First of all - best wishes to all for 2025.

And now...

Fast backwards to 2023 - Despite the best efforts of the Fed the music played on

thus proving Fed speak interpreters and other "experts" wrong.

In a September  2023 article titled  Mixed Signals Suggest Both Boom And Bust I said "At this time last year “experts” were predicting a recession in H2 of 2023 and the S&P500 would be down to 3,400.  Reality? Recession, what recession? And the S&P500 is over 4,500.  It ended 2023 up 24.2%."  

In that article I also touched on something much talked about today...

US Equity Exceptionalism

Quote "The first reference to the concept of American Exceptionalism by name, and possibly its origin, was by the French writer Alexis de Tocqueville in his 1835/1840 work Democracy in America.  It has proved to be the case many times since, for both good and bad reasons. Today I use it for a good reason - making money for investors including myself! 

Those “experts” I referred to above who last year said the world would be in deep recession by now also have constantly said the US markets are overpriced and the best plays would be in other places. 

Reality tells us otherwise and begs the question that having outperformed other markets for 12 out of the last 13 calendar years, could US equities dominate for another decade? My answer is yes." End quote.  

That Yes answer so far has proved correct  with the S&P500 going up 23.3% in 2024, closing at 5,881 and beating all other major markets.  Two consecutive years of above 20% increases - the first such result since 1998 - and the US dollar also strengthened to its highest level in nearly a decade.  All that despite the US Fed keeping interest rates too high and crashed many things including first time home buyers dreams of owning a house.  

A month later in October 2023 in an article titled The US Dollar Is The Main Safe Haven Currency I mentioned another point from experts that also proved wrong. They constantly said the US markets are overpriced and the best plays would be in other places such as the EU and EMs. Of my more than 40 equity investments most are in the US and they are primarily the reason for my super 41% increase in the year.  The EU and its euro currency declined further and few EMs have done well. 

In January 2024 I added more in  Making Returns In The Return Of The Roaring Twenties   including describing the Best Macro Environment In 30 Years.

Constant talk of a hard or soft landing approaching was ignored by the US economy that stayed nicely aloft with 2024 GDP growth of 2.7%.

Those S&P500 increases however also shows some dangers with the strength of the Magnificent Seven being something for investors to consider. Those seven companies made up 57% of the S&P 500’s market cap gain in 2024 and 65% in 2023.

The Magnificent 7 are not among my winners so which ones gave me my plus 41.5% "exceptionalism"? ...

-  Antero Resources  (AR) plus 54.5%

- Cummins (CMI) plus 45:5%

- Comfort Systems (FIX) plus 106%

- GE Vernova (GEV) plus 130%

- OneOK (OKE) plus 43%

- Primoris Sevices (PRIM) plus 130%

- Quanta Services (PWR) plus 46.5% 

- NuScale Power (SMR) plus 445%

- Vertiv (VRT) plus 136.5% 

Others gained over 30%. Virtually all of my big gainers are involved in one way or another with the energy/power supply sectors that I believe will continue to make profits for investors in the future. 

So much for the rear view mirror - what might the future bring...

A new nuclear age is dawning. That should ensure my above mentioned GEV and SMR picks continue to do well. GEV via its jv with Hitachi Nuclear Energy for nuclear.    I also recently bought into OKLO (OKLO) and Centrus Energy (LEU). The latter because it is a US leader in high assay low enriched uranium - HALEU - the fuel needed for the coming small modular reactor age. SMR is a big risk/big reward play at present.  

I - and possibly other readers of this article - would welcome hearing the names of other nuclear companies that some readers might know of. 

The US is leading with many things but is behind Russia and China with nuclear power technology.

The Grids.  As it plays nuclear catch up much must also be done to bring the old and overloaded power transmission grid into today's world of data centres and other new sources of demand. We are one quarter of the way through the 21st century and little has been done to upgrade the grid since midway through the 20th!  My above picks PRIM and PWR plus others like STRL should do well if much needed investment starts. Likewise three of my non American picks that are the the world's largest cable makers NEX on the Paris exchange, NKT on the Copenhagen exchange and PRY on the Milan exchange. Bloomberg has reported about how they are making a killing and show their 5 year S&P500 beating performance over the past 5 years under that link. 

Natural gas demand will continue to grow. As of Jan 1, 2025 the EU's supply of gas from Russia via a pipeline through Ukraine stopped after 50 years. That means 5% of the EU's gas supply must be sourced from elsewhere. The president of the EU Commission wants to buy more LNG from the US  and incoming USA president Trump is encouraging the EU to buy more or face the threat of tariffs. Asia's gas prices have increased already in anticipation of competition for supplies following the cessation of EU supplies from Russia.  

The US power supply system is facing huge demands today that new nuclear will not satisfy until around 2030. Wind power has topped out and solar is approaching that point. Both are anyway intermittent. Only gas can fill the gap. US gas prices are among the most volatile of all commodity prices and too often are affected by the weather forecast for Boston! More consistent demand should ensure higher and more stable prices.

Most US producers have managed to cut costs sufficiently to make nice profits at low prices so some may make huge profits as more demand comes soon.  I include my picks among those: Antero Resources (AR), Gulfport Energy (GPOR) and Range Resources (RRC). Midstream companies should do well too - Antero Midstream (AM) OneOK (OKE) Williams Companies (WMB) being my picks - as should sector equipment suppliers such as Swiss company Burckhardt Compression, BCHN on the Zürich exchange, and Chart Industries (GTLS). Exporters such as Cheniere Energy (LNG) will be winners too. 

Dangers for 2025 include ...

- expecting the market to repeat the 2023 and 2024 gains. Stock picking will be essential in my view and especially after the first quarter of the year

- The next Fed led crash 

The latter is a very real danger in my view and I am currently writing an article that should be available in the next week or so titled Prepare For The Next Fed Led Crash

For now some suffer life destruction in Ukraine, parts of Africa and the Middle East. In 1971 John Lennon of the Beetles had a solution in his song Imagine.

The lyrics under that link are as follows ...

"Imagine there's no heaven
It's easy if you try
No hell below us
Above us, only sky

Imagine all the people
Livin' for today
Ah

Imagine there's no countries
It isn't hard to do
Nothing to kill or die for
And no religion, too

Imagine all the people
Livin' life in peace

You may say I'm a dreamer
But I'm not the only one
I hope someday you'll join us
And the world will be as one"

Let us all do our best to towards a solution for those whose lives have been torn apart even as we enter the second quarter of the 21st century with many of us hoping/believing the evil behaviour of some had been left behind in past centuries where they belong.   

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