So Feb 2025 was the worst month since the Aug 2024 “Ueda Shock” sell off.
Market sentiment is at its lowest, with fear index exact same as the lowest point in Aug 5th, 2024.
From looking at the previous fear cycle, it took less than 1 month to recover to “greed” and 3 months later back to “extreme greed”.
So I want to outline my prediction and outlook here for the next few months.
Sustained downturn or a temporary pullback?
my opinion – temporary
fear reasons – tariffs, deepseek? (kind of recovered), DOGE, consumer report, inflation expectations
much less substance than the previous yen-carry unwind and recession scare.
recession fear not really on the table, nothing fundamentally changed since election
recent earning reports and growth trajectory are all healthy
Misunderstanding of tariffs and the trump administration?
tariffs might not cause inflation as people imagined
DOGE is probably more positive on the economy than negative
trump and white house is pro capitalism, wont let the market slide too far without “fixing” it
misunderstanding and irrational fear should prove to be buying opportunity down the road. probably this year
Prediction and Outlook
SP500 now 5800, basically back to pre-election levels.
Fear is at extreme level and VIX has creeped to 21.
Maybe it can last a little bit longer, but if it’s a small pullback, it should be contained within 7-10% from ATH. It’s down around 5% now so maybe another 2-3% to go max I would think?
Then with the secular bull market in tact and some upside catalysts, it should recover to previous ATH within 2-3 months, and I’ll recover this month’s loss within the first half year and maybe plus more.
The difficulty of conviction and discipline
easy to ask “how far will it go? what if I am wrong?”
not pretty looking at the numbers, -HKD$260,000 for the month
normal though with AUM of $3.6M and extra $400k margin
a recovery should get me +200-300k in a month easily
No regret for the previous purchases at higher prices because all part of the “allocate and rebalance” strategy.
Already bought slower since Jan and some buy the dip opportunity still now.
mindset of “superior asset” – gold, stocks, bitcoin.
Stocks and bitcoin taking a hit recently but when it runs up it runs harder than gold.
patience and discipline to keep buying down without fear is key.