The Agent of Chaos Returns
Why I maintain a positive bias for 2025 and beyond
It’s been a while since I posted here
Recap: since my previous post in late November we had:
Major indexes such as SPY 0.00%↑ QQQ 0.00%↑ hit all-time highs before retracing
TSLA 0.00%↑ hitting new all-time high just below $500 before retracing
HIMS 0.00%↑ hit a new all-time high this morning just shy of $40
Bitcoin making new all-time highs above $100,000 before retracing
The public portfolio and my ROTH account have both made similar peaks
At the start of the new year I made a post of a number of picks for 2025. You can see them [HERE]
One of the best things when looking at charts on longer time frames (weekly/monthly chart) is that trends are very easy to spot because they fit in year(s) worth of price action data. The first thing I did was to look at major indexes such as SPY 0.00%↑ and QQQ 0.00%↑ and how price behaved in the past - especially in early 2020 just before & during the onset of the coronavirus.
The Fed then injected massive amounts of liquidity in the market leading to not only a full recovery in two months but a bull-run that lasted until 2022 when the Fed reversed to quantitative tightening bringing about a bear market. It wasn’t until 2023 that the market began to reverse back to an uptrend with periods of consolidation along the way.
As I jumped head first into the world of trading I’ve come across a number of axioms. Statements like “everyone is a genius in a bull market” - virtually any position will be a winner during market expansions in a similar way that a rising tide raises all boats. Another is “the trend is your friend” - align your positions with the long-term movement and you’ll do fine.
So let’s get the basics right. Macro trends stay in an upward trajectory when the following conditions are met:
1) Liquidity / money supply
2) Security & stability (peace that fosters commerce & stable prices)
3) Growth (in GDP, productivity, revenue, profitability, innovation, etc.)
Whether you love or hate Trump, the new administration brings a number of changes. Media outlets have focused on concerns regarding tariffs which has reintroduced short term volatility but these are political levers pulled by the administration to achieve various goals.
The most relevant political goals for the administration that align with investment to me are
brokering peace on the global stage including in Ukraine/Russia & the middle east critical for international trade, & stable prices / supply chains
record investment for the US that reached above a trillion (yes with a T) that Trump brokered which will naturally introduce stronger employment with high wages
addressing the deficit / public debt which the administration seems very intent on examining and eliminating waste at meaningful levels
lower energy prices
Global stability, strong employment, higher wages, lower inflation are everything the Fed needs to lower interest rates fostering further investment & economic growth. This will also naturally resolve the declining birth rate and home affordability issue that is brewing. The US is realistically the only market that offers meaningful risk/reward on the global stage right now in 2025 (with the exception of perhaps Argentina & India) especially as the next revolution of our lifetime will be in AI which the US currently leads.
This isn’t to say that there are no risks. For 2025, US stocks are at high valuations, there are lasting effects of coronavirus shutdowns (higher commodity prices, heightened inflation, high interest rates exacerbating housing affordability, public debt/deficit, etc.). At the time of this post there is significant concern with regard to tariffs. These are also not unique to America - they are shared among all major economies with most faring significantly worse be it stagnant or negative growth, higher inflation, default risk, etc. China has also recently released DeepSeek, a LLM touting superior efficiency at significantly lower cost.
It’s important to keep in mind that the market isn’t static and constantly changing. Maybe we have another unforeseen black swan event that sets us back and all of this is completely meaningless. But if you ask me, things are on an upward trajectory and it is accelerating.