Investment avenues in 2025

Investment Analysis Clubs Macro Economic Trends and Risks
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While I am distressed at the possibility of removing all these impediments to financial doom, carefully built brick by brick out of the ashes of former conflagrations, I think it’s important to note that none of these sorts of financial disasters happen overnight. (Wars, pandemics, and SVBs excepted, of course.)

It took years after George W Bush charged in on his deregulation steed before the housing market imploded. Six years went by, during which his advisors steered away any regulatory attempts to rein in the financial sector, aided by the Libertarian minded Alan Greenspan.

The 1929 crash happened in October, but it didn’t start with Hoover’s inauguration in March. The kinds of stock excesses and margin betting were prevalent during the prior administration(s) and only came to fruition years later. Likewise the S&L banking fiasco at the end of Reagan’s term, for which he paid no price at all.

We are lucky that the 2008 crash happened when Bush was still in office, because it pinned the blame almost perfectly where it needed to be. (Almost, because Clinton was complicit in some of the deregulation, too.)

There’s nothing that says this recent round of “forget all those lessons we learned” will cause an explosion within weeks or months. It takes a long time for the system to get out of whack, for players to figure out the dark corners to run their grifts, and for enough detritus to pile up to actually threaten a large financial system such as we have. That doesn’t mean it won’t happen - just that it will take time. (Indeed, at first everything will look peachy! Remember 2006’s “Everybody Gets A House”, and the good times under Coolidge.)

Of course I’m one who moves in and out, eschewing the conventional wisdom of never doing anything, so my view is different. I’m not a fan of the wanton destruction, I just don’t suffer it as some do, chanting “Why worry? I can never happen to me.”

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22

Hmm, will the counter tariffs (by Canada, etc) damage their economies?

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23

Totally agree. The 4% rule is based on a 30 year investment horizon. That’s why I’m not changing my investing strategy. I don’t know what will happen or when.

But logically, if they dismantle all the guardrails that are designed to prevent economic crisis–which they say they want to do and in fact are doing right now–then we have to consider the possibility that some future economic crisis will be worse than what we’ve seen before.

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LOL That is hilarious. It isn’t the fall that kills you it’s the sudden stop.

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Yes, but they are imposing tariffs on one trading partner while US is imposing them on all major trading partners.

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Absolutely. However it also takes time to develop a plan, and in some cases implement it.

I confess we have been about 50% cash for some time now. It’s earning about 4.25% currently, and we had been thinking of possibly buying a property without a mortgage, so we liked the liquidity. We are at the point in our investing where we have enough and more would just be more. It’s a nice place to be but at some point taking on risk doesn’t make sense, given that risk can bring failure and since we are retired we have neither the time nor the income to recover. Yes I am aware of inflation risk. Note that I had always been a very aggressive investor in accumulation phase, other than not putting fresh money in when markets got too rich, instead accumulating the cash for when the markets went down. That’s in part why we’ve been cash heavy. Some of that might go back into the market at some point, but possibly not this market. I have concerns about the direction this country has gone in and where it could go from here. I recently came across a post from something like 2018 where I stated that I wouldn’t invest in a company whose CEO, while seemingly brilliant, appeared to be too unpredictable. That same unelected person has much too much influence in our government currently.

And we expect to be heavier in cash soon when we realize a significant profit on the sale of our primary residence. Our real estate market seems crazy right now, in a good way for sellers. Last Spring, buyers were hiding. This Spring, properties are flying off the shelf quickly and over ask. Knock wood. So I guess those people are finding value in buying property, which has merit if you are willing to stay a while. We wanted to leave that area for a while now and nimble seems to be a theme for us, as we explore becoming residents of the world. Trying to determine good countries to stash some cash, NOT to dodge taxes, but as a further diversification away from US policy. We may buy another home somewhere, but not in a rush to do so. Keeping an eye on the 2026 elections, or earlier signs of backbone in the House and Senate, while exploring our options.

Feel as though we are living in a dystopian novel. Not investing in that world. Seeking alternatives.

IP

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Not only that, but the tariffs from Canada et al are pushbacks on a bully. I don’t see rolling over and taking whatever is thrown their way as a good strategy.

IP

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I have to disagree with you a little bit here. A lot has been written on the market being overpriced in the recent years based on indicators like S&P 500 P/E or the Shiller ratio. I thought these opinions were wrong in the sense that the US stock market simply was more valuable due to accumulated trust.

Just like when after each airplane crash FAA adjusted manufacturer regulations, flight procedures, pilot training requirements etc. it had made flying much safer than 50 years ago; so is investing in NYSE much safer than 50 years ago.

If you start removing those guard rails the market really becomes overpriced and you need to discount those risks now rather than wait for an Enron style calamity to wake up.

This is what the market is doing right now.

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Great summation. Great position to be in. Well done! I highlighted but at some point taking on risk doesn’t make sense, because that is the driver of the current falling market, driven by economic uncertainty, driven by turbulent politics.

Earlier @WendyBG made an important observation, how long can the downturn last?

The plan has to be not to go broke in the next two or three years.

I noticed a curious activity lately, the market tends to go up after hours only to go down during normal trading hours. Any ideas why this is. BTW, options cannot be traded after hours because, I think, the CBOE does not provide price quotes outside market hours. At around 5:43 AM EDT

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The Captain

Patience grasshopper!

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You can trade options in markets around the world. Here are Nvidia futures that you can trade during European waking hours.

I’d say the world markets are simply more volatile due to low volume. NVDA trades in 10 of millions of dollars in Europe while it trades in tens of billions of dollars on NASDAQ. A lot of european volume is coming from retail investors that don’t price in risks too rigorously.

