As we head into the new year the market is at all-time highs but starting to turn after a 2-year bull run. Treasuries are at significant lows and there are some large uncertainties coming in the US with the new presidency and policies, incl proposed spending cuts, deportations, and tariffs all of which reduces economic growth.
My positioning going into the new year is as follows.
I've recently closed out some holdings in QQQ and acquired positions in SEA due to the attractive returns of over 18% and ultra-low valuations. This also provides some additional diversification in the portfolio.
Stock Market Expectations for 2025
I'm expecting some turbulence in the coming year in equities as the economy responds to significant headwinds including high interest rates and high tariffs.
Longterm treasuries are at all-time lows not see consistently since 2010. So this is a nice place to hide from the impending storm on the horizon.
Warnings on the horizon
My expectations for the stock market 2025 is to be very choppy. In the last few weeks, the yield curve un-inverted, this is a major signal that the US economy may be very close to a recession.
Therefore, with handsome returns in treasuries I'm increasing the allocation to treasuries going into the new year.
What comes next?
Unemployment is the hallmark of every recession; this is the primary signal I'll be looking for over the coming months. If the employment continues to rise then this is a sure sign the economy is entering a recession, and wherever the economy goes the stock market follows.
If the unemployment rate continues to climb, I'll be scaling back QQQ rapidly and preparing for the next phase to take strategic positions as the market declines in preparation for an ultimate recovery.
Be wise and be bold I believe 2025 will be a year in the market when fortunes will be made or lost.
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