Market On Open, Tuesday 31 December
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Was That It? Can We All Turn Bear Now?
by Alex King, CEO, Cestrian Capital Research, Inc
I think the most surprising outcome in 2025 would be a continuation of the only-up equity markets of 2023-4. Remember that plenty of people have remained sceptical of the current bull market for far too long already - I read a note somewhere this week suggesting that the typical retail investor was up less than 10% this year. Since the S&P500 is up over 20%, that is quite a lot of effort that folks have put into underperforming. In the main I would guess that is due to lack of confidence in the bull meaning too much cash on the sidelines; add to that some likely burned dollars in altcoins and other siren songs and you have another disappointing year for most people, even when the market has been handing out free money all year long.
So now that everyone sensible feels that the bull has run its course and, of course, anyone with a liking for drawing lines can wheel out a chart showing that It’s So Over Right Now, does that mean we’re done here? Well, yes and no. Ultimately sentiment determines prices and if enough price-setting investors believe that the good times are behind us, they will be taking profits and holding back from committing new capital, thus inducing sadness and fear in price-taking investors, who will duly sell all the way down into the lows, thus creating the conditions (abject misery!) for the next bull to begin.
Did we therefore top already in equities? I suspect there is some room to run yet. Consumer sentiment about stocks remains very high; even grownup crypto wizards believe there is more upside ahead in this most purely capitalist of all asset classes (see this from Yimin Xu today); and there’s nothing like a long bull market to suck in sidelined cash as the top approaches.
US government bonds, at least in $TLT form, are starting to look rather bullish down here at the lows, as we shall see below. Perhaps the hoopla about tariff-driven inflation will prove incorrect, in which case there is a long way up for bonds to travel (for disclosure, I am long $TLT, $TMF and other long-bonds funds).
On the last trading day of the year, if you’ve been even half paying attention this year, you should be able to look back with some satisfaction. If you think you can do better by keeping better company, if you think you’d like to join a community that is very focused on - wait for it - actually helping one another make more money on account of not fighting over the good corner office or the fat bonus or promotion - then do consider joining our premium Inner Circle service. We are ready for whatever 2025 brings. Bull or bear, or just sideways rangebound chop, we don’t care, we have the tools and the ideas and the people to handle it.
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Alex King
Short- And Medium-Term Market Analysis
Don’t forget that to open full page versions of any of the charts below you can just click on the underlined header which titles each chart - they are all hyperlinks.