End of An Era

 Today, December 31, 2025, marks Warren Buffett’s last day as the Chairman and CEO of Berkshire Hathaway and it feels like the end of an era. For many years, I have had the pleasure of looking up to many of the masters of the stock market. People who produced outstanding results for themselves and their clients. There are also many who toiled in anonymity and produced wonderful results for their clients. I have also had the pleasure of working with many different types of investors, and that has allowed me to see what works for me and what I could never fully grasp.

Mr. Buffett has been the CEO of Berkshire Hathaway since 1965 (that was before this 59-year-old writer was even born!) and over that 60-year span the stock has produced a compounded annual growth rate of 19%, easily beating the market benchmark. He has built a bit of a cult following and his annual meetings in Omaha every May are stuff of legend. He has been known to take large positions in a small number of equities and reaping large returns. By and large, he has done it the right way. Along the way he has doled out some wonderful advice and tidbits about his investing style. He bought businesses, not pieces of paper. He bought businesses that he understood and could easily explain to a 10-year-old. He studied balance sheets more than income statements. He loved cash flow and he loved businesses that generated large sums of cash. He said that his preferred holding period for a stock is forever. He said that when he bought a stock he would be comfortable not looking at the stock price for the next five years. He clearly bought for the long-term, not for the next quarter. Did he make some bad investments along the way? Sure. But his winners far outnumbered his losers.

So now another investment genius has decided to move on. It made me realize that these masters that I have looked up to for so long are old – and I am right behind them! Mr. Buffett is 95 years old. Every year, I like to put out a piece called “10 Things” that are based on a piece I used to read called “10 Surprises” by Byron Wien. Mr. Wien died in 2023 at the age of 90. Peter Lynch is another great investor whose investment wisdom I liked to follow. He is now in an advanced stage of cognitive decline and no longer makes public appearances. Howard Marks is another investor whose wisdom I like to follow and he is now in his 80’s. I think of some of the people I used to work with. The equity manager who I most admired was a man named Jim Moffett, and he is in his 80’s. He had many pithy little sayings that conveyed a bunch of wisdom. I think of Dave Anderson, whose investment style I could never wrap my mind around, but I am thankful to have been exposed to it. Mr. Anderson also gave me every opportunity I had at UMB and for that I am forever grateful. Mr. Anderson passed away in 2013. For personal money management, nobody could touch my Dad. This is a respect and admiration that has grown by leaps and bounds as I have aged. I will always remember his great advice about buying stuff simply because it was on sale – “It’s the money you spend, not the money you save, that counts.” If you would not have paid full price for it, what have you really gained? If you would have paid full price, and you got it on sale, that was a winner!

I still remember going to a Barnes & Noble in either late 1999 or early 2000 and seeing one of the tables at the front of the store highlighting books around the theme of “Investing.” I remember that every single book on that table was about day trading! I cringed when I saw that and I can only imagine what Mr. Buffett’s reaction would have been. I think that both of us would have preferred to see that table burned to the ground and the memory of it erased. That was not investing that was gambling. If I am going to gamble, then I want to gamble on something far more entertaining that a bunch of numbers on a computer screen! Finally, during the biggest bull market in history, 80% of day traders lost money! Mr. Buffett’s slow and steady won the race and that is how I will always advise others to invest their money.

Today is the end of an era. And a little bit of market wisdom retreats to the sideline. Mr. Buffett did what he loved, and he was great at it. From what I can gather, he has been retired since 1965! Meanwhile, the market will go on, and other great investors will come along. But, this has been a golden age for someone like me to look up to these masters.

Ten Things For 2026 - The Chickens Come Home To Roost

Every year at this time, I like to look ahead to the New Year and make forecasts in the spirit of Byron Wien, who used to put out his “10 Surprises” list. Mr. Wien would put out 10 possible events for the new year that he noted were outside the consensus thinking, but for which he thought had a greater than 50/50 chance of happening. I am not placing a probability on these events, so I will simply call them “10 Things For 2026.” I became familiar with Mr. Wien’s work during the 1990’s when I was still an equity analyst who thought he knew everything and Mr. Wien was an investment strategist for Morgan Stanley, and who knew much more than I did. Most of Mr. Wien’s predictions naturally centered around the financial markets. Mine will include the financial markets but will also include other areas of interest to me.

