Welcome to 2025!
We're already a month into the year if you can believe it. Hopefully your New Years resolutions are still intact. This time of year is inspiring as we have taken some time off during the holidays and were able to reflect on the year(s) past. After thoughtful consideration we set new goals for ourselves that encompass our health, finances, families, and careers.
Personal Reflections: As I look back on the prior year, I am immensely grateful for our clients and the magnificent growth that Sage experienced. Personally, I helped coach my youngest son, Asher's, basketball team, completed 2 'Spartan Races', read over a dozen new books and continued to deepen current client relationships while creating new ones. Looking forward, I am excited to continue to serve our clients at Sage Wealth Partners and bring new individuals and families into our practice.
Looking Ahead: Key Themes for 2025
Tax Policy Changes: The Tax Cuts and Jobs Act is set to expire at the end of this year. Starting January 1st, 2026, the tax code would revert to the pre-TCJA rates unless action is taken. Realistically, it is very likely that many if not all the provisions will be extended. These extensions would benefit most individuals and families through increased take-home pay and reduced taxes on retirement account distributions.
The AI Revolution: The announcement of Stargate, a $500 billion project between OpenAI, Oracle, and Softbank, signals a major push to modernize American infrastructure for AI innovation. This ambitious project includes construction of multiple large data centers across the US and new power plants to support AI models. The implications are far-reaching, potentially impacting every industry sector. Recent developments, such as DeepSeek's competitive AI model launch, demonstrate how quickly this space is evolving. Investors should prepare for market volatility as AI adoption creates both new opportunities and risks across market sectors.
Economic Factors: Tariffs on China, Canada, and Mexico could keep inflation "sticky" as companies pass along increased costs to consumers. However, these same tariffs might generate job and wage growth through increased domestic manufacturing over the long term. This economic shift could slow the pace of interest rate cuts, keeping borrowing costs elevated compared to pre-Covid levels. The outcome largely depends on the final tariff structure and how companies and countries respond to these changes.
Looking Forward: All in all, the market has performed very strongly in back-to-back years, with over 20% returns for the S&P 500 in 2023 and 2024. While three consecutive years of such performance would be unusual, it's not impossible. At Sage we're prepared and we're with you all the way.