New Business
The View | From US stocks to China’s growth, 5 myths cloud 2025’s outlook
Attentive readers will know that a year ago I laid out five myths, or dominant but misleading investment narratives, that were generally accepted as baseline expectations by the markets.
Any myth has a proportion of truth attached. In articulating them, one runs the risk that at least some of the myth turns out to be correct.
Market forecasts for the new year will be affected by kind of events that former US defence secretary Donald Rumsfeld would refer to as “unknown unknowns” – things we can’t forecast but nonetheless disrupt dominant narratives. Thus, I mark the success of my own 2024 forecasts not in absolute terms but in proportion to the degree to which I was right.
I forecast correctly that the markets wouldn’t crash under the weight of debt, the Chinese markets would have a slow recovery – thought they have bounced back nicely – and US interest rates would not fall much despite expectations that they would.
However, I was on the wrong side of the probabilities in suggesting that Donald Trump wouldn’t win – though I did say he was the favourite, and incorrectly forecast that the wars in Ukraine and Gaza would stop.
The five dominant myths in the markets for 2025 are as follows.
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