Author: Andrew Packer

Cryptocurrencies

Bitcoin Magazine: 2025 Bitcoin Outlook: Insights Backed By Metrics and Market Data

Posted on by Andrew Packer

Bitcoin, the original cryptocurrency, was one of the standout winners of 2024. Bitcoin rose over 120%, beating the major market indices as well as assets like gold.

After rallying to over $108,000 in 2024, bitcoin then pulled back to the low $90,000 range. So far, this pullback looks like normal trading. The data for the bitcoin network points to further gains in the months ahead.

Looking at bitcoin’s realized price and its market cap, it’s likely that we’re nowhere near bitcoin’s four-year cycle peak. That suggests a further rally in 2025. Currently, levels are akin to the price in May 2017, about halfway through the 2016-2017 bull market in terms of price.

Looking at moving averages, the recent pullback has given bitcoin a breather from overbought conditions at the end of 2024. That allows the longer-term uptrend to prevail.

If the four-year bitcoin price cycle holds, there’s not only more upside, but potentially the biggest part of the upside. Each bitcoin cycle has a lower percentage gain relative to prior cycles. However, from what we know, it’s possible that bitcoin could roughly double to the $200,000 mark before hitting its 2025 peak.

The data shows that bitcoin’s move higher isn’t over yet. Investors can still position themselves for substantial returns in 2025.

 

To see the full data behind bitcoin’s likely move higher in 2025, click here.

Stock market

Tastylive: Why We Don’t Believe in Modern Portfolio Theory in 2025

Posted on by Andrew Packer

Investors have many ways to think about the market. Most investors follow modern portfolio theory (MPT). First developed in the 1950s, MPT looks at the market as a way of transmitting information.

When new information about a company comes to light, the news is immediately priced into markets. Consequently, MPT investors look at a market that is efficient, and challenging for investors to beat over time.

However, in reality, this theory is incomplete. It assumes that all traders are rational at all times. But we know that human beings are capable of decisions based on fear and greed. When that happens, markets may get oversold or overbought at times.

Today’s traders have more tools than ever to take advantage of those periods of extreme emotion. By leaning against markets at an extreme, they can make excellent returns.

Options trading can allow traders to hedge their portfolios in overly bullish markets. That could include selling covered calls against existing portfolio positions. Or it could mean buying put options to hedge against a big market swing lower.

Either way, markets generally look efficient on a daily basis. But markets are also more quick to react to events with the rise of options trading swinging the markets. Astute traders can pay attention to these swings and use them to profit.

 

To view the full video, click here.

Income investing

Dividend Growth Investor: Dividend Champions List for 2025

Posted on by Andrew Packer

Of the thousands of companies trading today, just 145 companies in the United States have a history of being a dividend champion. Those are companies that have increased a dividend payout for 25 consecutive years.

While past performance is no indication of future performance, a 25-year streak is tough to ignore. That covers extreme events like the pandemic and housing market meltdown. They’re businesses that can likely be held indefinitely, deferring capital gains taxes along the way.

Overall, six companies that were dividend champions at the end of 2023 failed to make the cut in 2024.  One company became acquired, one didn’t raise its payout, and four cut their dividends.

Fortunately, seven companies joined the list for 2024.

The list contains many well-known names like Caterpillar (CAT), the manufacturer of farm and construction equipment. Or a consumer goods giant like McDonald’s (MCD).

But many smaller names also make the list, including local power and water utilities or small banks. On that list investors may find Prosperity Bancshares (PB), and Middlesex Water Co. (MSEX).

Many dividend growth companies don’t have a high payout. But the dividend growth over time rewards long-term holders of shares. That makes dividend champions an ideal starting point for long-term investors who may eventually want income from their portfolios in the years ahead.

 

To view the full list of dividend champions, click here.

Stock Picks

Tom Nash: Buy These 7 Stocks In 2025 and Never Work Again

Posted on by Andrew Packer

With the start of a new year, it’s a good time to rebalance an investment portfolio. And look for companies that are undervalued by the markets, but also have positive catalysts. That combination can be powerful for great returns.

After a big two-year run in the stock market, some investors are getting skeptical. That’s a good sign that the market rally has more room to run. It’s when investors are blindly bullish that danger lurks.

