Q4 2024 Earnings: “Mixed Results Relative to Expectations”

Market Remains Bullish Despite Increasing Turbulence

One thing’s for certain: It’s noisy out there. I like FactSet’s view on earnings season right now:

While the percentage of S&P 500 companies reporting positive earnings surprises is above the 10-year average, the magnitude of earnings surprises is below the 10-year average.

Translation: We remain trending upwards; however, the margin of that trend is slimming.

It won’t come as a surprise to anyone that reads this site regularly, to hear me advocate for a measured and planned approach to thinking about your portfolio right now. Having our shopping list of items not in the Magnificent 7 will help investors not only taper off any future volatility, it will also help us establish early positions with companies I think have a lot of room to run.

Again, FactSet does a great job describing where I think we could find potential here:

Since December 31, positive revenue surprises reported by companies in the Financials, Consumer Discretionary, Health Care, and Energy sectors have been the largest contributors to the increase in the overall revenue growth rate for the index over this period.

Like many, I expect the Magnificent 7 to continue to perform well and create value for shareholders. However, I think the ride on these stocks will likely have only more “DeepSeek-like moments” going forward — this isn’t for every investor. Prudent stock-picking, buying into moments like last week’s pullback, and planning for more turbulence in 2025 are all strategies to consider, and ones that will help us stay above the noise in what will likely remain a noisy year.