To The Moon

Special thanks to @TigerTradingNotes for the invitation. I'm excited to share my experiences from the past year with all of you, and I hope we can witness my growth and hard work together.

We would like to hold a themed event titled "Adapting to 2025: Investing in a Rapidly Changing World, Sharing Insights to Help You Adapt."

We hope you can share some memorable transactions you've made in 2024 and some of your own predictions for 2025.

We would like the content to be structured into three parts:

1.Please name three memorable transactions you've conducted in 2024.

We don’t normally switch around stocks to capture each move but stick to just a few stocks we have picked to keep applying the options strategy. We expected crypto companies and tech companies to do well in early 2024 with the expectations of easing in interest rates and monetary policies.

We picked Coinbase (since 2023 and continued into 2024), Marathon Digital, Sofi and Alibaba. With the exception of Alibaba (30% from our entry price), the other 3 have already more than doubled from our initial entry prices.

2.If you had to use one keyword to describe your transactions this year, what would it be? For example, "harvest," "joy," or any other?

“Enriching”.

Firstly with Tiger Brokers, I managed to make more friends at seminars, dinners and workshops. Without sharing these transactions, I wouldn’t have been able to learn more from the fellow traders.

Secondly, it also refer to the profits that I’ve made in a bountiful 2024. 😊

Lastly, with the experience I have gathered, I was also able to enrich lives of others by transferring my options trading knowledge to them.

3.What are your predictions for 2025? The overall content should not be less than 3500 words.

And if possible, we would also like some accompanying images.

Interest Rates

In 2023, market was expecting several interest rate cuts in 2024 due to the cooling inflation. The rate of cooling was not as fast as expected hence resulted in FED starting to cut interest rates in 3Q2024. Moving into 2025, the expectation is still to have FED interest rates above 2.75-3.5% as market expects inflation to stabilize or at least persist at current levels.

With Trump taking over the Oval Office on 20 Jan 2025, many expects tariffs implementation to cause inflation to trend higher or at least persist at current levels. However, many fail to note that inflation in the last couple of years was largely due to the excessive government spending which, even with the aggressive increase in interest rates and tightening of monetary policies, Jerome Powell couldn’t bring down the inflation effectively. In addition, the effectiveness of interest rates normally kicks in approximately 1 year after its implementation as it takes time for the policies to cause ripple effects into the consumers’ pockets. In my humble opinion, the effects of tariffs would be very much negated by the reduction in government spending after Elon Musks takes office at the DOGE department. The target of $2 trillion is ambitious, but by being even 50% as close would result in significant less spending into the US economy. In addition to the still moderately high interest rates, inflation would come down pretty quickly that may result in FED stepping on the pedal once again.

There are two schools of thought:

1.Interest rates cuts will stimulate growth and reduce cost of funds, in turn creating suitable environment for stock market to grow and reach new all time highs

2.Interest rates cuts are followed by recessions

For many who believed in no. 2, most did not look into the details of each event and the root cause of each recession. These events are no coincidence but definitely worth our time studying in details.

My personal belief would be for scenario number 1 (with probability of scenario 2, a mild recession) happening. It would mean stock markets reaching all time high concurrently with contracting GDP (The most common rule of thumb for a recession is two consecutive quarters or six months of negative GDP growth). Like mentioned earlier, establishment of DOGE department would likely result in cooling inflation, but also at the same time result in negative GDP growth as the huge reduction in government spending causes a significant drop in GDP growth.

Money Market Funds (MMF)

Money market funds hit an all time highs after all time highs when Fed Fund Rates was raised quickly in 2022-2023. Equities fell rather quickly in this period as investors flock to lower risk products (higher reward/risk). The increase has slowed since the pivoting of FED in August 2023 when Jerome Powell halted the rate hikes, but still hitting new records even until 4 December 2024.

With the expected reduction in interest rates in 2025, investors in search for higher yield would turn to other products like bonds or equities. The tapering of increase or reduction in MMF would then signify the shift in investment climate. This is something that we may or may not see as we move into year 2025.

China

The current manufacturing powerhouse of the world, China is experiencing slowdown in certain parts of the economy as we start to see cracks appearing in the property sector. In order to keep the economy moving, the government announced looser monetary policies just before going into 2025. I would expect more actions in 2025 to keep the engine hot and running.

With Trump coming on as the president, the tariffs that we are expecting to hit China would definitely have a negative impact on the economy. However, like in Trump’s first presidency, I would expect the Chinese government to be able to overcome this in the long run.

In the stock market, I would expect dips (knee-jerk reactions) in reaction to the announcements but would likely stabilize later into the year.

Bitcoin and Crypto

Bitcoin recently hit USD100,000 after Trump got elected. The sentiments for crypto is extremely positive with Trump being touted as the Bitcoin President. There are lots of potential tailwinds like Bitcoin reserves, stablecoin regulation, crypto regulations, removal of current SEC chairman Gary Gensler and also election of various House members who are very pro crypto. The hype around crypto is expected to be strong until the actual implementation upon Trumps inauguration on 20(th) January.

There might be a few dips before and after depending on the general macro environment, but crypto is expected to stay strong till mid 2025. The in-flow of money is also expected to coincide with the interest rates and money market funds flow.

Further to the above fundamental change, the 4 year cycle is placed in exact overlap with the timeline we have seen above. Reference to the S2F model by PlanB, I believe human psychology always play out in similar pattern even if the 500k target by PlanB is not reached.

As such, I am cautiously bullish with the crypto stocks such as Coinbase and Marathon Digital.

Industries of interest

Investing is about moving forward with times. In the 1900s, there are automobile makers, manufacturing to invest in. Nearer to the early end of 1900s and early 2000s, banking and internet are the hot favourites. AI then became big hit in early 2020s.

Moving forward, AI remains the important sector to look at with the money likely flowing downstream. It is still logical to stay invested in the big techs and AI companies as they will stay dominant for quite some time before the next revolution.

Forget the banks and forget the manufacturing companies if you want to see extraordinary growth.

My Opinion

With Trump’s presidency, there will be “Trump Put” and “Fed Put” where stock market will still remain strong as these become important markers of how the President judge his own tenure. Major indices should end well in 2025 with my targets for S&P being around 10% at year end. However, I would be expecting some kind of hype and melt-up mid-2025 as the Trump policies kick in and retrace nearer to the 2(nd) part of the year.

My strategy has never been timing the market with 100% of my portfolio. I would be more or less 90-100% vested in the 1(st) half of the year and adopt a more conservative approach for 2H 2025.