With 2025 right around the corner, investors reassess their portfolio strategy. Hennion & Walsh chief investment officer Kevin Mahn joins Seana Smith and Brad Smith on Morning Brief to share his outlook.

"There's likely to be a Santa Claus rally ahead, as I believe that the final four weeks of December are going to provide the cherry on top of the 2024 investing sundae," Mahn says.

The strategist says, "Beyond that, although I believe there are growth opportunities ahead in 2025, I think those growth opportunities will be more muted than what we saw in 2024 and 2023, so investors will need to be more selective." He notes, "It's not going to be like the last two years when you could just throw a dart and anything in the S&P 500 was going higher led by the ["Magnificent] Seven."

Mahn adds, "Consider all the record closes that have taken place this year, the lack of downside volatility, and, of course, those excessive valuations that are even in that large-cap growth technology space. I'm not saying to abandon that space, but perhaps look beyond the Mag Seven to some of those other 493 names that are still trading at attractive valuations and are likely to benefit from some other tailwinds that I see in the markets moving forward."

The strategist highlights sectors like banking, aerospace and defense sector. He adds that regional banks and biotech stocks are poised to benefit from increased merger and acquisition (M&A) activity and underlines potential gains from long-term artificial intelligence (AI) plays.

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This post was written by Naomi Buchanan.