Richard Stroud
COPIERS AND FOLLOWERS UPDATE Hi everyone, and welcome to 2025 as I give you my first (and apologies, rather late) update to the New Year. It has been a very volatile period to say the least as sentiment goes from highs to lows, so here is a low down of the main points over the last few weeks. The end of 2024 going in to 2025 was a bad patch for stocks, with the Dow Jones suffering its longest losing streak since 1974. On the back of this was, once again, disappointment at the Fed's more hawkish stance. We saw rates cut by a quarter point but future expectations now point to just two rate cuts in 2025, down from four. The consensus now is that the neutral rate, which is essentially the interest rate that neither hinders nor promotes growth, is now higher than was previously thought, showing that the U.S economy and consumers continue to be strong and resilient. It seems that, for the moment, we are back to good news being bad news for stocks. Stock market worries were exacerbated by the prospect of high import tariffs from U.S president Trump, with the addition of lower taxes and higher growth igniting concerns about inflation being pulled higher once more. At one stage the S&P 500 had pulled lower than before Trump's election victory. However, things now seem a little more rosy, with last week's inflation figures coming in lighter than was thought. Wholesale inflation increased by just 0.2% in December, less than the 0.4% that was expected, with core inflation also coming in under estimate. As well as this, a strong start to earnings' season led by the big banks have further helped lift U.S stock markets, whilst on Tuesday indices got a further lift after comments from Trump regarding international trade that were a bit softer that was first thought. Our portfolio has also got back on track, and is now around 2% higher so far this year, despite the big drop in treasury prices. My feeling is that this sort of volatility will feature quite regularly this year and, although general sentiment towards the U.S is still very good, we should not be too surprised if there are quite a few ups and downs over the course of 2025. As far as our tactics go, at some point I will be reducing our treasury positions a bit, to put funds to use elsewhere. Although the bonds we own provide a good income and stability to the portfolio, I think we will find better growth this year in other sectors, especially if the consumer remains strong and higher interest rates don't hold the economy back. Of course, I will make you all aware of any changes to the portfolio I make, but I have come to the conclusion that after a couple of very slow years it is much better to stay invested and ride out any volatility than to be too cautious and miss out on growth. I hope you have a great rest of the week and keep watching for more updates coming from me soon. Best wishes, Richard.
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