That’s also why tech stocks may have more room to run. Part of that is structural. As large-cap companies, these firms benefit from passive investors pouring money into a stock index.

But many big-name tech companies have unique catalysts that may drive prices higher. One such company is Tesla Motors (TSLA).

The EV manufacturer is working to more broadly restructure as an AI play. And the big proof of concept will be using AI to finally make self-driving cars a functional reality.

And while it was already one of the top performing stocks of 2024, Palantir Technologies (PLTR) could further rally. The data analytics company has become the largest defense contractor by market cap, reflecting the rise of the digital world.

With further gains likely in big tech names, today’s buyers may be buying high, but not likely near the top.

 

To see the full list of seven stocks to buy for 2025, click here.

Stock market

A Wealth of Common Sense: The Roaring 2020s

Posted on by Andrew Packer

The decade is nearing its halfway point. And what a wild ride it’s been. First, 2020 kicked off with the pandemic, leading to one of the fastest selloffs in stock market history. Following that rally, stocks are up over 180%.

Of course, it wasn’t a straight line. 2022’s bear market resulted in stocks dropping 18% over the year, and nearly 25% from their peak. Typically, bear markets are spaced a bit further apart than two years.

Despite those big drops, stocks have now seen two years of over 20% gains. Typically, if earnings hold up, markets can continue higher, if at a slower pace. With the market up 70% since its 2022 low, a few years of flat performance would result in strong annualized returns of 14.5%.

Meanwhile, investors who stuck with a dollar cost average have seen returns closer to 17% annualized so far this decade.

In other words, even with the big drops, stocks have come back stronger than ever.

Given that overall performance, investors who stayed the course during market selloffs ended up coming out ahead. That’s a good thought to bear in mind in the next stock market selloff.

It’s likely that the second half of the 2020s won’t play out like the first half. Drawdowns are unlikely to be as bad as the pandemic selloff. And bouncebacks may not be as strong. But investors should continue to stay the course in fearful markets.

 

 

To read the full analysis, click here.

 

Economy

Rebel Capitalist: Mortgage Rates are Soaring! (Here’s What Everyone’s Missing)

Posted on by Andrew Packer

One of the surprising trends of the past few months is the fact that interest rates have been trending higher. While the Federal Reserve has cut its short-term federal funds rate, long-dated rates haven’t fallen. Instead, they’ve jumped higher.

That’s created an unusual market. The most impactful result of this change is that mortgage rates have soared. That’s because mortgages are held for 30-year periods.

Since September, rates have risen from an average of 6.2% to 6.9%.

Why does this matter? The Fed started cutting rates citing its need to protect the labor market. Unemployment ticked higher in 2024, and still ended the year at a healthy level.

But the rising trend doesn’t bode well for consumer spending if it continues.

So, the Fed’s shift to protecting the jobs market comes at the expense of potentially higher inflation. The bond market may be pushing yields higher to account for higher expected inflation.

With rates rising, the economy could potentially slow, leading to a stock market selloff. And the housing market could also struggle with rising mortgage rates.

Consumers may have trouble selling a home as well, given that buyers will have to contend with higher payments as interest rates rise.

Since inflation hasn’t quite picked up quite yet, investors can still benefit from these rising rates with a higher allocation to bonds.

 

For the full look at rising mortgage rates, click here.

Economy

Heresy Financial: The Fed’s Hidden Move Just Ended the Reverse Repo Facility

Posted on by Andrew Packer

The Federal Reserve is best known for its decisions on short-term interest rates, known as the federal funds rate. However, the central bank has several tools at its disposal. These tools allow them to tweak inflation and the money supply.

The Fed’s goal is a mandate between keeping both inflation and unemployment low. Typically, these goals are at odds, and the Fed must perform a balancing act. One of the ways they can do that is with repo facilities.

The reverse repo facility keeps a floor under short-term interest rates. The Federal Reserve buys Treasuries from banks with these facilities. Banks can then buy new Treasuries, providing more government funding.

In short, these facilities are a way to move newly created cash into the financial system. But it does so at a cost of reduced assets overall.

