What are some of your predictions for 2025 that are driving your investment strategy? This should be a laugh for us to read on the 31st.
1. US Market Correction - there will be a market correction that will peak sometime in Spring 2025 driven by:
- Potential for interest rate hikes.
- Instability in US tariff policy.
- Overvaluation and overconcentration of the US market with a few select companies now dominating the S&P 500 that will be impacted by trade wars in a way we've not seen before, particularly as China and the EU have had years to prepare.
2. Shallow but prolonged global recession in fiscal years 25/26 and 26/27 driven by:
- Governments worldwide cutting budgets to address fiscal deficits and attempts to balance budgets.
- Political uncertainty in dealing with the burden of large national debts and associated bond market issues, particularly around France.
3. Ukraine Ceasefire sometime in spring 2025 that ends with:
- European troops stationed in Kyiv and Lviv.
- Russia facing economic collapse and internal instability as a consequence of the prolonged conflict and economic mismanagement but this will significantly ramp up pressure in the coming years given the attitudes of Russia's younger generation and the shock of the overall collapse takes root.
- The above will collectively push up European defence spending even higher to a level that will be sustained long-term and lead to tough choices at home.
4. Middle East Stabilisation will occur with a return to the Abraham Accord and with Israel in a much more secure position but there will be one event come summer:
- Israel will launch significant strikes on Iranian nuclear facilities which will set back Iran's nuclear program but not eliminate it. This will cause a spike in oil prices in the summer.
5. Canada will have a new government in October (that's an easy bet) and will focus on:
- Curbing wasteful spending.
- Reforming areas of systemic concern, such as procurement.
- Maintaining and strengthening the US trade relationship.
- Canadian equities will benefit from rising oil prices in the summer and a new government bounce.
6. An iron ore and coal price collapse will trigger a challenge for Australia, not insurmountable but I predict they will steadily have to become a normal developed economy where the sun isn't always shining:
- China has developed a new steel making process that allows it to access it's own lower-quality domestic mines and we've already seen Brazil and the Middle East pushing down the price of iron on international markets.
- The recession in Chinese property will suppress global demand for steel that likely will never recover.
- Australia's cheap and dirty coal is also on notice, Eurasia is now plastered with cheap solar panels from China's overcapacity.
7. Germany and Scandinavia will rebound in 2025
- After years of pessimism on the German economy I reckon we have hit the bottom and things will rapidly change following the upcoming federal elections that will see the CDU leading government. I don't see any change of position on Ukraine and a recalibration of the German economy will begin to solidify.
- Scandinavia will remain a safe-haven that people are starting to see has been undervalued, particularly in Sweden's innovation output and it's role in supplying advanced and precision steel for Europe. One thing I think everyone will look to see come online are efforts on green steelmaking.
So overall I think you can guess my portfolio's position - defensive and internationally diversified, weapons manufacturers and a move from Australia to Canadian holdings around the new tax year.
>1. US Market Correction - there will be a market correction that will peak sometime in Spring 2025
My one caveat would be that you hear everybody talking about this right now. Which means there are still a significant number of bearish investors. But markets usually top out when the bears capitulate, just as bear markets end when the bulls capitulate.
Which, in this case, could mean that the correction won't come, at least not in that timeframe.
That isn't to say that markets aren't flashing warning signs. But just like a game of jenga, you can't always predict which exact one of the pieces you keep pulling out from the bottom of the jenga tower will make it collapse.
How come it's always such a sharp drop from the peak of the up to the sudden start of down? Or is that just how the graph works? I would have expected it's arc up then gradually wind down, not peak then start going the other way immediately.
>>10016 It's how the graph works, but when there's a market fall it tends to be quite sharp because of a) people panicking and b) uncertainty.
Everyone knows you're meant to "buy low and sell high" but many people do the opposite of this. They only like to invest when markets have been rising for a while and doing well because this makes them optimistic. They'll then sell out when markets fall because they no longer feel confident with investing.
- The Russia situation will drag on without resolution.
