American Exceptionalism -- Investing -- January 2, 2025

Locator: 44590INVESTING.

Wow, wow, wow, I'm in a great mood. 

For an investor, 2025 is going to be an incredible year. 

The key thing to remember: the stock market (aka, "Wall Street") is not the economy. 

The American economy is going to do very, very well particularly when compared to the rest of the world. 

So, let's leave it at. The American economy is going to do very, very well.

But that doesn't mean the stock market (aka, "Wall Street") is going to do well. It's hard for me to believe that after two years of back-to-back gains of 20% in the market (actually almost 25%) will mean a third year of the same. But nearly 100% of analysts expect the stock market (aka, "Wall Street") to end the year higher than when it started. It's hard for me to be a contrarian, but after two years of back-to-back gains of 20% in the market (actually almost 25%)....

If that ends up being true, that the market will end up higher by the end of the year compared to the beginning, investors will be very, very happy and very, very well rewarded.

On the other hand, it the market has a significant reversal, it offers an opportunity for investors to invest in the market at lower prices. Warren Buffet appears to be betting on the latter. 

But that doesn't mean the economy is / will be doing poorly. The US economy in 2025 is going to do incredibly well. We'll talk about that later, but maybe not this week. If the US economy in 2025 does incredibly well, and the market disappoints the average investor, not to worry. The incredible US economy will continue into 2026 (tailwinds) and the market will eventually catch up. Investors who continue to invest in stocks this year (2025) will be rewarded, sooner or later.

If the stock market reflects the economy then investors should see a  market that ends higher at the end of the year than when it started.

If the stock market falls, it simply offers investors an opportunity to invest in some great American companies. And wait for things to turn around in 2026.

One caveat: if the market does poorly this year compared to the economy, then the market becomes a stock pickers' market. Again, I think that is where Buffett excels. 

So, bottom line for me this year:

• I will stick with large cap American companies.
• I won't be adding to my positions in high-flying tech stocks. 
• I added cautiously to my tech stocks this past year, but it was back in 2023 that I made my huge positions in high-flying tech stocks. That's over for awhile until I see which way the wind is blowing. 
• There is one exception. I will continue to add to a position that I just started in the past six weeks (which rules out Apple; I've held Apple for quite some time).
• I won't be adding to my oil and gas positions simply because I've built up such huge positions over the years, mostly through dividend reinvestment.

That leaves nine other sectors, sectors about which I know very, very little.

So, except for

• one tech company,
• one restaurant,
• one construction company, I will be putting all new money into broad-based ETFs, not "specialty" ETFs.

I can't be more specific than that, because it doesn't matter. Everyone has their own ideas on how to invest. I'm about the last person anyone would want to follow. 

But it's going to be a great year for investors.

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Disclaimer
Brief Reminder 

• I am inappropriately exuberant about the Bakken and I am often well out front of my headlights. I am often appropriately accused of hyperbole when it comes to the Bakken.
  
• I am inappropriately exuberant about the US economy and the US market.
• I am also inappropriately exuberant about all things Apple. 
• See disclaimer. This is not an investment site. 
• Disclaimer: this is not an investment site. Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here. All my posts are done quickly: there will be content and typographical errors. If something appears wrong, it probably is. Feel free to fact check everything.
  
• If anything on any of my posts is important to you, go to the source. If/when I find typographical / content errors, I will correct them. 
• Reminder: I am inappropriately exuberant about the Bakken, US economy, and the US market.
• I am also inappropriately exuberant about all things Apple. 
• And now, Nvidia, also. I am also inappropriately exuberant about all things Nvidia. Nvidia is a metonym for AI and/or the sixth industrial revolution.
  
• Longer version here.