2024 was a year of unexpectedly strong market performance. Major stock market indices generated historic gains with the S&P 500 returning 25.0% with dividends, the Nasdaq 29.6%, and the Dow Jones Industrial Average 15.0%. This occurred despite concerns around inflation, recessions, Fed policy, and the presidential election. International stocks also performed well with emerging markets rising 8.1% and developed market stocks gaining 4.3%.

This past year underscores the importance of staying invested during periods of uncertainty. While trying to time the market or holding cash may often feel more comfortable, the opportunity cost of doing so is high. There is no doubt that 2025 will present similar challenges for investors, so working with a trusted advisor to build the right portfolio and financial plan will be even more important.

The S&P 500 reached 57 new all-time highs in 2024, ending near record levels despite a slight pullback in December, capping off the best two-year performance since the late 1990s with a 57.8% gain across 2023 and 2024. This bull market, which began after the 2022 bottom, saw only two periods of significant volatility—in April and August—driven by concerns about inflation, the Fed, and tech stocks, though both dips were quickly followed by sharp recoveries.

The accompanying chart puts bull and bear market cycles in perspective. History shows that bear markets are unpleasant, but they tend to be brief compared to bull markets. While it’s hard to say how long the current expansion will last, it’s important for investors to position for the full cycle and not just for downturns.

Markets performed well beyond the broad index level in 2024, with ten of the eleven S&P 500 sectors posting gains, while only the Materials sector saw a slight loss. Driven by artificial intelligence and technology stocks, sectors like Information Technology and Communication Services led the way, but others, including Consumer Discretionary, Financials, Utilities, Industrials, and Consumer Staples, also delivered strong double-digit returns. Notably, Financials outperformed mid-year, highlighting the importance of diversifying across sectors and asset classes to maintain a balanced portfolio.

Waiting for pullbacks can be counterproductive

With markets near all-time highs, it’s natural for investors to wonder if they should “wait for a pullback.” It is certainly true that markets never move up in a straight line, and there can be periods of volatility and short-term market declines.

The past doesn’t guarantee the future, and market history shows there are always concerns keeping investors cautious. In 2025, these might include Fed policy, high valuations, national debt, geopolitical tensions, or unexpected challenges.

The bottom line? 2024 is a reminder that staying invested in a well-constructed portfolio is the best way to achieve long-term financial goals. These lessons will apply equally well in 2025 regardless of the challenges the new year may bring.