were highlighted as far as how the S&P performed in general, record closes, those types of things. Yeah, some pretty remarkable stats just in terms of the market. If we get cut off before the break, we'll run through a couple more here. But yeah, when looking back, I mean, you look back at 2024 in terms of the market year,

You know, also followed up a great, you know, 2023 in terms of a bounce back year coming off of the bear market of 2022. I believe it's the most successful two year consecutive market run since 97 and 98. So what I guess that's basically a quarter century ago almost here, right? Or a bit, bit more than that.

It doesn't seem that long ago, actually, in my head. But in reality, it's a good bit ago, a couple of lifetimes ago. But the...

But just in terms of the market, S&P is on track for a 24% year-to-date return here. Dow up roughly just over 13% or almost 13%. The NASDAQ just under 30% at 29.8%.

This stat is the one that always kind of blows my mind because of its perception, where you've got 57 record closes for the S&P 500 in 2024. Unbelievable. Yeah, and I tell folks, we started, right? The market started at an elevated position at the beginning of the year, so there was really no...

you know, time in 2024 where you just felt, Hey, you know, back up the truck, right. It's just, you know, it's time to plow into, into equities, but it, you know, it gives you the, um, you know, it gives you perspective in terms of, you know, a lot of times riding the trend, right. Is, is, is important. Um, you know, you want to, want to be vigilant and know, you know, get off the trend. If you see it, uh, you know, faltering a bit, especially towards the top, but,

It just tells you that the market, just because it's at an all-time high doesn't mean that it can't go higher. There's a lot of other factors in there than just some arbitrary price level, if you will. So 57 record closes in 2024. That's pretty wild. For gold, gold actually wasn't just in the equity markets. Gold had its best year since 2010.

So that's another kind of interesting stat that I had. Of course, we don't have to hit this one because everyone knows Bitcoin more than doubled in 2024. Of course, breaching above 100,000 for a bit there. Up more than 117% on the year. So there's pretty, from a market history standpoint, the last two years have been a...

Pretty remarkable and one for the history books. We'll see and try to keep it going in 2025. We'll be right back with the Best Stocks Now show. This is Bill Gunderson. Thank you for tuning in to today's Best Stocks Now, Best Inverse Funds Now show.

I put several hours of research in during the wee hours of the morning each day to bring you the very best cutting-edge stories that I can. To get two free weeks of my newsletter, go to GundersenCapital.com. To talk to us about our fee-based only money management services, call us at 855-611-BEST. Now, back to the second half of the show. Music

The instigators Because there's something

We've got to get together.

Plenty of messages that will be coming out on the live trading subscription. And what he can't say, he'll be typing at us today. I've gotten a few texts already. Yeah, absolutely. Yeah, well...

Market-wise, we've got everything really in the green still. Nothing to write home about too much. NASDAQ's basically flat at the moment. Then you've got the S&P up.

about seven basis points, 0.07%. The Dow kind of leading the rate up today, about 0.2%. So pretty quiet, it seems, as expected, of course. This time of year, we've got a lot of prognostications. 2025 outlook, certainly stay up to date with

With Bill's thoughts, our thoughts on the market, you can get Bill's newsletter, of course, at GundersenCapital.com. Or if you'd like to have a discussion with myself or Jeff about your portfolio allocation, always feel free to give us a call. You'll likely reach Edie first, and that's at 855-611-BEST. That's 855-611-2378.

Of course, we're here to be a resource for 2025 and beyond. A couple of other of these stats are pretty amazing. Of course, you had, like I said, S&P 500 up 24% year-to-date, first-time consecutive back-to-back time period since 1997, best back-to-back year since 1997 and 1998, being 2023 and 2024.

The interesting thing is, of course, you've got that 24% year-to-date return for S&P, and the market really didn't get the amount of rate cuts that they would have expected when you looked at the beginning of this year. You had firms pricing in six to seven cuts in 2023. We didn't get that, or in 2024. We didn't get that, but still the market performed in terms of

up 24% for the year. So that's pretty remarkable. It is interesting in terms of return, 38% of the, so almost 40% of the total S&P return occurred in the first quarter of 2024. As you may remember, it's like we got shot out of a cannon portfolio-wise in terms of

the market this year in the first quarter. So a lot of that return was made in the first quarter. It kind of had a soft third quarter, certainly a soft July, which would have been the first month of the third quarter. But large cap continued to outperform versus small cap. That's been evident for an extended period of time now.

Stat-wise, the Magnificent 7, this is a good one, Jeff. You'll like this one. Magnificent 7 accounted for 53% of the return in 2024. So seven stocks accounted for 53% of the return in 2024, and NVIDIA by itself was 21% of the total return of the S&P 500. So it just shows you the power of...

those big, large tech names and their attribution to the overall earnings picture of the market. I mean, there's a reason why. You can argue that there's a reason why the S&P multiple is at 21.9 or whatever on a forward-looking basis because tech names have become a much larger portion of that mix.