Overall, I am not optimistic about 2026, either from a financial market perspective or any other perspective. Next year should be a year that this country should be in quite a celebratory mood, as it will mark the 250^th anniversary of the passage of the Declaration of Independence, in which we declared our separation from Great Britain. This was one of the most notable events in all human history, and yet I am not convinced that the citizens of the United States appreciate what our Revolution truly meant. As Abigail Adams wrote to her husband John, “Future generations who will reap the blessings will scarcely know the hardships and sufferings that we’ve endured on their behalf.” We are becoming – or have become – the very people that we rebelled against 250 years ago.

In short, 2026 is looking like a year in which our chickens will come home to roost. Our culture has been building up towards some sort of catastrophic event, or events, for a number of years. We live in a restless and angry age. We are losing our humanity. We are losing our soul. We are normalizing political violence and have become accepting of it. We place a lower value on human life. Our closest and most intimate relationships are becoming transactional.

I know that many will see reasons to be optimistic. I look for AI to continue producing strong results, although we are seeing a noticeable slowing in that sector. Inflation looks like it is well tamed, wages are rising and this bodes well for affordability.

Here are my 10 Things For 2026:

1.      I know that I am way outside the consensus on my first “10 Things” outlook for 2026. The consensus is calling for stock indexes to rise by double digits next year. What I see is that stock market indexes will produce a negative return next year. There are several factors at work here. First, valuations are historically high, specifically with the “Mag 7” stocks that have continued to soar higher. Higher stock prices do not fall simply because they are overvalued. There needs to be a catalyst, a reason to send the stocks down, and that typically comes from either a slowing economy or from some sort of financial crisis. Second, an historically high amount of stock has been purchased on margin (ie debt). Falling stock prices produce margin calls, which makes dramatic drops in stock prices even worse. Finally, the stock market tends to follow a Presidential cycle. During that cycle, the year of the mid-term elections usually produces a below average return, and I believe we will see more of the same in 2026.

2.    Another area where I am outside the consensus is economic growth. According to The Blue Chip Survey, GDP is expected to come in at 1.9% for 2026, which is below average. I think economic growth might be less than that, more in line with 1%. Minds much smarter than me see many tail winds that will produce higher than expected growth with moderate inflation, but I see head winds that could slow down the economy. For the economy to hold up like the experts are predicting, employment will need to hold up. I think employment is highly vulnerable next year.

3.     I talk of chickens coming home to roost in 2026, and this will occur in several places. First, household debt is at record levels and continues to climb. Mortgage debt, auto debt, credit card debt and personal debt are all at record high levels. This can go on as long as employment holds up. However, the latest employment report put the unemployment rate at 4.6%, the highest level in four years. My personal belief is that the economy has been a house of cards for the past 3-4 years, largely because the growth has built by an unsustainable mountain of debt. Job growth in full-time employment has been stagnant during this time and the growth in jobs has come from areas like contract jobs, gig economy jobs and part-time jobs. I would not be surprised to see unemployment rise to more than 5% - 5.5% in 2026, which would produce in spike up in credit defaults and bankruptcies.

4.   Crypto currency will be another area where the chickens come home to roost. Bitcoin is down about 8.5% on the year as I write this, and this is an asset that can easily see a big drop in a hurry. As anyone who has ever sat in finance class at an accredited university knows, the intrinsic value of any financial asset equals the present value of the future cash flow streams. The intrinsic value of bitcoin is literally zero. What backs its valuation? Air? Right now, this is an asset that looks like it is dependent on the greater fool theory, and the world will be running out of greater fools in 2026 (the world will not be running out of greater fools – those greater fools will be running out of money). Any flight to quality, which I believe we will see in 2026, will not include Bitcoin or any other crypto currency.

5.   Gold and silver will be two assets that will hold their value in 2026. While both have experienced tremendous rallies in 2025, a flight to quality will include both assets. Both assets tend to spike up in price during inflationary times. I do not see inflation being a problem in 2026. I do see inflation staying in the 3%-3.5% range for the year, which is higher than the fed would like. However, given the struggles that we will see in other areas of the economy, I do expect to see interest rate cuts during 2026.

6.    I really hope I am wrong with this one, but I think we will see a significant act of political violence in 2026. Perhaps multiple acts. We live in a restless and angry age, one in which people feel justified in committing acts of violence.

7.    In the fall mid-term elections, I expect the Democrats will retake the house and I believe the Republicans will hold onto the Senate.

