And so begins a new year! We hope you and your families had a wonderful festive season and are geared up for what looks to be a more volatile and in our case, chart filled 2025! As we listen to commentators and particularly those who bleed over into the politics, we are reminded of a lesson from skeet (clay target) shooting:
Shoot the leading edge of the target - not where you think the target may fly. The shooter must connect with the target, move with it, and then dispatch it.
Right now, a few more investors than usual are taking shots with the buy and sell button and hoping that the target just happens to fly into their shot stream. That’s a tough approach!
As ever, it is important to understand the valuation of the broad market, especially as it relates to what you own. As markets have become more indexed and stocks get bought and sold en masse correlations have gone up. That doesn’t mean there is less merit in owning cheaper stocks with a margin of safety. You just might not be immediately rewarded for it.
As we talked about a few times last year, 2024 was the largest global election year in history - more people voted in more countries than ever before. It confirmed that for politicians, inflation is a deadly disease and a few more victims were found this month. New governments mean new policies, but all the old problems are still here. As solutions are tried, we will be eager to watch what happens to business confidence, the tone of managements on earning calls, and consumer sentiment.
In December, we issued our 10 Surprises for 2025. We are going to do our best to call the balls and strikes during the year to continue the fun. So far #8 about the streaming wars is looking like a strike and #6 about Japan is showing some promise as Honda and Nissan try an outside of the box merger. If you follow us on X, we will aim to post updates on these as they happen and review the misses at the end of the year.
We are also thrilled to share that HVP’s Christopher P. Davis will be a speaker on the Emerging Managers Panel at the Columbia Business School CSIMA Value Investing Conference on February 7th in NYC. We are honored to have HVP represented at the spiritual home of Value Investing.
Themes to Takeaway
Bullish Themes
GDP Now and other macro productivity indicators are strong.
Policy certainty may start to emerge and investors will have actions, not rumors to work with.
Early earnings reports from the banks on 1/15 have come in strong.
Click here for Bonus Video From the First Day of Trading in 2025 - Sectors to Watch
Bearish Themes
The broad stock market in the US is expensive on a historical basis.
The impact of tariffs are challenging to model.
US Debt & the Deficit remain in focus; bond yields have been skittish to the upside since the election.
Keep your eye on
Scott Bessent and how Treasury Issuance (Mix between Bills/Notes/Bonds) changes.
Tariff fears causing some pull-ahead in ordering.
Earnings Growth vs Sales Growth as companies report. Is it efficiency, margins, and price hikes, or more sales?
Whatever happened to?
Non-meat meats
If you haven’t already….
And now since December was our Special 10 Surprises for 2025 edition, we have a trio of extra “Charts of the Month” for you!
Holiday Spending
Yen (Blue Line, Right Scale) vs NASDAQ ETF (Mountain, Left Scale)
Spot Bitcoin (Mountain, left scale)
vs US Money Supply (Blue Line, right scale)
