2024 defied expectations in the stock market, rising more than most economists and experts predicted at the start. The year ahead is filled with potential, and potential pitfalls aplenty. 2025 portends change ahead, starting with the impending turnover of government in the Unites States. Results remain to be seen as the new, and former President is set to take office on January twentieth. Donald Trump is coming to power with republican majorities in both houses of Congress, and the Supreme Court has recently reshaped the concept of the regulatory state through a few major decisions that offer promise to remake the business landscape in ways unseen since the 1970s.

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First on the agenda is taxes. The 2017 Tax Cuts and JOBS act changed significant portions of the United States tax code and the planned ‘sunset’ of certain breaks, such as the doubling of the estate tax exemption, now looks unlikely to happen . Campaign promises made during the 2024 election season of additional and wide-reaching tax cuts, such as lowering tax rates on Social Security benefits, offering tax-free ‘tips,’ and reducing the rate on corporations would  likely come with a high price tag for the deficit but are on the table. Also, under discussion is the (partial) restoration of the so-called ‘SALT’ (state and local tax) deductions. However, in my view, all these ideas seem unlikely to make it through a House of Representatives with one of the slimmest majorities in the modern era. Another potential big policy change is on immigration, with the incoming President having long promised to restrict it and to deport illegal immigrants. From my perspective, some impact on the cost of labor is all but certain over the long term.

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The S&P 500 index entered the new year at close to record highs according to its various ratios, i.e. price to earnings (PE), price to sales and price to book when viewed from a historical perspective 1.  If past is prologue, we think the market could be in for a rocky road, especially when one factors in the incoming President’s rhetoric on imposing tariffs on imported goods from the US’ major trading partners. There may be  negative impact on corporate profits and perhaps, stock prices too. Potential slowdowns in China and Europe may also provide reasons for investors to sell.

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On the positive side of the US economy is the consumer, who, overall, appears healthy and is keeping a positive outlook 2, with credit card debt to disposable income relatively low 3 and access to credit easy 4.  In my view, this could be one reason why stock prices remain elevated in the face of higher interest rates and outlooks for them over the longer term.

As I see it, inflation risk remains elevated given the confluence of the above factors and I believe that it is not likely that prices will decline soon. While the Federal Reserve has lowered rates a few times since last fall, mortgage rates have remained high, while the increase in the so-called ‘term-premium,’ that is the difference investors demand for owning longer term versus short term debt rising three-fourths of one percent in the past three months 5, is indicative that bond markets don’t expect low rates or reductions to continue.

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We remain cautious, as always, with client portfolios and asset allocations. Given the run-up in equity prices, especially ‘growth’ stocks over the last two years, and the increasing attractiveness of owning debt securities, we are aware and think that reliance on continued outperformance of stock markets is a risk in the new year.

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Speaking of which, we wish you, your family and loved ones a healthy, happy and prosperous 2025! If any of your financial circumstances, including your goals and objectives, risk tolerance, or liquidity needs have changed, please let us know. As always, please contact us with any questions, comments, or concerns about your portfolios or any other financial considerations that you may have.

Warm regards,

Scott Lasky, CFP™

Disclosures All statements are opinions and should not be construed as facts. This newsletter is for informational purposes only and should not be deemed as a solicitation to invest or increase investments in Lionshead Wealth Management’s products or affiliated products. The information provided is for educational purposes. Your advisor does not provide tax, legal, or accounting advice. In considering this material, you should discuss your individual circumstances with professionals in those areas before making any decisions. Further, your advisor makes no warranties with regard to such information, or a result obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information.All investment strategies have the potential for profit or loss; changes in investment strategies, contributions or withdrawals may materially alter the performance and results of a portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client's investment portfolio.  Lionshead Wealth Management is registered as an investment adviser and only transacts business in states where it is properly registered or is excluded or exempted from registration requirements. Registration as an investment adviser does not constitute an endorsement of the firm by securities regulators nor does it indicate that the adviser has attained a particular level of skill or ability.
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Source, 1- S&P 500, Bloomberg,

Source 2 - Federal Reserve Bank of Dallas, Haver Analytics,

Source 3- Federal Reserve Bank,

Source 4- Federal Reserve Bank,

Source 5- New York Federal Reserve