8.     By the end of 2026, I expect that we will see increasing calls for President Trump to resign coming from an unexpected source: Republicans. The President gave us quite a glimpse into this with his appalling reaction to the tragic death of Rob Reiner, which he managed to make about himself. Republicans widely condemned the President’s reaction. When confronted about this by a reporter, Trump doubled down on his awful take. I get that Mr. Reiner said awful and nasty things about the President on social media. But when you are the President, you must be the bigger person and take the high road every time. The overall reaction was not one of an emotionally and mentally healthy person. Reactions like this will become more frequent and equally as extreme, if not more so. Of course, President Trump would never consider resigning. This is akin to losing in his book and he honestly does not have a mentally healthy approach to losing.

9.  The Ohio State Buckeyes will repeat as college football champions defeating the Texas Tech Red Raiders, and the Los Angeles Rams will win the Super Bowl over the Houston Texans. The Michigan Wolverines will beat the Arizona Wildcats for the college basketball national championship.

10.  Venezuela promises to be a hot spot in the world in 2026. This is ultimately about the oil. Venezuela has the largest proven reserves of oil in the world. Larger than Saudi Arabia, larger than any Middle Eastern country and most definitely more than either Russia or the United States. And yet, their economy is on the verge of collapse (how does that happen with that much oil? – See below)

I want to close out with thoughts about a couple of things that made advances in the marketplace of ideas in 2025. When I was a fresh-faced rookie equity analyst back in the early 1990’s, I was given a great piece of advice. That advice was that these are the five most dangerous words on Wall Street: “It is different this time.” The words not only apply to Wall Street, but to all parts of life. Yes, people have different tools and different toys at their disposal, but human nature has not changed since Biblical times and will not change in the future. When you argue that it is different this time, you are saying that human nature will change. It never will. I thought about this as I saw two recycled – and failed – ideas from the past come forward again in 2025. Those two ideas are: 1. Tariffs and 2. Socialism. President Trump has made tariffs a foundational piece of his economic program. But I do not think he really knows what a tariff is. A tariff is a tax, pure and simple. It is a tax paid by the end consumer. I believe that President Trump thinks that other countries will dip into their Treasuries to pay the tariffs. Nothing could be further from the truth. There is not one school of economic thought that says that higher taxes – whether it is a tariff, a higher income tax, or an increase in any other tax – produces widespread prosperity. In fact, every school of economics believes that taxes hold down economic growth. As for socialism, it always sounds appealing in theory, but in practice has produced miserable results. In the present debate of “Socialism vs Capitalism,” I will always side with capitalism. Socialism revolves around state ownership of the means of production, and governments have proven them highly inefficient allocators of capital. A recent article (https://bit.ly/4saAppt) explains it well and echoes my beliefs on this subject. I am a big believer in free markets and free enterprise. I am also a big believer in the idea that human nature does not change.

I feel as though I must apologize to the reader for such a pessimistic outlook for 2026. I hope that in many ways, I am wrong in my outlook. If you made it this far, thank you for reading.

I wish everyone a blessed 2026 with much love to all.

Where Does The Love of God Go?

 

This past November 10 marked the 50^th anniversary of the sinking of the freighter, The Edmund Fitzgerald on Lake Superior. Twenty-nine men lost their lives as the ship sank to the bottom of the lake. This event was forever memorialized about a year later as Canadian folk singer Gordon Lightfoot (1938-2023) wrote, recorded and released his hit song, “The Wreck of The Edmund Fitzgerald.” This is one of the most haunting songs I have ever listened to, but one part of the song really stands out to me. He has just sung about the final wreck of the big ship and then there is a musical bridge which is both eerie and terrifying at the same time. The bridge fades out, the music softens and Mr. Lightfoot comes back and sings this line: “Does anyone know where the love of God goes when the waves turn the minutes to hours?”

Gordon Lightfoot was a terrific storyteller and this song was a masterpiece. The question he asks above hits hard. For those raised in church, the easy answer is that God’s love is always there and never leaves. Our God is an awesome God! Yet, the easy answer leaves you unsettled and unsatisfied when life hits you hard and knocks you down. For me those moments when “the waves turned the minutes to hours” were when Angie died. All of us have moments like that, whether it is tragedy or betrayal or something else sinister. Like I am prone to do, I turned to the word of God for answers. Again, what I found was troubling. 1 Kings 19 tells us how the prophet Elijah ran as far as he could from Queen Jezebel (that name just sounds wicked) after she had sent a messenger to Elijah. The messenger relayed that the Queen was sending an army of men after him to slaughter him in the next 24 hours. Elijah had slaughtered the prophets of the god Baal after challenging them to call their god and they failed, as told in 1 Kings 18. It is quite a humorous story. Then we get to verses 11 & 12 in Chapter 19 that say, “The Lord said, “Go out and stand on the mountain in the presence of the Lord, for the Lord is about to pass by. Then a great and powerful wind tore the mountains apart and shattered the rocks before the Lord, but the Lord was not in the wind. After the wind there was an earthquake, but the Lord was not in the earthquake. After the earthquake came a fire, but the Lord was not in the fire.” I have always been told that I worship an omnipotent God, that he is everywhere all the time. Yet this tells us that He was not in the powerful wind, that he was not in the earthquake and he was not in the fire. Where was He? And where was He when Jesus cried out on the cross, “My God, my God, why have you forsaken me?” (Matthew 27:46 & Mark 15:34) And no doubt, God was not in the storm that night on Lake Superior. Verse 12 goes on to tell us that the voice of God is a whisper, implying that we need to find ourselves in a quiet moment to truly hear His voice.