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Money flows from Asia and Europe?

DB2

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I trade shares and options in the USA. My report was about US markets.

Europe would likely tax the hell out of me. I get a sweet deal in the USA, no capital gains taxes for non-resident aliens but a 15% retained tax on interest and dividends so I avoid both.

The Captain

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Likely.

That is why I prefer pulling stock from shelves than simply adding tariffs.

This is a better way to deal with it:

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Related:

“Tariffs and escalating trade tensions are a form of economic self-harm and a recipe for slower growth and higher inflation. They are paid by the consumers. This is why Australia will not be imposing reciprocal tariffs on the United States,” Albanese added.

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Translation, he’s afraid that responding to the US tariffs will result in tariffs on Australian goods that do account for a significant part of their trade with the US. Australia exports only about $1B of steel and aluminum to the US per year, 0.2% of Australian exports to all markets, only about 6% of their $16.7B total exports to the US. The US runs a trade surplus with Australia, so the PM may be thinking he can avoid being accused of “ripping off” the US, if he keeps his mouth shut.

Steve

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Or, he just is astutely aware that tariffs are a tax on his own citizens.

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DON’T listen to losers who are pessimists. DON’T panic and sell.
Many people will write longs posts sounding reasonable about how things are terrible. They know NOTHING.

BUY and HOLD great companies at fair prices. You will get very rich slowly.

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The housing market collapse started in the Clinton Administration.

Last night PBS’s Frontline aired a new documentary called The Warning. If you missed it, you are in luck. We’ve got it right here.

Here’s how Frontline describes the documentary.

“We didn’t truly know the dangers of the market, because it was a dark market,” says Brooksley Born, the head of an obscure federal regulatory agency – the Commodity Futures Trading Commission (CFTC) – who not only warned of the potential for economic meltdown in the late 1990s, but also tried to convince the country’s key economic powerbrokers to take actions that could have helped avert the crisis. “They were totally opposed to it,” Born says. “That puzzled me. What was it that was in this market that had to be hidden?”

Born walked into an ideological battle that pitted her against some of the most powerful men in government. This was the post-Reagan, post-Communist heyday of deregulation—and Born’s proposals were seen not only as wholly unnecessary but as a dangerous threat to prosperity. Federal Reserve chairman Alan Greenspan, Secretary of the Treasury Robert Rubin, Deputy Treasury Secretary Lawrence Summers, and Levitt lined up against her. When she dared to disagree with them, they convinced Congress to strip her agency of its regulatory power and testified against her proposals at committee hearings. With few tools left to do her job, she left the CFTC at the end of her term of office and returned to legal practice in 1999.

Greenspan-Rubin-Summer’s choir.
Their hit song " Laissez Les Bons Temps Rouler"

And let’s not forget Andrew Cuomo:

Andrew Cuomo, current governor of New York and a likely 2016 presidential aspirant, accelerated easy-housing policies and inflated the housing bubble, setting the stage for its collapse.

In a heavily researched 2008 article in the Village Voice, Wayne Barrett writes,

> Andrew Cuomo, the youngest Housing and Urban Development secretary in history, made a series of decisions between 1997 and 2001 that gave birth to the country’s current crisis. He took actions that — in combination with many other factors — helped plunge Fannie and Freddie into the subprime markets without putting in place the means to monitor their increasingly risky investments. He turned the Federal Housing Administration mortgage program into a sweetheart lender with sky-high loan ceilings and no money down, and he legalized what a federal judge has branded ‘kickbacks’ to brokers that have fueled the sale of overpriced and unsupportable loans. Three to four million families are now facing foreclosure, and Cuomo is one of the reasons why.

The meltdown was the consequence of a combination of the easy money and low interest rates engineered by the Federal Reserve and the easy housing engineered by a variety of government agencies and policies. Those agencies include the Department of Housing and Urban Development (HUD) and two nominally private “government-sponsored enterprises” (GSEs), Fannie Mae and Freddie Mac. The agencies — along with laws such as the Community Reinvestment Act (passed in the 1970s, then fortified in the Clinton years), which required banks to make loans to people with poor and nonexistent credit histories — made widespread homeownership a national goal. This all led to a home-buying frenzy and an explosion of subprime and other non-prime mortgages, which banks and GSEs bundled into dubious securities and peddled to investors worldwide. Hovering in the background was the knowledge that the federal government would bail out troubled “too-big-to-fail” financial corporations, including Fannie and Freddie.

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I’ve been working on the new Covered Call Selector feature to deal with the falling prices. I finished the user interface just now and had a look at my stocks. The charts seem to say that the first half of March might have been the bottom. Tomorrow is the Ides of March? Hmmm…

I expect to finish the code over the weekend.

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Switching to OOP was a great success. The original php framework I created tended to get spaghettified becoming too complicated to maintain.

OOP forces the coder to compartmentalize and within each ‘object’ to create separate functions or ‘methods’ as they are called. OOP also makes it easier to reuse code, it’s a bit like LEGO.

A shoutout to Bare Bones Software, to their terrific BBEdit. Great software, great service

The Captain

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41

OK, have it your way. My point stands: these kinds of disastrous consequences of stupid policies don’t happen overnight (again, tariff wars and a few specific issues like OPEC embargoes, etc. excepted.)

So it took 10 years for housing to implode, not 6. OK. I expect the market to continue to bounce its way down so long as the present uncertainties keep being broadcast from a certain Oval Room, the end result of really terrible policies is more a long term issue. (See: housing crisis, Brexit, etc.)

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