- US will correct a bit but remain overvalued.
- Stock markets elsewhere will get a boost from AI efficiencies.
- Unemployment and social unrest will increase as a result.
- Another US oligarch representative will be assassinated.
- Trump or Musk will be assassinated.
- The Middle East will remain volatile. The new Syrian government will turn out to be just as bad as Assad.
- Dynamic pricing tariffs will become the norm for electricity in the UK.
- The king will die of cancer.
- The UK will introduce ID cards and a surveillance based road pricing system.
- Bitcoin will crash by 90%.
>>10018 >Stock markets elsewhere will get a boost from AI efficiencies.
This relates to something I'm gambling on predicting too, the valuation difference between the S&P500 and rest of world is now too great. I'm not saying the S&P is about to lose its status but we're due a reality check on the price between a handful of tech companies and the rest of the US and global economy. That and people realising that:
1. Quantum computing won't be as dramatic an industry as LLMs despite recent hype. Different tool that requires specialist hardware.
2. Chip generations have largely bottomed out with development now flowing towards efficiency and general ecosystem development while most applications don't actually need the hardware now arriving to the marketplace.
3. Middle states are now working on national AI models, being spearheaded by the French to create models that conform to French language and culture because of course they would do that.
It would be nice if we collectively stopped fucking about and actually developed applications that improve productivity but I won't hold my breath. Not with Microsoft and Microsoft affiliated labs running the show.
>Bitcoin will crash by 90%
Wishful thinking on that. I reckon we're heading to a world of bitcoin reserves where little is actually trading on it but states and major banks will use proxies for deals.
>How come it's always such a sharp drop from the peak of the up to the sudden start of down?
As is often the case in life, you can scare off investors much quicker than you can regain their trust and lure them back in to drive up stock prices again.
When a stock or the entire market goes down, often you suddenly have a mass panic of everybody just wanting to get out of the way. Which is where you see the sharp drops that markets and stocks are now and then notorious for. At the bottom, things usually move more gradually, because investors need time to start believing that the coast is clear and they can get back in.
It's often said that stocks (or markets) climb up the stairs and then jump out the window. For those reasons.
I can't see the hole in his argument here. It's not that we'll go bankrupt but expect us to roll on until the March Budget where austerity will come back to satisfy the bond markets and the narrative will be global conditions on debt (+Tories) which will go down like a bucket of sick.
>>10021 I read a good emerging narrative recently about this from the perspective of Chinese innovation and how China is reorientating Eurasia towards its societal model.
>Unlike China’s, the American economy is consumer-oriented. America’s sexiest AI applications — ChatGPT, Sora, Midjourney — have gotten a wide uptake from ordinary people who want to play around with the technology. In contrast, China is a production-oriented society, and Chinese AI companies are (mostly) more inclined to seek business providing big-data solutions to large companies and industries like health care, transportation, energy and education. China being China, many of those enterprises are state-owned.
>Here, AI is less about chatbots and more about making trains run on time, irrigating deserts, enhancing agricultural productivity and providing health care to poor regions without adequate numbers of doctors and hospitals. If that sounds pretty Communist, that’s because it is — Chinese AI serves the goals of the Chinese government, which are not about maximizing investor returns so much as improving and perfecting national infrastructure, health care, educational outcomes for deprived regions and fueling what Xi Jinping has talked about as the Fourth Industrial Revolution.
>Chinese AI, therefore, is funded and directed in a different way than American AI. Whereas in the U.S., barely regulated venture capitalists pour funds into startups, Chinese scientific research and technological development emanates from tightly controlled Chinese universities and research institutions like the Chinese Academy of Sciences.
>Of course, one central factor in the calculations about AI competition between China and the U.S. is the ban on the sale of advanced semiconductors to China. Although some reports suggest a black market allows Chinese scientists ways to get around this, Keun Lee, a Korean expert on China’s economy, shared his research, which suggests that China is beginning to get an intimidating advantage on less-sophisticated chips. Indeed, many of the massive industrial applications that China is pursuing are less data-intensive than ChatGPT. Running Chinese high-speed trains really is simpler in some ways than creating Instagram memes.
