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Finishing up the equities portion of the 2025 Fearless Forecast, let’s turn to sectors. Last year, I said that technology would not lead again, but also would not lag. And it finished in the middle. I liked financials, healthcare, biotechnology, energy and REITs. While financials led the market, the other sector picks lagged.

For 2025, I see the same impact by tech. And I am going back to the well with biotech, energy and healthcare plus regional banks and retail to a lesser degree. I will also add consumer staples but not right out of the gate. Along with healthcare, I think defensive sectors get some attention after Q1 and possibly even later. Last year, as a bonus I saw ARKK soaring 40% during 2024. In 2025, I am still with that horse as it soars to at least $80 during the year.

Fixed Income

Last year I said that bonds weren’t offering any strong opportunities and that they would likely trade below their 2023 high and above their 2023 low. That’s exactly what they did. For 2025, I do see the 10-Year making a multi-decade high above 5% which is what was seen in 2007 before the financial crisis. I would be a buyer of bonds above 5.20% as I believe the move would be terminal and lead to yields falling well below 5%. In any case, I see bonds become more attractive during the warmer months.

Dollar

While a strong dollar has its benefits globally, it has to be strong for the right reasons, like solid economic growth that is better than its counterparts. A strong dollar when the global economies are weak is not a good reason. 2024 dollar strength spills over into 2025 with the Dollar Index soaring above the 2022 peak before summer ends. After that the greenback falls to year-end.

Gold

Last year, I saw gold hitting $2500. It soared all the way to $2800. In 2025, I see more muted gains to $3000 or so.

Oil

In 2024 I was a buyer in the low $60s and a seller in the upper $70s to low $80s. The problem was that oil never got to the low $60s. $65 was all the bears could muster. In 2025, oil gets into the $90s with a chance at the century mark over the summer.

Economy

With the election over, much of the stimulus has been exhausted. The U.S. economy is behaving just fine as 2025 begins. However, without a massive tax cut, the “have not” consumers are maxed out on their credit cards and home equity lines and their auto loans are becoming delinquent, all thanks to inflation. While deregulation is an economic tailwind with the potential for a tsunami of mergers, acquisitions and IPOs, tariffs and deportation will have a negative impact.

The economy will be in good shape for at least the first half of 2025 and then 3%+ GDP growth slows to 2%+ as unemployment rises and inflation falls towards 2%.

Fed

In 2024, the masses predicted the FOMC would cut interest rates 6-7 times. My forecast was hugely less at 2-3 times with the risk being even less. For 2025 I see a Fed that is largely in neutral with “wait and see” being their dominant theme. I do not see any early year rate cuts and perhaps 1-2 later in 2025 as growth slows and inflation comes down. I absolutely do see President Trump attacking Jay Powell and the Fed for not moving more quickly.

Bitcoin

Coming into 2023 with Bitcoin around $14,500 I thought it would at least double during the year with a chance at getting into the $30,000s. In 2024, I thought the sector would calm as a plethora of new, exchange traded products were finally approved. Exceeding $50,000 was my forecast for Q3 or Q4.

In 2025, I see less upside for Bitcoin than we have seen in a few years and lots of downside. While a run to $120,000 or $130,000 would not take much work, I do see a significant decline unfolding during the year. The magnitude will be at least 20% and as high as 40%.

Bonuses

I am usually wrong with these because they’re often my teams, but that won’t stop me from opining anyway. Give me the Bills (again) and the Eagles in the Super Bowl with Buffalo finally winning the big one. I don’t know which of my teams is worse, the Cowboys or the Jets.

Last year, I predicted that the UCONN men would be the first team to win back to back national championships since the Florida Gators in 2007. For 2025, my pick is that the UCONN women make it to the championship game in Tampa and Geno Auriemma vies for his 12th ring. Finally, the Yankees dominate the AL, but cannot keep pace with the Dodgers.

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