As US stocks (^DJI, ^IXIC, ^GSPC) have led record runs throughout 2024, is there any future factor that could tame valuations heading into 2025? One strategist doesn’t believe so.
"From our perspective, it’s hard for us to make the case that valuations all of a sudden are going to go back towards something like the long-term average, at least for now until we get clearer evidence that there’s risk on the horizon," Bernstein Private Wealth Management Senior Investment Strategist Matthew Palazzolo tells Yahoo Finance.
Palazzolo highlights some of the advice he is giving clients, namely remaining "very diversified by sector, by capitalization, and by geography, and also fixed income."
He goes on to comment on the likelihood of a slight stock pullback and how that factors into his forecast for earnings growth:
"Our models are assuming that we get earnings growth of high single-digits in 2025 and into even 2026. And if you assume that valuations stay north of 20-times earnings, then you’re going to get a return on the market pretty much consistent with that level of earnings growth."
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