2025 Financial Prospective: A Year of Surprising Reversals and Upside-Down Shifts
Farewell to excessive guesswork – Welcome to enlightened fact-finding.
When? Likely imminently as deferral due to tax-driven selling initiates in January.
Why? As optimistic enthusiasm passes away, logical scrutiny takes its place. Financial gain reversals induce speculators to withdraw.
Where? Primarily in stocks, but bonds, real estate, and cryptocurrencies are all susceptible, as well.
From my former article, "2025 Vision – Anticipate a Fresh Financial Cycle," here's the rundown:
Bond market - Interest rates are being reinstated to their genuine values, thanks to the re-emergence of the "bond vigilantes." This means the emphasis should be placed on financial and financial fundamentals, rather than the Federal Reserve.
Stock market - The stock fads that started in 2021 are overstretched, the AI bubble is colliding with reality, and the hordes of ailing companies are limping towards extinction. Consequently, focus is shifting towards companies boasting genuine, not imagined, appealing fundamentals.
Real estate - Higher mortgage rates and skyrocketing property prices are once again limiting demand. No fix is imminent as the markets are accurately reflecting today's economic and financial circumstances.
U.S. government bonds - The borrowing level is historically immense. Recall that a year ago, Moody's revised the rating outlook for U.S. Government debt to "negative." The reasoning was excessive debt, escalating interest payments (now exceeding $1 trillion), and the escalating political fragmentation that could hinder agreement on curative measures. Worse still, the recent power struggles in the House with President-elect Trump's involvement demonstrate that political polarization is intensifying.
President-elect Trump's policies - Two significant actions could have a substantial and highly unpredictable impact on the U.S. economy and financial system:
· Implementation of substantial tariffs on major trading partners, such as Canada and Mexico
· Expulsion of millions of unauthorized migrants and their families.
The core message: Embrace reality, not reassurances.
Begin by disregarding the Federal Reserve. It is responsible for creating inflationary problems, and its minimal attempts to rectify the damage are now being recognized. As stated by The Wall Street Journal Editorial Board: " The Fed Recognizes an Inflation Fault - Yet the central bank still lowers its target rate by another 25 basis points. Its explanation is unconvincing."
In conclusion, view all U.S. government spending increases as inflationary misuses that could lead to Moody's converting its negative outlook into a genuine negative credit rating adjustment.
Based on the text, here are the two sentences that include the given words:
In the context of financial planning, the 2025 investment outlook should consider the potential impacts of the current economic and financial circumstances, such as interest rate reinstatement and market shifts. By 2025, smart investors may need to reconsider their investment strategies, shifting their focus away from overvalued stocks and towards companies with appealing fundamentals.
