In a monumental year for markets, Morgan Stanley looks back at some of 2024’s most compelling stories.
As 2024 winds down, it’s time to reflect on some of the most important developments of 2024, and how they laid the groundwork for what’s to come in 2025. In this roundup, Morgan Stanley experts revisit their insights from earlier in the year and consider why investors found them illuminating, while noting what investors should have on their radar in the year ahead.
What the Trump Victory Means for Markets
“Few topics generated as much interest in 2024 as the U.S. elections. While factors related to the business cycle often matter more to markets than political outcomes, we knew how important it was to provide our clients with timely insight about how post-election policy shifts – around taxes, trade and regulation, for example – might affect the economic landscape and their investment portfolios. We’ll be watching closely as the new administration takes office and begins working to implement its agenda in 2025.”
–Monica Guerra, Head of U.S. Policy, Morgan Stanley Wealth Management
2024 M&A Outlook: Ready for a Rebound
“While mergers and acquisitions increased in 2024 after a trough in 2023, a robust rebound did not materialize, after private-equity firms delayed selling assets and a challenging regulatory environment hindered megadeals priced over $40 billion. Dormant areas of the M&A market are now more poised for growth than ever, as a new U.S. presidential administration could usher in relaxed antitrust and merger guidelines, and financial sponsors may consider finally selling assets and returning money to investors from funds nearing the end of their terms to raise new funds.”
–Tom Miles, Head of Americas M&A at Morgan Stanley
Why Mega-Cap Tech Stocks’ Dominance is a Risk
“Risks stemming from the disproportionate influence of the ‘Magnificent 7’ stocks on major U.S. equity indices was a critical, but often overlooked, issue in 2024. These richly valued mega-cap names made indices historically top heavy, and we felt it was vital to alert clients about the implications if one or more experienced a big drawdown. While some of the market’s concentration around the Mag 7 eased toward the end of 2024, it remains a risk that investors should watch heading into 2025, particularly as these stocks may see earnings growth decelerate.”
–Lisa Shalett, Chief Investment Officer, Morgan Stanley Wealth Management
Global Outlook: What’s Ahead for Markets in 2025?
“This last year was interesting because we saw modest earnings growth, in the U.S. in particular, relative to stocks’ performance. The gains were mostly from expansion of the price-to-earnings multiple, and that's probably not going to repeat in the year to come. The challenge is that growth continues to be below trend in many parts of the world, and high-quality assets are expensive everywhere — it's not just the U.S. So, you get what you pay for. The S&P is extremely expensive, but that's because the return on equity is higher, and growth is higher.”
–Mike Wilson, CIO and Chief U.S. Equity Strategist
What Could Keep India’s Bull Market Going?
“India, already on track to be one of the world’s most relevant growth stories over the next decade, may be on the longest bull run in the history of its stock market. Underpinned by strong macro stability through the government’s focus on inflation targeting and fiscal consolidation as well as the economy’s declining oil dependence, we expect India to be among the best performing emerging markets in 2025. Earnings growth may rise 18% to 20% a year through 2030, driven by factors including private spending growth, rising social equity and a surge of capital into equities as the roughly $10 trillion in household wealth accumulated through the past decade starts to show up in the economy.”
–Ridham Desai, Morgan Stanley’s Chief Equity Strategist for India
Financially Smart Ways to Use RMDs
“Every retiree who plans to use their savings to fund expenses thinks about the best way to withdraw those funds from retirement accounts, especially when RMDs kick in. The key is balancing their desire for a good standard of living with the need to make sure their savings will last. Tax efficiency is a core part of that planning. I anticipate people’s interest in tax-efficient ways to manage their retirement income will continue to be top of mind in 2025 as lawmakers consider changes to the U.S. tax code.”
–Dan Hunt, Senior Investment Strategist, Morgan Stanley Wealth Management
Ready to Perform: 2024 Bond Market Outlook
“Our core thesis essentially remains intact despite the market volatility seen earlier in the quarter: We expect U.S. economic exceptionalism to continue, with stable growth compared to other developed markets. Given the strong economic backdrop we see, coupled with less restrictive monetary policy and attractive yields/valuations in select sectors, diversified and flexible fixed-income strategies offer a potentially compelling opportunity for investors looking to move out of cash or riskier parts of their portfolios.”
–Vishal Khanduja, CFA, Head of Broad Markets Fixed Income Team at Morgan Stanley Investment Management
Understanding Private Credit
“Amidst a shifting U.S. interest-rate environment in 2024 and rapidly expanding private credit landscape, asset allocators paid increasing attention to the asset class. Next year, it will be noteworthy to monitor which sub-sectors of private credit gain traction with investors. Will direct lending continue to scale up, or will an unanticipated economic slowdown result in a broader opportunity set? These are the themes worth watching in 2025.”
–Ashwin Krishnan, Co-Head of North America Private Credit at Morgan Stanley Investment Management
State of the Workplace 2024 Financial Benefits Study
“Since we first fielded this study in 2021, a clear constant has been the theme that financial benefits are a strategic priority. Amid ongoing economic uncertainty, workers are still under financial stress and are looking to their employers for financial guidance. As employers and employees continue to navigate evolving needs, benefits plan sponsors and providers must work smart, harnessing emerging technology and developing bespoke solutions to meet the moment.”
–Scott Whatley, Head of Morgan Stanley at Work
Understanding and Investing in Private Equity Secondaries
“General partner (GP)-led private equity secondaries (also known as continuation funds or vehicles) have had another record year in 2024. However, what truly made 2024 remarkable is the quality of the assets that came to market. GPs have gravitated to continuation vehicles because this exit route allows them to maintain control of their best assets while providing their LPs with the liquidity option.”
–Nash Waterman, Portfolio Manager and Head of Private Markets Secondaries at Morgan Stanley Investment Management
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