Smoothing Out the Rough Roads
Stocks are 6% off their highs. Should you panic? We have advice to help smooth out the rockiest of roads.
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A Market Update for the Week
While 2024 felt mostly like driving on an uncongested highway, 2025 is more like driving on a bumpy back road. Wouldn't it be nice if our portfolios had cushy shocks?
Last week, I mentioned that if Monday showed no follow-through to the upside, the S&P 500 would test 5840 and then 5800. Well, there was no follow-through, and the market fell through both 5840 and 5800. Friday’s low was 5666, and the market rallied nicely in the afternoon to finish the week at 5770, off 3% on the week and 6% off the recent all-time high.
My call on Tesla TSLA is still in the running, but just barely. I think shares are ready for a bounce, but they almost touched my stop loss this morning.
I’m not going to leave a target this week except to say that things have changed. This is a high-risk market.
In my Fear & Greed article on Wednesday, I suggested that we are getting close to a bounce, and I still think that’s around the corner. But there’s still so much volatility coming out of DC that this is anything but a normal market. Both investors and corporations are scared to put money to work.
Rather than make any forecasts, I’d rather share this chart from Louis Llanes’ great article Why You Should Add Private Market Alternatives Investments Now.
This chart says that today's Price to Earnings ratio of 21.7 is historically high and we shouldn’t expect the party from 2023 and 2024 to continue in 2025. It suggests 3% annualized returns through 2027.
Rocky roads, indeed.
Should Investors Panic?
That said, should you sell it all and put the cash under your mattress? James “Rev Shark” DePorre has other advice right here in The Most Common Mistake Investors Make During a Correction.
Similarly, Ed Ponsi channels his inner risk manager to tell us how to Sleep Well Like Buffett With These 3 Steps to Stay Safe in a Volatile Market.
Become a Filthy Rich Animal
But the big news I want to share is that we launched our new newsletter, Filthy Rich Animal last Saturday. It’s geared towards newer investors and our first ten articles are an introduction to investing series.
Our plan is to provide those cushy shocks for portfolios. No, we won't guarantee market-beating returns. Our plan is simply to help investors develop their own plan. And then to keep them on track. And to make it fun.
For example. we wanted to start by addressing the elephant in the investing room. Many investors are scared that investing is rigged. We agree, but in a good way! We at Filthy Rich Animal want you to know that Investing is Rigged, but it’s Rigged in Your Favor!
So please join us or share this link with your friends and family members who could use a hand getting started.
On the Subject of Rough Roads...
The fine folks at Rivian were kind enough to share their latest and greatest truck with me. A 2025 R1T pickup with the big battery, three motors, and the all-terrain package. This thing is a beast.
How did I treat it? I abused it. You'd have done the same. That's the magic of Rivian. Their trucks are built for fun.
I wrote this article comparing the product philosophies of Tesla and Rivian and find that the Rivian R1T delivers on this EV feature that Tesla forgot.
Have a great weekend!