Well, that's super impressive. I'm hoping in 2025, though, we see some balancing taking place. Seeing some other folks that none of us like the 80-20 rule, or in this case, the 70-53 rule, whatever it is that...

We want to see other up-and-coming organizations contributing as well. So I'm optimistic that's going to happen. Yeah, I mean, this is the important part of being in the right stocks right over the last two years. So since the market bottomed in 2022's bear market,

Only 10 stocks have provided essentially 59% of the gain since then. So the markets really jumped on the back of really 10 stocks and rode that thing until where we're at now. There have been some bright spots for the market. I think financials were up 28% or so in 2024. Industrials were up 16%.

on the back of AI power needs. We're up 20% in power

In 2024, I don't know. I can't. 20% for utilities seems like I'm sure there's some years where they must have been real low and came up pretty well. But that's a pretty significant run in the utility space. We're ending the year at a multiple of 21.9 in terms of forward PEs of just under 20.

To give you an idea, the 10-year average is right around mid-18, so around 18.5. Okay.

And we've got, you know, so that just tells you, you know, and that kind of ties into, you know, probably what we would consider, and Bill's talked about, you know, kind of the biggest risk for 2025 is valuations, right? Because, you know, we're at almost a 22 multiple, usually a 10-year average being 18.5 to get, you know, towards, you know, back to that mean or close to that mean is, you know, requires a pretty significant pullback in the equities market.

I think earnings, right, earnings expectations and earnings have held up very well, which has kind of led to that 21.9 PE because PE ratio hasn't gotten any help from the interest rate side of things, right? We're basically finishing the year close to the highs of rates, at least over the last 18 months here.

So the market's really kind of priced for perfection, I think would be a good way to put it, in 2025. Thankfully, those tech names have been able to count on in terms of growing that overall pie significantly.

from an earnings perspective. So as Bill loves to say, stocks follow earnings. And my guess is earnings, particularly at the P-E ratio we're at, that's going to be a big driver going into particularly this first quarter.

earnings quarter out of the gate, right? You want to start fresh with the old adage of, you know, so goes the first quarter. I guess however goes the first quarter, so goes the rest of the year. So certainly held up for 2024 being up 10% in the first, pretty much in the first quarter of 2024. So...

Barry, you mentioned some of the sectors, financials, industrials, utilities. Any one of those, was any one of those sectors a particular favorite of yours? Anything out there that was unusually surprising to you as far as performance goes or, you know, perhaps even maybe disappointment? Yeah.

Yeah, I think looking forward, I think some of the financial names, particularly ones in the deal-making space, because I think you don't have to connect too many dots to figure out that with the Trump administration reducing some regulation, helping a more friendly deal-making environment, you should have some of your investment banking side of things

of the financials piece, right, should perform well, or even some of your private credit, you know, the Apollos kind of the world, which has already gotten kind of a good little kick since the election. I think, to me, on the wicklified natural gas side versus the

The old adage, the drill, baby, drill kind of mantra, right? But I think liquefying natural gas and reducing some of those restrictions that have slowed up some of that expansion and capacity expansion for oil

And liquefied natural gas will, you know, continues to provide more demand, I think, for different reasons. I think natural gas is up almost 22% today, and that's based on a forecast of pretty chilly weather over the next two weeks. But, you know, long-term, I think certainly Trump administration, you know, for companies like Chenier or just, you know, anything to do with,

liquefying of natural gas is a better bet than maybe just drilling for oil because oil could supply and demand factors would be a bigger headwind potentially for them. But great question. We'll touch on a couple of other outlooks here when we get back for the last segment of the year for the Best Docs Now show. You gotta go do what you wanna do with it, do it.

And welcome back here to the Tuesday, December 31st edition of the Best Docs Now show. It'll be the last segment of 2024. I am Barry Kite, planer analyst here at Gunderson Capital, sitting in for Bill today. And we have Jeff Webster on the show. Hello.

uh vice president advisor here at uh here at gunderson capital and uh looks like we'll be going out with the little green on the screen i'm going to get it in right now because the uh the nasdaq is basically up two points so that green could change to red at any moment so um one of the number one is as jeff mentioned just want to

Thank all of our clients, listeners, subscribers for a great 2024. We're looking forward to seeing what 2025 has to bring in the market, and we'll be on the front lines, too.

If you want to follow what Bill does, you can reach us at GundersenCapital.com. You can sign up for two weeks free of the newsletter. I think we still have the four-week trial for the live trading. I don't think he's cut that thing off at the end of the year yet. Get in there and subscribe. Get Bill's take on what we've got coming ahead in 2024.

