Market analysts have issued a warning regarding the recent exuberant gains of the Nasdaq index, suggesting that its remarkable year-end rally may merely represent an advance on the anticipated profits for early 2025.

However, Steinberg contends that the Nasdaq's year-end surge has resulted in returns that merely prepay the expected earnings for early 2025.

Despite the elevated valuations of the U.S. stock market, with a considerable likelihood of recording returns exceeding 20% for two consecutive years, investor sentiment remains optimistic ahead of 2025.

Part of this optimism is based on potential “growth-promoting” policies that might be implemented during the second term of the government, such as additional corporate tax cuts, although these measures are not guaranteed. According to Steinberg, this could lead to a weakening of growth stocks in the first quarter.

At the same time, the market also faces numerous other potential pressure factors. For instance, the yields on the 10-year U.S. Treasury bonds remain at elevated levels, which diminishes the relative attractiveness of the stock market. As bond yields rise, some of the capital that would have typically flowed into the stock market diverts toward bonds, thus creating downward pressure on stock prices. Additionally, the concerns raised by the new year’s “bond vigilantes” regarding the increase in U.S. deficit spending could exert serious pressure on growth stocks.

The “bond vigilantes” are individuals or groups that attempt to influence government policy by selling bonds or merely threatening to do so. Their concerns stem from the increasing U.S. deficit spending, which could trigger inflation, rising interest rates, and other potential issues that could impact bond values and market stability. When they take action or issue warnings, the market often experiences volatility and panic, with growth stocks being particularly vulnerable due to their sensitivity to market conditions.

Lastly, Steinberg pointed out that with the progression of the “America First” agenda, a strengthening dollar may also affect the earnings of multinational corporations in the coming year. He advised investors to rebalance their overly stock-heavy portfolios to align more closely with a traditional 60/40 mix of stocks and bonds.

Steinberg concluded with a cautionary statement: “It’s time to manage greed.” This remark serves not only as a warning to investors but also as a reminder to maintain rationality and calm in the investment process. One should not be swayed by the short-lived fervor of the market, but rather fully recognize the presence of market risks and take appropriate measures for risk mitigation and management.