Market Regime: This was not it!
On Jan 14th (2025) I wrote the following:
2025: not a high beta year
The more I look at the market, the more I think it is a good year to be hedged in general in 2025 or at least be out of higher beta names.
“The more I look at the market, the more I think it is a good year to be hedged in general in 2025 or at least be out of higher beta names.
The high beta trade is long in the tooth, so I advised all (investor) friends to get rid of highly speculative names (that includes crypto, especially outside of bitcoin). I could be early, but those friends are sitting on super high profits now, so most of them raised cash 25-30%.”
Again, in general, I am very careful in 2025, high cash levels, lower beta, low volatility and Buffett style quality is my best guess for the time being.
And…
Gun to my head, this was not it (e.g. not (!!!) —> testing the local lows and then up to the sky).
Yes, we will have snapback rallies (looking for one in April), but all in all I expect a bad year with more drawdowns to come.
Reasons:
—> Liquidity Cycle —> the fed did not get the memo at all + tons of refinancing in the tube and liquidity is not matching that refinancing need! I see no FED put right now, they will be forced by the market, but we have a long way to go until they must react. Reference Crossborder Capital (watch their videos on YouTube).
—> Politics —> let’s just say, with the current US Administration the stock market (right now!) is not the highest priority. They knew they could not prop the market much higher (all the money was already spent ;-)), so a nice DD now and then a big rally the last 2.5 (or so) years of the 4-year election cycle just in time for the next election (all fine by me, just observing).
—> Not a big fan of valuations as a timing indicator, but the Mag7 (that they have a name is very telling in itself!) are simply very expensive + liquidity gets tight + we are under 200 Day MAs on major indices. So, we have the fire to ignite a reset here.
By the way, I stand by my #SecularBullMarketUSA thesis (after a nice DD!).
Huge Secular Bull Market: What most macro models get wrong! #SecularBullmarketUSA
Let us start with the most important factor (if other factors are in play, later!): Demographics:
Best Markets follow a big DDs, so I am embracing it and get ready for the big pitch…
Best Regards
Andreas