2025: Changing Dynamics – Strategic Shifts for Outperformance

As we move through the opening weeks of 2025, the global stock market continues to present an evolving landscape, and with it, both opportunities and risks. The re-election of President Trump has set a tone for markets over the last weeks with his protectionist policies and tariffs creating an environment set to benefit U.S. economic and stock market performance.

As you’ll recall, the defensive position we adopted in Q3 last year was with the aim of protecting against short-term market declines and economic shocks. Thankfully, no significant sell off materialised, however, the global stock market did trade largely sideways over this period (see below) reaffirming the approach we took was in fact the right one after adjusting for unrewarded volatility presented by equity markets. This 3-month period of consolidation coupled with continued strong economic data out of the US has given us the confidence to start to unwind the ‘overweight’ defensive allocation we took and move forwards with a more ‘balanced’ approach.

Looking ahead, the outlook for 2025 remains overwhelmingly positive. Wall Street’s consensus predicts gains of approximately 10% for the year, with U.S. equities once again expected to lead the charge – Europe, the UK, and emerging markets continue to face headwinds, not helped by new economic policies being introduced by the Trump administration. While these measures may pressure international markets, they create a favourable backdrop for strategic allocation to American stocks. As always, we will take advantage of any short-term market weakness to build positions in U.S. equities – such as the one we experienced yesterday (declines of c. 3%)

With this in mind, we have already begun to reallocate portfolios to capture the potential of U.S. markets and scale back exposure to underperforming regions. As such, you are well-positioned to benefit from optimize returns in 2025.

If I haven’t done so already, I would like to take this opportunity to wish you a very Happy New Year.

If you would like to schedule a time to speak with me, please use the link below or alternatively, you can reply to this email or WhatsApp me.
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