I will state here that I do not doubt that God loves me, that He is Almighty and all powerful. But, sometimes I have questions. We all have questions, and that is good. For the time being I leave this question without a good answer. And sometimes not getting a good answer is all I get for now. I keep pursuing the answer, knowing by faith that the answer will be revealed to me.

I will close out with another master storytelling song from Mr. Lightfoot, my personal favorite of his, “Carefree Highway.” It is a story of reminiscing about a love lost. I think of the Carefree Highway in Arizona, a 30-mile stretch of road that is north/northwest of Phoenix. For those not familiar with the highway system in Phoenix, they name their highways. If you are driving on I-10 in Phoenix, you are actually on the Maricopa Freeway (Phoenix is in Maricopa County, Arizona). I have spent a small portion of my life in Arizona, particularly the Phoenix/Scottsdale area and I have many fond memories. Everything from a summer job while I was in college (1988) to a guys’ weekend golf trip to spring break trips with my sons. Obviously, I highly recommend Arizona. The Grand Canyon remains the most amazing place I have ever seen. Still on my bucket list is a trip to Sedona. Back to Mr. Lightfoot’s song. In it, he sings an unforgettable line to me: “Now the thing that I call living is just being satisfied with knowing I got no one left to blame.” So give me a convertible (I’ll settle for an open sunroof), an open stretch of highway basking in the sun, some good tunes turned up loud and not a care in the world. Carefree Highway, let me slip away on you!

Raiders and Reunions

This past weekend, I attended my 40th high school class reunion (Shawnee Mission South class of 1985). Something happened at the events that I attended that left me amazed - I thoroughly enjoyed myself. Before I go further, I will happily acknowledge that those who put on the events that I attended - particularly the main event on Saturday night - did a terrific job and put on a wonderful reunion. They deserve all the credit in the world, and I am happy to throw that credit their way.

This was not about rehashing all the stupid stuff we did in high school. I'm sure there were some memories recounted during the evening, but it was about connecting with people and where they are today. There were plenty of smiles, laughs and hugs all around. These were all very good things. I enjoyed conversations with people that I barely said two words to in high school. But the connection today, even though it was only a few moments, was priceless. That was then, this is now. I also enjoyed seeing a few people for the first time since high school and hearing about their lives today.

I am not the same person that I was forty years ago, and for that I am grateful. If I am the same person today that I was then, what was the point of the last forty years? Each of us has had the whole range of experiences that have shaped who we are today. And it is a little bit different for each of us. And yet, in so many ways, we are all very similar. I loved hearing about it all. My favorite observation for the evening came from the lady who said that all she wanted from the reunion was the see everyone and know that we are happy in life. So simple, yet so beautiful. I completely agree with that sentiment.

Thank you to all who said hi and took the time to visit with me. I enjoyed the moments and enjoyed hearing about where your lives are these days. Thank you once again to those who organized the events of the weekend. It was a resounding success! We were a damn good class and for those few moments, I truly understood that there is nothing greater than a Raider!!

Letting Go

"Memories
Light the corners of my mind
Misty watercolor memories
Of the way we were"

Barbara Streisand, The Way We Were, 1973

I have been undergoing a massive downsizing. Going from about 3,600 sq ft to 800 means you learn about things like minimalism and you learn what you really need and do not need. Downsizing can also be quite a spiritual cleansing as you clear out the physical clutter in your life. De-cluttering does not mean just get rid of everything. You learn what things you have truly serves your soul and has value, purpose and meaning in your life.

