Back in December of 2024, I ran a survey which was completed by 276 finance professionals. It asked them 10 questions on what would happen in markets in 2025.

Let’s see how they got on:

Question 1 – What will be the % total return of the S&P 500 in 2025?

Prediction: 6.5% (mean)

Outcome: 17.9%

The 21 participants that predicted a loss of 10% or greater for the US market must have been feeling pretty good in April, but by the close of the year the US market had recovered to produce a total return just short of 18%. Of the 268 responses, only 8% predicted performance of 18% or more.

The average return expectation was for a 6.5% total return from US equities in 2025. While this seems a reasonable number such ‘normal’ performance is quite rare in any given calendar year – equity returns are high because they are very lumpy!  

Question 2 – Will the Russell 2000 outperform the S&P 500 in 2025?

Prediction: Yes (60%)

Outcome: No

The respondents were moderately optimistic about a recovery in the fortunes of smaller US companies, perhaps through a combination of depressed (relative) valuations and the initial hopes for the economic impact of Trump’s second term. As it turned out, the performance of small caps in the US was decent in absolute terms, but they still trailed the mega caps by c.6%. Maybe 2026 will be the year.

Question 3 – Which equity market will produce the highest total return in 2025 (USD terms)?

Prediction: US equities (39%) 

Outcome: Chinese equities (20% of respondents)

There was a strong expectation for a continuation of US equity exceptionalism in 2025, which turned out to be entirely wrong. While near 40% of participants backed the US to be the leading market in 2025, its returns trailed all other options except for India. This was a win for the contrarians, as the much-maligned Chinese market came top of the pile – making 20% of the respondents right.  

Question 4: What is the probability of the US economy entering a recession in 2025?

Prediction: 25% chance of a recession (mean)

Outcome: No recession.

Without the ability to observe parallel universes it is quite difficult to judge the quality of responses here. All that can be said is that most participants were generally sanguine about the prospects for a US recession in 2025 and the outcomes were consistent with this. It was looking a little dicey in April and May, however, with prediction markets pricing in a 60% chance in 2025.

Oh, and the 23 forecasts of a 0 or 100% recession probability were wrong from the start.  

Question 5: Will Nvidia outperform the S&P 500 in 2025?

Prediction: No (62%)

Outcome: Yes. Nvidia returned 39%, against 18% for the S&P 500.

Much like the small-cap view, participants were expecting a broadening out of US equity markets in 2025. It seemed reasonable to believe a company of that size, trading on that valuation with that stratospheric performance history couldn’t outperform for another year, but markets have a history of being wholly unreasonable.

Question 6: What will be the GBPUSD spot exchange rate at the close of 2025?

Prediction: 1.26 (mean)

Outcome: 1.34

Although on average there was an expectation for a slightly stronger sterling / weaker dollar across 2025, the most common prediction was for sterling weakness (1.20). This probably reflects lukewarm sentiment for the UK and (thus far) unfounded optimism about Trump’s impact on the dollar. Only 16% of respondents went for a rate of 1.34 or above.

Here is a resolution for 2026 and for every year for all investors – I will not make currency forecasts.  

  
Question 7: What will the USD price of Bitcoin be at the close of 2025?

Prediction: $108,353 (mean), $95,000 (median)

Outcome: $87,647

Participants were a little too optimistic about the fortunes of this ‘belief asset’ in 2025, however, the forecasts did range from $1m to 0 so it was a little noisy. It is hard to say whether any given prediction is either serious or a joke given the nature of the asset.

Question 8: Will the S&P 500 suffer a peak to trough decline of more than 20% in 2025?

Prediction: No (60%)

Outcome: No (just)

Although US equity returns were strong across 2025, there is also a Wikipedia page for the ‘2025 Stock Market Crash’, which although seeming a little dramatic is a reminder of the negativity that surrounded ‘Liberation Day’ and the policy chaos that surrounded it. If we classify a bear market as a 20% decline, the S&P 500 just missed out in 2025 falling 18.9% between 19 February and 8 April.

Question 9: What will be the annual rate of US inflation (CPI) in 2025?

Prediction: 2.9%

Outcome: 2.7% (November print)

This is a tricky one for a couple of reasons: 1) We don’t yet have the December figure, 2) There was much scepticism from economists about the November print because of the impact of the US Government shutdown. It is probably fair to say that the average inflation expectation for 2025 was in the right ballpark.

Question 10: What will the US Ten Year Treasury yield be at the close of 2025?

Prediction: 4.20% (mean)

Outcome: 4.17%

Who said that forecasting bond yields was difficult? The crowd was wise on this topic with the average prediction being pretty much bang on the yield of ten-year Treasuries at the close of 2025. The dispersion of responses to this question was, however, wide. 20% of participants forecast the yield finishing the year above 5% and another 20% below 3.5%. Lots of wrongs can make a right.

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Making good predictions about financial market performance over short periods such as one year is incredibly difficult. In essence, we are trying to forecast how other market participants will react to events that we know will happen but don’t know the outcome and events that we don’t know will happen and (by definition) can’t know the outcome. We also need to work out how these events or developments might interact with each other. It would be hard to design a more complex prediction problem. *

(There is a reason why annual investment outlooks don’t spend much time reviewing what they said a year ago.)

Given this it is somewhat baffling that the entire asset management industry can sometimes feel like a giant forecasting game – one where people are constantly making predictions while being incurably afflicted with amnesia about the quality and content of their previous judgments. I was totally wrong last time, but you have to listen to me this time around.

The good news is that for most investors this is all irrelevant noise. Our long-term investment fortunes will not be defined by our ability to foresee what will happen in markets over the next quarter or year. They may, however, be defined by our ability to accept this and act accordingly.

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* It is not even about getting a single prediction right, you have to do it again and again.

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My first book has been published. The Intelligent Fund Investor explores the beliefs and behaviours that lead investors astray, and shows how we can make better decisions. You can get a copy here (UK) or here (US).

All opinions are my own, not that of my employer or anybody else. I am often wrong, and my future self will disagree with my present self at some point. Not investment advice.