MOST RECENT POSTS
Market Note to Members (3/26/25)
Here is the note I sent to my Educational Members earlier today. If you’re interested in more content like this, first time members can email support@joefahmy.com for a discount code. Thank you.
One of the biggest challenges I have with this Educational Product is that people constantly want ideas. The problem is the stock market is not always going to be healthy, and I don’t like forcing ideas just to keep people happy. I think many people forget that the stock market actually has corrections and that individual stocks can drop considerably (and sometimes these individual stocks never come back). Don’t forget the 80/50 rule that I discussed in the Seminar Videos. 80% of big winners correct 50% and 50% of big winners correct 80%.
The title of my 2025 Preview was “Keep Your Expectations Realistic.” I mentioned that after two big years, don’t be surprised to see a pullback this year, a range, corrective action, etc. In other words, chop and consolidation. When I ran a webinar in early January reminding members that we are likely to see a 10-15% correction this year, so many members were upset because they didn’t want to hear this. They kept telling me “Joe, we just want you to be bullish” as if I can control the market, lol. I get it. The past two years have been great, and no one wants to hear that the party is going to pause for a bit.
Now, the same thing is happening. In last Monday’s webinar, I mentioned that we still haven’t seen a valid follow through day on the Nasdaq Composite or the S&P 500 and people didn’t want to hear it. They said but (insert name) says this, but (insert name) says that. While I highly respect these people, I don’t care what they say. I care what the market is telling me. Right now, we are still below the 200-day on the Nasdaq Composite, and we have not seen any strong volume from the institutions. If you don’t care about volume so that it fits your narrative and justifies you being on margin, then do what works for you. I have MY rules, and I have to stick to MY discipline.
Again, my style is not for everyone nor am I imposing it on anyone. After doing this for almost 30 years, I’ve realized that you’re going to make the majority of your money during powertrends, which occur 2-3 times per year. The rest of the time, it’s going to suck (I don’t know how else to put it). That’s why managing a portfolio of individual stocks is difficult because it involves decision making, and most people want to be loaded up on stocks and watch them go up forever, as if they are ENTITILED to receiving gains from the stock market all the time. I hate to break it to you, but that’s not how the market works. Once you accept this concept, you will have much more clarity in your approach to the market.
I can’t say this enough: I am BEYOND grateful for all the members and for your confidence in me. I honestly can’t put into words how much I appreciate you and your continued trust in me. However, I’m not going to tell you what you want to hear just so you can justify your positioning in the market. I’m going to be real and honest, and if my interpretation of the market is wrong, I will do my best to correct it quickly. Again, please be patient and show some discipline until we see more consistency from the big institutions because THEY control the market. A better market could be right around the corner, but it will require more patience until we see the healthier conditions required for a SUSTAINED new uptrend. I will discuss this further in tonight’s MidWeek Video. Thank you and good luck.
2025 Market Preview: Keep Your Expectations Realistic
I posted a 2025 Stock Market Preview Video on January 1 for my Educational Members. It’s over 31 minutes long and here is the link to the first 10 minutes of that video. Here is a summary of some of the main points.
1) At the beginning of each year, Wall Street Strategists from the top 20 firms give their S&P 500 target for the upcoming year. They are usually conservative with their targets and predict about a 6-10% gain because that’s around the average gain historically, and you can’t get fired for making a conservative prediction. Coming into 2023, for the first time in over 30 years, the consensus estimate was for a NEGATIVE year. Clearly, these strategists were affected by the recency bias of the bear market in 2022. The result: They were dead wrong, as the S&P 500 was up over +25%.
Coming into 2024, the average target was 4800. They were basically expecting a flat year because the index closed at 4770. The result: WRONG AGAIN, as the S&P 500 was up over +23%.
Coming into 2025, the consensus is for a +12% year (see table below). I don’t see this happening. My feeling is they got burned the past two years, and they are overcompensating for their prior bearishness. Once again, they are being affected by recency bias.
2) I don’t see a double-digit gain for the S&P 500 in 2025. I can see a positive year in the single digits, but it won’t be an easy year. That’s why this post is titled: “Keep Your Expectations Realistic.” After two 20+% years for the S&P 500, some digestion or consolidation should be expected. Some people might say this is a negative or bearish view, but it is absolutely not! I still love some individual stocks that I feel have considerable upside in 2025, and I still think there will be an incredible rally, but my instincts tell me that it will be later this year and from a lower level.
3) I am expecting a 10-15% correction at some point this year for the S&P 500. I just have no clue if it will happen early in the year or later this summer. This is not exactly a bold call because the average intra-year correction over the past 50 years is approximately 14.5%.
4) There’s way too much bullish sentiment coming into 2025, and my feeling is the market needs to shake some of this out. For example, according to The Conference Board, this is the highest level (in the history of their survey) of people expecting stock prices to rise in the upcoming year. In addition, there are incredibly high levels of leveraged bullish ETF ownership, and speculative call buying is also high based on the historical data. Keep in mind the market tends to fool the majority.
5) One of my favorite Stanley Druckenmiller quotes is: “Probably one of my greatest assets over the last 30 years is that I’m open-minded and I can change my mind very quickly.” I refer to this quote because I have no problem changing my mind if needed. Some might say this is a cop-out hedge, but I view it as being flexible and being able to adapt if the facts change. For example, I realize that after two 20+% years in 1995 and 1996, the market continued with THREE more amazing years. This was due to an invention (the internet) that revolutionized our lives and increased productivity. The analogy is that if the new current invention (artificial intelligence) helped to boost earnings, then I could see a very strong year. I would also need to see an accommodative Fed, but I don’t expect that anytime soon. BOTTOM LINE: Be open-minded and keep your stock market expectations realistic for 2025. Good luck this year!
I can be reached at: jfahmy@zorcapital.com.
Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained on this blog constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned on this blog. The stocks presented are not to be considered a recommendation to buy any stock. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.
MORE POSTS