Over the past few months, the Fed has been winding down its reverse repo facility. This means the bank has been buying up financial assets to reduce its repo balance.

The potential downside is that the government is now essentially short on cash. And that the U.S. government could face a crunch in just a few days, and even hit its debt ceiling.

This behind-the-scenes maneuver ends some of the Fed’s extraordinary measures from the pandemic era. But it could mean more market volatility with less liquidity in the system to start 2025.

 

To see a full explanation of the reverse repo facility and what this move means, click here.

 

Stock market

LPL Research: Keys to Stock Market Gains in 2025

Posted on by Andrew Packer

The stock market had a banner year in 2024. The S&P 500 rose over 20%, and for the second consecutive year. Gold and silver also rose over 20%. Bitcoin soared over 100%.

Volatility was low, with a maximum pullback of just 8.5%. That’s well under the average of 13% for the average decline. There are several reasons to suggest that the market may be more volatile in 2025, but could still continue higher.

Historically, a bull market that lasts two years has a strong chance to rally for a third year. The statistics are fairly strong, with only a recession or overly aggressive Federal Reserve breaking such a trend.

Given that odds of a recession remain low, this trend looks strong. Plus, the Fed is still on track for further cuts, not rate hikes. So far, so good.

In the third-year of a bull market, stocks tend to have positive returns most of the time. However, those returns are about 5.2% on average, well below the year 1 and year 2 returns. That suggests that 2025 will see markets trend higher, but not in a big way like in 2022 or 2023.

Overall, those returns could also be driven by a mid-year correction that sees a big pullback in stocks. Markets historically have a 10% correction every 12-18 months. Given the drop of only 8.5% in 2024, markets could be in for a deeper pullback amid a generally bullish year.

 

To see the full data on the third year of a bull market, click here.

Economy

Figuring Out Money: A Perfect Storm Is Brewing for 2025

Posted on by Andrew Packer

Several economic indicators have soured in recent months, hidden behind the stock market’s strong returns. Consumers are starting to struggle, as seen by rising credit card balances and delinquencies.  

That’s at odds with expectations for the stock market to trend higher in 2025. While the market can trend higher, consumer spending is the lion’s share of the economy. If that’s in trouble, markets will likely struggle in 2025.

Part of the reason for struggling consumers? High interest rates. Since 2020, interest rates on credit cards have moved from 15% to over 20%. And even with the Federal Reserve cutting interest rates, the trend for credit card rates is on the rise.

That makes it more challenging for consumers carrying a balance on their credit cards to make their minimum payments. Over time, overly high rates can cascade out of control.

With rates rising, consumers look to longer-term loans to afford monthly payment costs. That’s leading to longer holding times for products such as automobiles. And a longer hold time can also reduce future spending.

While markets have been trending higher over the past two years, the past year has seen a rise even as unemployment has ticked higher, from 3.4% in early 2023 to 4.2% at the end of 2024.

Unemployment is still well under its historical average, for now. But a further trend higher bodes poorly for consumer spending as more and more find themselves out of work.

 

To see the full issues consumers are contending with as we enter 2025, click here.

 

Economy

FT Alphaville: Never Ever Make Predictions

Posted on by Andrew Packer

The end of one year and the start of another leads to many predictions. However, a look at investment predictions reveals that predictions don’t tend to have any accuracy to them.

It doesn’t matter if the predictor is an expert in their field or not. The major annual predictions from the big Wall Street banks are often wide of the market’s actual results. In fact, the average prediction tends to simply take an existing trend and extrapolate it.

That’s why many analysts see a good market return in 2025. It follows on the recent past from 2024 and 2023’s returns.

Over time, the average prediction runs in a much lower band than actual market returns. The experts aren’t good at predicting major market swings, both lower and higher. Failing to predict a market crisis is one thing.

If the experts can’t make good predictions, what indicators can investors use? One potential measure that may work is volatility. Hedge funds tend to also use volatility targeting as a way of better predicting extreme market moves.

While predictions often fail to pan out, it’s still important to plan for potential market scenarios ahead of time. That way, investors won’t get blindsided with a rapidly-changing market. And can even set themselves up to profit, especially during fearful times.

 

To read the full analysis on the trouble with predictions, click here.