>Lee alluded to the fear among many American companies like Intel that China’s development of its own chips will lead to a huge Chinese price advantage at the lower end of the market. In this world, America would be at the cutting edge of semiconductors (which American companies like Apple could still purchase for installation in China-made devices), but American companies would be, effectively, a luxury segment, dominating the higher end while China made the chips used in a myriad of ways in daily life.
>In this scenario, as Huawei and BYD are doing, Chinese AI companies might be the top players in markets in the Global South with products and services that, having been developed for Chinese provinces, are equally useful in places of similar developmental levels, like Brazil, Indonesia, Turkey and elsewhere. Even if the most sophisticated chips are in short supply, traffic lights, map applications and weather forecasts don’t need them. Chinese technology could both lag the Americans in frontier applications and dominate global markets with efficient, useful systems. So China cedes the frontier to dominate the heartland — although, of course, most Chinese technologists aren’t ready to cede any frontiers just yet.
https://www.noemamag.com/the-death-and-rebirth-of-europe/ https://www.noemamag.com/china-builds-a-new-eurasia/
>>10023 So is "the government borrowing money" the same thing as "the government selling bonds", or are they two different things that can be done? I have always assumed they were separate, but this guy seems to be talking about them like they aren't.
Also, if everywhere goes to shit, as it looks like it is doing, can't the IMF or whoever just artificially reduce interest rates like they did in 2008? Then we'll all be able to borrow more money this time.
A bond is a form of debt and the main way that governments borrow money. It's basically an IOU note issued by the government or a corporation saying "I will pay you back the value of this bond on this date, plus interest payments on these dates". Those interest payments are called a "coupon"; the predictable nature of coupons makes them attractive for institutional investors like pension funds who want a reliable income more than they want capital growth.
The maturity date on the bond could be a year, five years or ten years in the future - you generally get slightly better coupon rates on a longer-term bond. Because they're issued on very simple and understandable terms, bonds are very easy to re-sell to someone else. For issuers, this does create a complication - any new bonds you issue are competing with old bonds that haven't yet reached maturity and are being traded on the open market.
Governments can issue bonds at whatever rate they like, but nobody is forced to buy them. For buyers of bonds, there are three main risks, two of which are closely related. The first is the risk that the government won't be willing or able to repay their debts, which is mostly hypothetical for first-world countries. The second is the risk of inflation. If you've got a bond with a coupon rate of 2% and inflation is running at 3%, you're losing money by holding it - the interest you're receiving doesn't offset the declining value of the repayment. The third, tied to the second, is the risk of rising interest rates - if you hold a bond at 2% and the government starts issuing bonds at 3%, your bond is now significantly less valuable.
If bond rates are rising, that's a sign that the government is struggling to find people willing to lend them money. If we look at those risks to bond buyers, we can see a dangerous trap. You'd be daft to buy bonds today at 5% if you think they'll be issuing bonds at 5.5% soon. If the government is running a deficit, they constantly need to issue new bonds, because the old bonds are regularly reaching maturity and need to be repaid. In this context, the pandemonium around the Truss budget makes a lot more sense. There was a real risk that either we wouldn't be able to borrow at all, or we'd be stuck in a spiral of constantly increasing interest rates.
I have two thirds of my assets in a LISA stock portfolio that over the past two or three weeks fell from +7% to -5%.
I'm thinking of buying a house in about 12 months and as reluctant as I am to sell anything at a loss, I think it'd be a bit reckless to gamble the rest of my 25% bonus on riding out Donny's antics. I'm thinking I should convert most of my stocks to high yield corporate bonds, even if this costs another .5% or so in dealing fees.
>>10037 I don't think anyone can know at the minute but the standard wisdom is that bear markets will on average last 289 days and there's some pressure for interest rates to rise which will hurt bonds.
