2025, THE OUTLOOK FOR THE YEAR AHEAD
Markets during 2024 showed remarkable resilience giving investors good returns. Are markets over-valued? My view is that we are going to find out during 2025. The US market and other major markets were down during December. So too was our market.
Expect more volatility during 2025
Gold has been a star performer but not likely to be repeated during 2025.
There are tensions in the world, wars, China, and the Trump factor. If Trump proceeds with his election pledges, inflation will likely increase raising the risk of a recession and bond yields to increase.
On the plus side Trump is very pro-business and is looking to reduce Government red tape. This might be good for the US economy.
Interest rates will likely reduce during 2025 as inflation reduces. The chances of a mild recession in 2025 though, is very real.
China has a property valuation problem, but it also has big fiscal firepower. China has already looked to soften any negative reaction from its property crises. If Trump insists on tariffs, China can respond. This might actually be good for Australia as China looks to other markets including Australia.
Where to invest in 2025?
- Continue to increase exposure to Fixed Interest and cash.
- For direct shares consider Woolworths, BHP, CSL, Amcor and Ramsay health.
- Consider a small cap fund manager early in 2025.
- International Shares keep steady or take profits.
- Increase exposure to property.
The Lithium price remained low during 2024. RIO Tinto has made a bid for Arcadium and other lithium projects. I feel this tells us something about the direction RIO feels the price of Lithium will go.
I look forward to our next review meeting.
Yours Faithfully,
Steve Burge