2025 Market & Investment Updates: How to Meme Your Way into the Presidency

A few weeks before the U.S. election, I was thinking about ways to bet on the outcome.

I had a feeling Trump would win and that his odds were higher than the 50/50 that news sites, pollsters, and Nate Silver kept “forecasting.”

I thought about buying call options on Tesla, the S&P 500, or even the U.S. Dollar, but I eventually settled on crypto.

I moved cash around and prepared to make a large purchase of Bitcoin and Ethereum when BTC was around $65K and ETH was at $2.5K.

As I was about to press the “Buy” button, the lights and internet in my apartment cut out due to a power outage on my block.

Some might have interpreted this as a sign from God and given up.

But I prefer to ignore deities, so I immediately ran across the street to a coffee shop with wi-fi.

After all, buying crypto is more important than having electricity in your home.

I completed the purchase and am up ~35% over 2.5 months, even with the recent price drops (I also bought more at higher prices after this).

Across all my assets, I was up just over 30% for the year vs. a 25% total return for the S&P.

My net worth is over 3x its 2019 level vs. a ~2x multiple for the S&P over this period.

And yes, I eventually went home and called the utility company to get my power restored – but only after confirming my crypto trades.

Market & Investment Updates: My Current Portfolio

Here it is as of January 1, with the key differences below the chart:

• Equities: 52% [Down 2%]
• Crypto: 13% [Up 8%]
• Gold: 10% [Up 2%]
• Real Estate (Equity Funds + Owned Properties): 9% [Down 3%]
• Cash & Savings: 7% [Up 2%]
• Silver: 4% [Up 1%]
• Angel Investments: 4% [Down 1% – Recording these at historical cost]
• Real Estate Loans: 1% [No change]
• U.S. Treasuries: 0% [Down 4%]
• Natural Resources & Commodities: 0% [Down 3%]

If you look at the allocations and the returns for each major component (great for everything except non-U.S. stocks), an overall ~30% gain makes perfect sense:

With a better equity allocation from the start, earlier crypto purchases, and fewer “personal issues” (see below), I probably would have been up more like 35 – 40% for the year.

What Did I Change in 2024?

For the first half of the year, I maintained my old allocations from 2023 and rebalanced once or twice.

Because of some difficult personal issues, I could not contribute anything to my investment accounts for this period.

I don’t feel comfortable describing the exact problem(s) here, but let’s just say that I needed a large cash reserve due to something in the “legal, medical, or tax problem” category.

I haven’t yet fixed the issue 100%, but I made enough progress by mid-year to feel comfortable contributing cash and moving around assets.

Major changes included:

• Equities: I cut my allocations to international stocks and shifted to more U.S. stocks. The vast majority is now in a U.S. Total Market ETF (technically, a Vanguard Admiral Fund for lower fees).
• Crypto: I turned bullish on crypto in early 2023, bought in when BTC was at ~$30K, and became even more bullish in 2024, selling stocks, gold, and other assets and moving the proceeds into BTC and ETH.
• Treasuries: I sold my remaining U.S. Treasuries with almost perfect timing, getting out right before the 10-year yield started increasing in September.
• Gold / Silver / Commodities – I sold my remaining “non-precious metals” commodities and consolidated everything into gold and silver using the Sprott Physical trusts.
• Individual Stocks – I dabbled around with various biotech, energy, and tech stocks but shifted ~50% of these holdings into crypto by the end of the year. Trading individual stocks is not a great strategy when the overall market is up 25% (see below).
• Real Estate – Finally, I am attempting to exit a few private real estate funds, but the liquidation requests take months to complete, which means 9% of my net worth is still locked up here. Having some exposure to real estate is good for diversification, but I’m targeting closer to 5% for now.

So far, it seems like most of these changes have paid off.

But if crypto prices crash and international stocks greatly outperform U.S. stocks in 2025, I will look silly (again).

What Helped My 2024 Performance?

Put simply, U.S. stocks, gold, and crypto had a banner year, rising by far more than anyone expected.

Gold outperformed the S&P 500, and silver came close, which was even more surprising than crypto prices for the year.

The global M2 money supply rose, governments kept spending like drunken sailors, and government debt everywhere rose.

The U.S. election in November 2024 also acted as a huge catalyst, with Trump’s win sending Bitcoin, meme coins, Tesla, and many other stocks to the moon.

Many people seemed to be betting on rate cuts, but they did not materialize as expected.

Yes, the Fed cut rates 3 times but then “guided” to fewer rate cuts in 2025, which sent risk assets tumbling in December.

I’m sure that expectations of rate cuts drove stocks for the year, but much of it also comes down to: “Where else are you going to put your money?”

What Hurt My 2024 Performance?

The biggest drags this year were:

1. Bad Equity Allocation – I had too much in international and dividend stocks at the start of the year. Yes, many international stocks are cheaper than U.S. stocks, but I don’t think that justifies anything close to a 50 / 50 or 60 / 40 split because you also need to consider the growth prospects (see below).
2. Personal Issues – For the entire first half of the year, I had to sit on a large cash balance, which cost me at least a few percentage points.

A few smaller issues also hurt things.

First, I spent some time trading individual stocks and had ~10% of my total assets in them at one point.

