May 2025 Market Strategy
If in doubt, go long?
Disclaimer: The information contained in this article is not and should not be construed as investment advice. This is my investing journey and I simply share what I do and why I do that for educational and entertainment purposes.
In my April 2025 Market Strategy, I argued that the stock market will likely do quite well in the near-term because of extreme risk aversion of institutional investors and because seasonal fiscal headwinds were turning into tailwinds. However, in spite of that positive near-term outlook, I remained unconvinced that we have seen the bottom of this bear market. I sensed complacency from stubbornly high interest rates and a lack of rate cut expectations. I also put a high weight in the subjective part of my assessment on the exuberance in December. I didn’t think that could unravel in less than a quarter.
Let’s check how the picture has evolved since then.