The Nasdaq Composite Index rose by 30% in 2024, which is much higher than usual. This might make some investors worry that the market is too hot and will go down in 2025. But history shows this might not be the case.
Since 1972, the Nasdaq has gone up by 30% or more in 13 different years. In 11 of those 13 years, or 85% of the time, the index kept going up the next year. So history suggests the Nasdaq could keep rising in 2025.
Billionaire investors Warren Buffett and Bill Ackman could benefit from this trend. Buffett’s company Berkshire Hathaway has a big investment in Apple, while Ackman’s firm Pershing Square owns a lot of Alphabet stock. Both are big Nasdaq companies.
But should regular investors buy Apple and Alphabet just because Buffett and Ackman own them? Not necessarily. Even successful billionaires make mistakes sometimes.
For example, Ackman sold Netflix stock in 2022 before it tripled in value. And Buffett sold Snowflake shares earlier this year, which have done better than the market since then.
Historical patterns suggest Nasdaq rise
Blindly following what billionaires invest in doesn’t always work out. While history hints the Nasdaq might keep going up in 2025, the pattern has broken before and could again. A 30% gain in 2024 points to more gains next year, but big Nasdaq stocks like Apple and Alphabet could still go down.
Regular investors have more choices than billionaires, who often have to buy huge stakes in large companies. Smaller companies can still give good returns, even if they’re too small for billionaires to invest in. For instance, some investors like Driven Brands, which runs Take 5 car washes and oil change shops, because it has growth potential.
But it may be too small for a billionaire’s portfolio. Investors should look for these kinds of opportunities on their own, not just rely on ideas from famous portfolios. Berkshire Hathaway’s investment in Apple in 2016 has paid off well, but Apple may grow more slowly in the future based on current numbers.
Alphabet is still a leader in online search and YouTube streaming but also faces growth challenges. The lesson isn’t necessarily to buy Alphabet or Apple stock, but to realize that investment situations and the economy can change. Investors should make careful choices rather than just assuming it’s safe to copy well-known investors.
Looking at investments billionaires recommend can help, but it should be done carefully. Investing always involves risk, and understanding the details is important for any investor, rather than just relying on past gains or what others do. This helps create a balanced strategy that fits each person’s risk tolerance and understanding of the market.