I focused on event-driven trades and merger arbitrage, but these strategies performed poorly this year, with the merger arb index up only ~6%.

Governments increasingly blocked mergers, many deals fell apart, and I made some bad bets on questionable companies.

I was still up ~20%, but this was a bad result for the time and effort it consumed.

It could work if I were “retired” and spent 100% of my time on this, but it’s not a viable strategy for anyone like me who works 10 – 14 hours per day.

Finally, real estate has not performed well for the past few years, dragging down my performance.

I probably should have liquidated all my private funds as soon as I bought my property, so I’m doing that now.

Are U.S. Stocks Overpriced? Will There Be a Crash?

When I started investing in the stock market, I took an unusual approach and put 1/3 into U.S. stocks, 1/3 into non-U.S. developed markets, and 1/3 into emerging markets.

This was based on research and back-testing showing that this split delivered a ~10% annualized return over many decades with less volatility than a 100% allocation to U.S. stocks.

Plus, U.S. stocks have traded at a premium to the rest of the world since ~2009, and I prefer to buy undervalued assets.

That said, this initial allocation was clearly a mistake.

People online still say that U.S. stocks are overpriced and set for a crash, and they point to indicators like Market Cap / GDP, forward P / E multiples, CAPE ratios, etc.

There are at least three problems with this claim:

1) Where Else Will the Money Go? – OK, so institutional investors and individuals are going to sell their U.S. stocks and put the money into… Europe? China? Money-market funds? Bonds? Gold? Crypto?

Regions like Europe, Japan, and China are in even worse shape in terms of demographics and economic growth, so the main hope for solid market returns there is huge government stimulus.

That could happen – China already tried it this past year! – but I don’t think it’s a strong enough reason to shift heavily to international stocks.

Meanwhile, markets like precious metals and crypto are too small to absorb tens of trillions of capital outflows if the U.S. market crashes.

The bond market could more plausibly absorb this capital, but major institutions tend to have set allocation percentages and won’t switch everything on a dime.

2) Globalization – This claim about international stocks outperforming U.S. stocks in certain periods was more meaningful decades ago when companies were less globalized; now that most large companies operate in all regions, the S&P 500 already provides plenty of international exposure.

3) Catalysts – For a major divergence to happen, there would have to be a catalyst that affects the U.S. but not other regions. I find this unlikely in today’s world if you look at recent market crashes/declines in March 2020, 2022, etc.

This one comes down to thinking like a trader vs. thinking like a banker.

Bankers like to use metrics and multiples to analyze companies, but traders think about supply and demand.

And I don’t believe the supply/demand dynamics favor international stocks.

That said, having a small percentage in non-U.S. stocks is still prudent because anything could happen in a single year.

I just think the ~67% I started with many years ago was ridiculously high and that something in the 20 – 25% range is more appropriate.

Why I Am Long-Term Bullish on Crypto

I was an “early bull” back in 2013, buying crypto when Bitcoin was less than $1,000:

No, I did not keep it all – I sold it in 2017, 2021, and 2022 and bought more at higher prices over time.

In the short term, Bitcoin is a proxy for global liquidity:

But in the long term, it could be much more than that.

People in developed markets care about crypto mostly for speculation, but it could be life-changing for the billions living in emerging markets.

In many of these places, it’s the only reasonable way to save and invest because fiat currencies are continually devalued, and there are often restrictions on stock trading, moving funds outside the country, buying real estate, etc.

Crypto lets anyone put small amounts of money to work with a few taps of their smartphone.

And absent a coordinated effort to block it by every single government in the world (good luck), it can’t be stopped.

Yes, it’s incredibly volatile, so it’s not yet appropriate for day-to-day usage, but it is arguably the best long-term store of value in many countries.

I have no idea what will happen to crypto prices each year, but the structural forces are all in its favor: Massively indebted governments, huge deficits, constant money printing, and a worldwide demographic doom loop.

Assuming Bitcoin eventually reaches gold’s market cap of ~$18 trillion implies a price of nearly $900K.

If it eventually reaches the total global equity market cap of $111 trillion, that’s over $5 million.

Of course, it’s 100% possible that Bitcoin will crash to $10K, but it’s equally likely that it will reach the low millions by 2030 or 2040.

For me, a potential loss of ~90% vs. a potential 10x, 20x, or 50x gain is an easy bet to make.

I wouldn’t want 100% of my net worth in crypto, but I would be fine with something in the 20 – 25% range (vs. 13% currently).

So, What Will Happen in 2025?

Currently, most banks are forecasting S&P gains of 5 – 15% for the year, with almost no variance between the estimates.

My prediction is that all these estimates will be wrong.

We’ll either see a much higher or a much lower return, and the forecasts will be even worse than usual.

Since I don’t have much conviction on the direction this will go, I’m not changing my allocations for now.

Yes, there are geopolitical tensions, energy issues, the threat of tariffs, continued inflation, etc., so all that factors in and explains why I’m less optimistic than the consensus.

However, the biggest potential catalyst is if Elon and Vivek manage to cut government spending with DOGE (yes, this is a big “if”).

If the deficit fell to ~$1 trillion annually, I would have to reevaluate my views and change my asset allocations.

But since this requires the government to do something useful, I’m not holding my breath.