As 2024 comes to an end, let’s take a look at how various investment categories have performed and what we can look forward to in the upcoming year of 2025. It’s also important to consider what to keep in mind when making future investment decisions.
Despite its volatility, cryptocurrencies like Bitcoin continue to attract investors due to their high return potential.
In 2024, Bitcoin saw an increase of approximately 129%. Factors such as the results of the 2024 US presidential election and the “halving” event in April 2024 contributed to this significant growth.
In 2025, if elected President Donald Trump fulfills his promises to make Bitcoin investments easier, streamline regulations, and establish a strategic Bitcoin reserve, these could signal further growth for cryptocurrencies.
However, a word of caution: Bitcoin is highly volatile and largely speculative. While it is touted as a currency, security, commodity, inflation hedge, and technology, it has mainly served as a means for those hoping for continued market price appreciation to invest.
Companies focused on artificial intelligence (AI) like Nvidia and Palantir Technologies are expected to see strong growth.
In 2024, Nvidia impressed with a growth of 171% from the beginning of the year. This robust growth is part of a broader trend as Nvidia has delivered substantial returns over the past few years.
In 2025, Nvidia is set to become a pipeline for high-end AI data centers. Their expensive GPUs have been in high demand by major tech companies such as Google, Meta, Microsoft, Amazon, and Elon Musk’s new AI project.
Nevertheless, the strong demand for high-end semiconductors has not been fully reflected in the favorable products and services provided by large tech companies. Generative AI continues to suffer from errors (known as “hallucinations”), and the fundamental framework of Gen AI’s reliability for decision-making based on output remains to be seen.
With an aging population, Novo Nordisk and Eli Lilly have become investment targets.
Pharmaceutical stocks had mixed performance in 2024, with some companies achieving significant gains while others faced challenges. With continued innovation and research, especially in areas such as diabetes, obesity, gene therapy, and neuroscience, the industry is expected to perform well in 2025.
The adoption of AI and advanced data analytics may drive clinical development. Integrating health technology and AI into standard operations will streamline processes and increase efficiency. Companies with diversified product portfolios are most likely to achieve growth.
However, if new products are not approved by the FDA, they may not be profitable. Additionally, even if new products are approved, the approval process can be lengthy.
Despite challenges in the energy industry, it remains a critical investment area, especially with the global push for renewable energy.
In 2024, energy stocks had mixed performance, with some companies experiencing significant increases while others faced challenges. The following are some of the best-performing energy stocks as of December. These stocks benefited from rising oil prices and geopolitical tensions:
In 2025, we can expect energy stocks to perform well, driven by several factors such as economic recovery and growth resulting from OPEC’s supply constraints, ongoing geopolitical tensions, and accelerated growth of renewable (clean) energy.
However, if the International Energy Agency’s prediction that over one-third of global electricity will come from renewable sources by 2025 materializes, it will reward the clean energy industry while penalizing traditional fossil fuel energy industries.
During periods of economic uncertainty, stocks from industries like utilities, healthcare, and essential consumer goods are considered stable investments.
In 2024, defensive stocks had mixed performance, with some sectors standing out.
In 2025, the performance of defensive stocks will depend on various factors, including economic conditions, interest rates, and trends in specific industries. Goldman Sachs favors utilities and healthcare stocks as they offer attractive risk-return profiles and significant exposure to trends like AI prosperity.
However, Wells Fargo Bank suggests that the returns on defensive stocks may be lower than cyclical industries due to economic resilience and declining interest rates.
While these bonds can provide attractive returns, their risks are higher than government bonds.
In 2024, high-yield bonds performed well. The yield on US high-yield bonds was 7.2%, likely to continue attracting investors.
The ICE BofA High Yield Index tracking junk bond performance showed a nearly 10% increase this year. Strong corporate profitability and soft economic landings have kept default rates at lower levels.
For 2025, central banks may further cut interest rates, making high-yield bonds more attractive than government bonds. Overall, experts anticipate positive performance from high-yield bonds in 2025, but risks also exist.
However, credit spreads have narrowed, indicating strong fundamentals and investors’ demand for higher yields. Nevertheless, spreads may widen later in the year, affecting returns. High-yield bonds will be impacted if the economy slows down as investors seek safer assets.
These investments are considered safe, especially during times of economic uncertainty.
In 2024, the average yield on 10-year US Treasury bonds over the past 12 months was 4.53%. Yield fluctuations are influenced by Federal Reserve rate cuts and economic data. While rates have been rising for the past three years, bond prices have been sold at a discount (bond prices move inversely to yields).
For 2025, forecasts for the 10-year US Treasury bond yield suggest a moderate decline.
Investment strategists expect an average yield of around 4.14% by the end of 2025, lower than the 4.53% yield over the past 12 months. This is mainly due to inflation and economic growth uncertainty.
However, national debts are at wartime levels, and deficits continue to grow. As the supply of these bonds increases with the total amount of government debt, other countries like China and Japan are reducing the amounts they are willing to hold. This could have the effect of raising yields, thereby proportionally decreasing the principal value of bonds.
Gold is often seen as a hedge against inflation and remains a popular investment choice.
In 2024, the price of gold soared by nearly 30%. Starting around $2,073 per ounce at the beginning of the year, it has now risen to around $2,636 per ounce. Key factors include increased central bank demand, economic uncertainty, and declining interest rates.
For 2025, next year’s gold prices are expected to perform well due to several factors:
Caution: Gold is a speculative activity that can be highly volatile, similar to cryptocurrencies.
These investments reflect current market trends and economic conditions. The US has seen good performances in all investment categories for two consecutive years. Therefore, considering the scale of the past two years, the likelihood of a third year of growth is low.
This means that caution is needed. It might be a good time now to reduce high-risk investments in your portfolio. By taking down some of the speculative investments that used to make you money, you can avoid losses and maintain the safety of your principal.
Good luck and Happy New Year!