The Federal Reserve may slow down the pace of its rate-easing cycle in 2025. Main Street Research chief investment officer James Demmert tells Morning Brief hosts Seana Smith and Brad Smith this could cause a market (^DJI,^GSPC, ^IXIC) correction, which he says is an opportunity for investors to buy on the dip. “Investors should recognize that ‘25 is going to be really different than ‘24,” Demmert says, also noting that “this rally, which has been really dramatic since July, is starting to look a little bit vulnerable.” Investors need to “prepare themselves emotionally for, let’s say, a normal correction of 8% to 12% in markets. We really haven’t seen much of that,” the CIO continues. “You can also prepare your portfolio by maybe paring some of these giant gains that we’ve seen in the last couple of years.” The strategist adds that 2025’s “key point” for investors will be “realizing that the Fed really is already probably at the neutral rate [and] they’re probably not going to have to cut very much at all in 2025 because they kind of got the economy where they want it… The market [will] have a nice big correction [and] investors should buy that correction because we’re in [the early phases] a bull market.” Watch the video above to learn more about Demmert’s investment strategy heading into 2025.
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