>>10038 To go back to this. What do you lads reckon are the odds of any reform to LISAs?
I'm in an unfortunate predicament where I have over 30k sitting in my LISA account and the new tax year starts next week. But from my reading up it appears that the world is full of people who regret it after the government took it's bonus back plus another 6.25% for the cheek of saving their money. I'm frankly wondering if I should put another 4k in there now or if I'm just going to stung down the line for doing what I'm supposed to do.
Yes I could just move out of the South-East but this is where my career is and I don't like the idea of living in Middleborough with only one employer in my field. Best case scenario might be sitting still until I'm 60 but that's an awful long time to have money locked away.
>>10046 Back in reality, LISA accounts are experiencing massive and record-breaking growth in the number of people contributing to them.
The yuppies in and surrounding London who'd rather take a torch to their savings than suffer the indignity of living in what £400-450k buys you can get fucked.
Rather than thinking of a LISA as a savings account with onerous withdrawal conditions, you can think of it as a pension with more permissive exit terms. I mean, the clue was in the name.
I have 60k in mine. On April 6th I’ll put in another 4k and hope that they reform them to allow withdrawing all the money without any penalty or “retaxation”. Otherwise I’ll eventually use the money to buy a UK hovel.
It would be an interesting experiment if we did. Technically it's not a subsidy but if you nudged a home bias and created new British investors then it might work a bit like one for our criminally underappreciated assets.
Best case scenario is you end up with a Thatcherite utopia with a nation of savers/investors. Combine it with efforts to try and fix the crisis of shareholder democracy and it might be quite interesting. Up until the low-impulse poors who can't run a budget sell their shares off to pay for massive tellys and vote Labour to deal with their own misfortune.
It'd be an odd turn of events if Trump accidentally solved wealth inequality by completely crashing the global economy. I wonder how that cockney trader lad would react if house prices collapse because we all end up equally poor.
I mean if you ever actually listened to more than three minutes of anything cockney trader lad says, you would have an answer to that.
I don't think it's out of the realms of possibility anyway. Trump could well get exactly what he wants, which is to crash the value of the dollar. Except of course, trouble is he hasn't thought out any of the actual repercussions that would have.
>>10061 I'm sure he's thought through one of the repercussions well enough to have timed his personal investments for himself and his friends to anticipate these huge market shifts. He's going to be loaded once he lifts all the tariffs after sticking a couple of million dollars into the Dow Jones and the Nasdaq.
>>10056 "Losses aren't losses until they're realised" which, while true, doesn't feel great if the unrealised losses happen this quickly. Time to close all trackers, head down to the Winchester, and wait for this all to blow over.
>The ALICE analysis shows that, during Run 2 of the LHC (2015–2018), about 86 billion gold nuclei were created at the four major experiments. In terms of mass, this corresponds to just 29 picograms.
>- Israel will launch significant strikes on Iranian nuclear facilities which will set back Iran's nuclear program but not eliminate it. This will cause a spike in oil prices in the summer.
I just capitulated on this predication. Jesus wept.
>>10131 I'd have followed your lead if you'd have posted on my weekend off, but moving thousands of quid about on a phone while away at work just seemed like a bore. At least I'm in BAE already I guess.
I saw Mountainhead last night, pretty good film but poorly reviewed which I think says more about it touching a nerve with sycophants than anything else. Anyway it had lots of subtle examples of misused words, often in a blink-and-you'll-miss-it framing.
>>10133 I think his word fits better than yours. He hadn't capitalised when making the post, as that was merely a future intention. People have been predicting an attack for a while and he relented by finally taking consequential action as opposed, perhaps, wishing they were wrong.
>>10132 >>10133 >>10137 I meant that I'd capitulated on the prediction that I made at the start of the year. There's only 3 of us so I assume that was implied but my quoting.
>How much did you make?
I lost a lot of money. Made worse as I moved my money into emerging Asian markets. My lesson is to stick harder with my convictions unless I see serious losses on the horizon.
