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A person walks past the New York Stock Exchange at Wall Street in New York on Feb. 3, 2025.<\/p>\n
Angela Weiss | AFP | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n
A \u201ctorrid two-year stretch\u201d prompted the S&P 500 to gain around 70%<\/a>, but that momentum is stalling, Morgan Stanley Wealth Management said in its investment strategy research this week.<\/p>\n Consequently, the days of the \u201cset-it-and-forget-it\u201d approach, where individual investors reaped large gains just by parking their stocks in an S&P 500 index fund<\/a> buoyed by the Magnificent Seven, may be over.<\/p>\n \u201cThe \u2018set it, forget it\u2019 is done,\u201d said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management. \u201cWe can\u2019t set it and forget it because there\u2019s new considerations every morning when you walk in the door.\u201d<\/p>\n The investment environment is shifting to a new period that Morgan Stanley is calling \u201cThe Great Normalization,\u201d where rates and valuations may normalize, equities may be driven by earnings growth, and there may be less index concentration.<\/p>\n More from Personal Finance:<\/strong> The announcement that China-based company DeepSeek has built a powerful new artificial intelligence model may undermine U.S.-only dominance in the space, Morgan Stanley notes in its latest investment research.<\/p>\n Moreover, the Federal Reserve has also recently made it clear that they are going to be patient<\/a> and are in \u201cno hurry to cut rates any further,\u201d Shalett said.<\/p>\n Despite a 30-day pause on tariffs for both Canada and Mexico, no one can predict what may happen when that time is up, she said \u2014 and how the market may react<\/a>.<\/p>\n \u201cWhen you have rising uncertainty, you need to price in risk,\u201d Shalett said.<\/p>\n<\/div>\n It\u2019s now important for investors to be diversified and pay attention to the idea that risk premiums are going up, Shalett said.<\/p>\n \u201cThey should demand higher returns for the risk that they\u2019re taking,\u201d Shalett said.<\/p>\n Investors may look for value by seeking cheaper stocks where expectations aren\u2019t already priced in, she said. In a more idiosyncratic market, some investment strategies like commodities or hedge funds may perform better, she said.<\/p>\n Tariff announcements sent markets falling early Monday, though news of a 30-day pause with Mexico prompted a rebound that same day.<\/p>\n<\/div>\n Though just a blip, the event was a wake-up call for individual investors, financial advisors said<\/a>. As new developments with tariffs and other initiatives may prompt market volatility, now is the time for investors to do a gut check to make sure they\u2019re comfortable with their amount of equity exposure, advisors say.<\/p>\n Within those equity investments, it\u2019s also important to revisit how they\u2019re invested.<\/p>\n \u201cPeople should always diversify their investments,\u201d said Ivory Johnson, a certified financial planner and founder of Delancey Wealth Management. \u201cNow you see that more.\u201d<\/p>\n
How tariffs may impact U.S. consumers<\/a>
The Fed holds rates steady. What that means for you<\/a>
IRS announces the start of the 2025 tax season<\/a><\/p>\nTime to \u2018demand higher returns\u2019 for risk<\/h2>\n