Ken Fishers Surprise Forest for the stock market in 2025

On January 28, 2025By Littum

Last month, during the thick of the holidays, I found myself in a rare, but not completely unprecedented situation: I wasn’t sure which way to focus on the stock market in the coming year.

In my December -column, I told you that there were three possible 2025 results -all of them seemingly likely and to an annoying degree. I also told you I would return to you as I could conclude, which is actually the most likely.

Well, I’m back – and with an answer that has surprised me in more ways than one.

Remember the three possible results I had outlined: a minor decline, a small single -digit positive year or another great year as 2023’s and 2024’s winnings. I also said that the latter was the least expected and would shock most people because three great years in a row are legendary rare.

Now I dare say – stag to the legendary rare. That’s because I think what is probably a stock market gain of 15% to 25% – maybe a little bigger.

However, there is also a great VRI here that came even less expected to me – and which is therefore perhaps even more universally shocking. The twist is that European shares must lead, calm but strong, as my forecast above is for the MSCI World Index. S&P 500 must disappear Europe.

What has changed since the end of the year? As I said back then, I would continue to research signs of mood that would swing direction and that the swing would soon happen.

I also told you that American investors were optimistic while foreign were pessimistic. It turns out that overseas pessimism is extreme – much more depressed in general than Americans are optimistic. Therefore, even a moderate year for foreign GDP, especially European, would lead to tremendously positive surprise to them. They are just more sensitive right now.

Decades ago, behavioral men provided American investors hate loss more than they love comparable size gains – approx. 2 ½ times as much. My former research partner Meir Statman and I then implemented the same method showing that the UK and German investors are even more creepy about losses, of factors of 4 to 1 and 6 to 1 respectively.

Europeans are just more risk -averse than Americans. I have long known that. Apparently few remember it.

Now I have discovered how much more it is right now than usual, as absolute Trump terror overwhelms Europeans – hugely more than measurable in December. It’s shocking, almost beyond words. Since the US election, they have become extraordinarily pessimistic. It is as if they were MSNBC commentators, only without occasional smiles and jokes.

And then European shares are too depressed and also, but less, most non-American markets. So most, but of course not everyone, quietly beats the S&P 500 year to date. Britain, Germany and Israel have actually hit new heights all the time in 2025.

Coupled to what is associated with the composition of US versus foreign equities should value meter, which means statistically cheaper on earnings and other measures than more expensive growth stocks, surpass growth stocks for the first sustained time this year.

But why do I say it is “inherent”? In industrial sectors, America and growth stocks are intertwined. When weighting market hood, almost all growth storage is American. Technical and communication services are a total of over 40% of the S&P 500, almost none of Europe.

Therefore, when growth stocks like the magnificent 7 delay the market, as shown in Nasdaq, which is limping the S&P 500, even when both rising, the value must lead. Europe too! But this is more than just sectors. So is the mood of the country.

Do you doubt me? Ok but it happens right in front of your eyes. Grab your iPhone. Use its normal Apple News Stock Market app to look up the S&P 500, NASDAQ Composite and MSCI Europe. There it is. Europe is leading.

And if you look at specific European countries, you will see it widely spread except Denmark (which is mostly Novo Nordisk weakness). Said otherwise, Europe is leading S&P 500 leading Nasdaq.

While I’m on it, I add that I expect new markets to disappear as they mostly fall across categories, I expect to hang as utilities and fight for raw materials.