It’s the end of the year. An important period for your money. With two major events: the race to reduce taxes (what?! You don’t have a retirement savings plan yet?!). And the race to publish economic and financial forecasts for the year 2025. Each financial institution, large or small, publishes its macroeconomic forecasts. And his investment advice for next year.
A celebration for me because I love immersing myself in reading these thick (virtually…) and detailed reports. The most fun exercise consists of reading the forecasts from the previous year only to realize that they all, or almost all, turn out to be completely wrong. Forecast reports are a bit like polls. They make mistakes all the time but we can’t live without them and we follow them very carefully.
Investment: over the last forty years, investing in stocks has yielded more returns than in real estate
This is not a criticism, because the art of forecasting is becoming more and more difficult. How could anyone have imagined that American stock indices would show an increase of almost 30% after an already exceptional year 2023? How can we anticipate a rise in the German stock market of more than 20% when it is trumpeted everywhere that Germany is in recession and that it has lost the industrial war? Could we predict that the CAC would significantly underperform the vast majority of stock indices due to a completely unexpected dissolution? Without mentioning French interest rates which are falling despite the political crisis and the absence of a budget… In short, the exercise is not simple. But what strikes me, year after year, is the extent to which these predictions are presented as near certainties.
Yes, the United States has everything to succeed, but on the stock market, economic performance does not always make shareholders happy in the short term.
For 2025, ask for the program. It is the same in almost all the major international houses worthy of the name: the United States will again explode the counters and crush the rest of the world, Europe should be “underweighted” (translate: to be avoided) and France no longer even appears on the radars of Anglo-Saxon establishments. On rates, there is also almost unanimity: accelerated decline in Europe, and reflation therefore maintaining high rates in the United States.
As for China, no one dares to take risks anymore: it will bounce back… one day. As for emerging countries, to paraphrase General de Gaulle, these are investments for the future… and will remain so. And I of course forgot the bitcoin which will be worth 1 million dollars, at least…
The French continue to dip into their current accounts… to save
My first reaction when I see this magnificent choir singing in unison is distrust. Yes, the United States has everything to succeed, but on the stock market, economic performance does not always make shareholders happy in the short term. Yes, Europe is in crisis, but it has levers for rebound. Yes, China is in crisis, but it still has a massive reservoir of consumers and industries. I almost want to take the opposite view of all these predictions. Either way, we will all be right or wrong one day…
