Happy Lunar New Year! Welcome to the Year of the Wood Snake! This year is believed to be a period of growth, renewal, and creativity, as the wood element enhances the Snake's natural wisdom and strategic thinking.
Those born in a Snake year are often seen as wise masters of reinvention, adept at shedding their skin amidst change.
With the S&P 500 is coming off consecutive years of over 20% annual returns, I thought it'd be fun to look back at history. The Year of the Snake has not been favorable for market returns. Since 1928, the S&P 500 has averaged a mere 0.5% return during Snake years, with five out of eight years experiencing negative returns.
On a brighter note, in two of the last three Snake years, the S&P 500 saw significant gains, with returns of +32.4% in 2013 and +31.7% in 1989.
While the Year of the Snake may not offer much clarity, here is a clip from our quarterly client conference call that highlights one of the reasons we are optimistic for 2025.

Earnings support a strong year ahead

Last year, S&P 500 earnings grew 9% and thanks to multiple expansion, the S&P 500 returned over 23%.

The good news is that analysts expect 15% earnings growth in 2025, which should be a tailwind for equity markets.

Furthermore, earnings growth is shifting from being dominated by the Magnificent Seven in 2023 and 2024 to a broader growth across the rest of the companies in the S&P 500. The Mag7 are expected to grow earnings by 21%, compared to 13% for the rest of the S&P.

While the market dynamics are evolving, the anticipated earnings growth and broader participation across the S&P 500 companies provide a positive outlook for investors in 2025.

Feature image from Deepseek Image Generator.