In 2023 and 2024 the S&P 500 registered back-to-back +20% years for the first time in more than two and a half decades.
Given that we’re students of the market and not fortune tellers, we have no predictions for 2025, but most investors are probably not expecting a +20% three-peat this year.
That said, it’s useful to go into a new year with something of a plan of attack.
I sort of liken the start of the year to the start of a football game—most teams start the first quarter with a well-thought-out game plan, but within a few drives, the script often goes out the window, with coaches and players scrambling to do whatever they can to win.
It’s not dissimilar when investing, as most people start out with a handful of goals and targets for the year … but within a few weeks, most of those are forgotten as we adjust to what the market throws at us.
And with as sloppy as 2025 has started, especially coming on the heels of the post-election rally, odds are, a lot of scripts have already been cast aside.
So, instead of just hoping for a repeat of 2023/2024, I thought it would be worthwhile to distill my experience into some lessons to live by this year.
5 Investing Lessons to Live By in 2025
- Forget about Last Year: In 2024, I was a hero, up 58% in my Cabot Growth Investor advisory’s Model Portfolio. As you may have gathered based on the bull market, 2023 was another good year.But in 2022, I was heavily in cash, helping subscribers avoid much of the bear market, and in 2021, I was a dud, up just single digits as growth stocks lagged and (frankly) I made some snafus.But whether you were a hero or a zero last year, that was last year—put it on your long-term track record, sure, but don’t rest on your laurels (if you did great) or sulk (if you did poorly). Flip the page.
- Win Big, Lose Small: This is something even the best investors lose sight of—no matter what you’re playing with (growth stocks, value stocks, options, whatever), winning big and losing small is going to be the core reason you make money.Honestly, I’m always surprised at how many frustrating trades, round trips and earnings duds come around … and yet, at year’s end, you still made money, often big money. Long story short, remember to cut your losses but aim big (or at least bigger) with your winners.
- Choose the Best, Leave the Rest: Sometimes, the market environment is such that you can throw a dart and make money; we all love those times. But this … isn’t one of those times.You don’t have to invest in blue chips, of course, but it’s almost always best to avoid the junk pile—for growth stocks, stick with those that have great stories, numbers and (at least resilient) charts, and let others toy with the speculative stuff that often tempts but usually disappoints. (A side benefit of this is you’ll have more conviction in the stuff you own, which will allow you to hold on through normal, tedious shakeouts—which in turn will allow you to develop bigger winners.)
- Follow a Plan: There is no perfect plan, just like there is no perfect investing system. But you’ll come out better if you have some roadmap that guides you rather than just going with your emotion.Obviously, if the evidence really changes (huge crack of support, trend change in the market, etc.), you should change as well—but for the most part, it’ll be best to let things develop.
- Stay Optimistic: I’ve been at Cabot now for a quarter century, and of course, invested some before that, and during that time I’ve seen two of the biggest bear markets ever, a terrorist attack on our country, various wars and skirmishes, a housing/financial meltdown, rising interest rates, huge natural disasters, presidential impeachments, an oil crash, a trade war with the second biggest economy in the world, massive fiscal deficits and a pandemic.Through it all, our standard of living has (generally) gone up and the market has presented some great opportunities—especially in firms offering new, cutting-edge technologies and products. There are down times, but let there be no doubt that there will be great opportunities ahead. So be sure to keep your eyes open for them, and apply these growth investing strategies when managing your portfolio.
As for the current market, overall, we remain encouraged by the market’s resilience in the face of bad headline news and uncertainties, with inflation coming in hotter than expected and threats of reciprocal tariffs providing the latest tests—but, so far, the buyers have supported the major indexes and key leaders, with many testing new high ground.
That said, when you look at the collection of evidence, it remains mixed: The major indexes (Cabot Tides) are still rangebound during the past couple of months, our Aggression Index is toying with intermediate-term support, the Two-Second Indicator is looking iffy as new lows have expanded in recent days and the number of new highs remains muted.
Again, the above factors aren’t bearish, but they do reflect the hit-and-miss nature of the market right now, with a few names looking great, many doing OK and a lot getting tossed around by the daily headlines.
All in all, then, we’re still in favor of picking your spots and going slow, just keep those lessons in mind.