You can always give us a call at 855-611-BEST. That's 855-611-2378. Tell Edie hello, and she'll get you where you need to go. But from a market perspective, Jeff, yeah, it's kind of looking on to 2025, like I said, I think.

I think Bill has highlighted that the biggest risk in the market for 2025 being P.E. ratio and valuations, which is not an unlikely problem that we've had over the years. So it's better, I guess, than the alternative in terms of being on the low spectrum of the P.E. scale. Well, yeah.

I think so. You know, there's always the concern that everything's overpriced. There are going to be many opportunities out there, Barry. And that's, you know, it's very important to do your research. I mean, you referenced, you know, the four-week live trading trial. I mean, we provide tools for the do-it-yourselfer, you know, for the individual that's looking for someone to help them, you know, manage their money.

again, Gundersen Capital Management, we're active managers, bills involved in those portfolios every single day. And, you know, if there's uncertainty in your mind and stuff like that, that's when perhaps it might make sense, you know, to turn to an active money manager that can help you make good, sound decisions that, again,

ideally provide positive returns for you. Yeah, and we're weighing, like I said, being active and really present in the portfolio in terms of we're looking at the last couple days of the year trying to figure out, hey, is there a name that we want to potentially part ways with to take advantage of some tax loss harvesting? There's a lot of different moving parts in terms of managing the portfolio, whether it's picking good stocks or

doing some urine tax planning. Very talk to us for a second about that tax privacy. For our listeners out there, what does that really mean and why is it important? Yeah, and really in terms of this market cycle, it's important too because, as I mentioned earlier, you can

got a lot of clients, you know, whether there are clients or they're just, you know, whether they're just folks out there who, you know, bought Nvidia in March of 2023, right? Or Microsoft in March of 2023. You know, you're sitting in a position where you have, you know, long-term capital gains, you know,

If you haven't trimmed that position along the way, right, well, then it's now become, you know, pretty significant from a concentration risk standpoint. So at certain points, right, it makes sense to trim some of those names. And so in, you know, whether it's in 2023 or particularly in 2024, you know, capital gains are going to be,

a nuisance, and that's just because the market has done so well two years in a row. So it's one of those double-edged swords where you've got to pay some taxes. But at the same time, thankfully, there were some gains that went along with that taxes. But to help offset some of that, you can do – you've likely taken some significant gains in 2024, and then you can sell some laggards.

things that are showing a taxable, potentially taxable loss or unrealized loss. And if you sell those, it becomes a realized loss and you can net that off on your taxes. So you just want to avoid that wash sale rule.

in terms of buying it back within the next 30 days. But it's a strategy, and this year it's more important simply because, number one, it's kind of hard to find some losers sometimes, at least in this market nowadays. But every portfolio is going to have some

And it's just going to be a way to offset some of those gains in what's likely going to be a pretty significant tax gain year. So you'll have some gains to offset those losses against, put it that way.

Awesome. Thanks for that explanation. Yeah. It's one of those kind of nuances that you hear people talk about, but sometimes no one gives you the definition of what it actually means. It's like a wash sale rule. It's like, okay, well, look that up. The name does not describe it completely. Yeah.

I will say real quick, talking about Apollo and them being positioned well for deal-making in 2025, if anyone gets a chance, peek at Torsten Slok's kind of – he puts out essentially 12 risks of the markets in 2020.

in uh in 2025 and gives you you know kind of a chances of that happening i like number 12 um probability of a recession in the u.s zero percent you don't you don't get zero percent or 100 in this business too often but i like that yeah that is as uh you know as the 12th thing there that essentially no no chance of a u.s recession um to put that in in in context he he says uh

There's a 40% chance that Germany will be in a recession, and there's a 33% chance that China will be in recession in 2025. So to put the U.S. in context, he's got a 0% chance there. But there's some interesting ones here. NVIDIA, you see this one, Jeff, with essentially a 90% chance that NVIDIA's earnings will disappoint inflated expectations, I think,

I don't know if they can hit any expectations nowadays in terms of that. Right. That fence has gotten higher and higher and higher over the years, but it will be interesting to see how that one plays out. Yeah, and again, maybe an opportunity to start looking around at the picks and shovels that support NVIDIA and other AI companies to, you know,

supplement, Dad. Yep. We'll be on the lookout in 2025 and Bill will be there as well. We're looking forward to it and I just want to thank you all for listening and have a happy new year from Best Docs Now.

This show is not a solicitation to buy or sell any securities. Bill Gunderson or clients of Gunderson Capital Management may have long or short positions in stocks mentioned during the show. Past performance is not indicative of future performance. Gunderson Capital Management is a fee-based registered investment advisory firm. All accounts are held at Charles Schwab. Schwab is a member of SIPC and FINRA.