This weekend has been an example of this in my life as I went through countless sympathy cards from 25 years ago. I realized something as I looked through them - they were no longer comforting. The cards no longer contained any value or purpose in my life. Please understand that I am forever grateful to those who took the time to express their condolences to my family and me during that devestating time. The words meant a lot to us all and provided much needed comfort. The cards and letters were eventually gathered up and buried deep in the crevices of excess storage, not to be seen again until this past weekend. I knew as I read them again that they were no longer needed. My life has moved forward, my kids' lives have moved forward, and that is good. The cards, letters and their words were good in that time and space. I am no longer in that time and space. All the condolences could do was take me back to that time that I would rather forget. 

I did choose to keep three letters which are still meaningful. The first was from one of Angie's former roommates at Baylor, who addressed the letter to my sons. The letter brought out Angie's ability to love deeply. The second was from one of her former colleagues at Ecolab who really highlighted the respect she garnered in her profession. The third was from The First Baptist Church of South Pittsburg, Tennessee. This church had a ministry at the time that would send volunteers to local hospitals to visit and bring comfort to those who were suffering. There were several members of that church who came to the hospital and played with the boys (keeping them distracted) while I was being treated for a broken collarbone. The pastor's wife, sizing up the situation, went to Wal Mart and bought some overnight clothes for the boys and grabbed some her husband's clothes for me (apparently, we were roughly the same size). I will never forget the kindness and generosity of those people who came and stayed for several hours. In my attempt to repay their kindness (which I could never truly do), I sent a donation to the church and a check to the pastor's family to repay them for their out-of-pocket expense. 

I received a letter back from the church, signed by the pastor, thanking me for my donation. As I read it further, I was struck by the fact that he was hoping to purchase hand bells and create a permanent hand bell choir that would make beautiful music for many years. Hand bells really do make a beautiful sound, and when done well are joyful. Angie loved hand bells and to think that out of something so devestating, something beautiful could arise does bring a sense of happiness to my soul. Another thought has crossed my mind. I never did find out if the church purchased those hand bells. I hope they did!

One final thought. I would not recommend listening to Barbra Streisand singing "The Way We Were" while de-cluttering and parting with things from your past. It is a beautiful song, and Ms. Streisand's vocals were flawless in singing this song. But it will tear your guts out.

Scattered pictures

Of the smiles we left behind

Smiles we gave to one another

For the way we were

The Significance of Today

 

Today, the Kansas City Chiefs are playing for their third consecutive Super Bowl championship, a feat never before accomplished. However, the significance of today goes back over 50 years for me. I first became a Chiefs fan back in the early 1970’s when Hank Stram was still the Head Coach and Len Dawson was the Quarterback. The Chiefs had just begun a downward slide that would last in one form or another for 50 years.

I was there for the 18 seasons between 1972-1989 when the Chiefs appeared in just one playoff game. When the Chiefs were coached by people like Paul Wiggin, John Mackovic and Frank Gzanz, and presided over by GM Jack Steadman. I was there during the Marty Schottenheimer years where we enjoyed regular season success but suffered heartbreaking playoff defeats. Marty also suffered the same fate in Cleveland, producing regular season success and two heartbreaking defeats against Denver in 1986 and 1987. In Kansas City, Schottenheimer took the Chiefs to the doorstep of the Super Bowl in 1993 before losing to the Buffalo Bills in the AFC Championship Game. Then came crushing defeats against the Indianapolis Colts in 1995 and the Denver Broncos in 1997. Thus began a 21-season stretch between 1994-2014 where the Chiefs would not win a single playoff game. This would include home playoff losses to the Colts in 2003, and the Baltimore Ravens in 2010 and an inexplicable loss to the Colts (they sure show up here a lot) in 2013 where the Chiefs blew a 38-10 lead. This was another lost period for the Chiefs as they were coached by the likes of Herm Edwards, Todd Haley and Romeo Crennel. Then came more heartbreak with home playoff losses to the Pittsburgh Steelers in 2016, the Tennessee Titans in 2017 and the New England Patriots in 2018.

The New England defeat in the 2018 AFC Championship Game still ranks (and will probably forever rank) as the most heartbreaking defeat I have experienced as a Chiefs fan. Nothing will ever top the Royals-Yankees Game 5 in 1977 in the heartbreaking defeat department, but this was a very close second. I watched with absolute joy as the Chiefs intercepted a Tom Brady pass with about 1:30 to go in the game and the Chiefs up 28-24. Only to watch it all evaporate with an offside penalty on Dee Ford that gave the great Tom Brady the opening he needed. Needless to say, Brady and the Patriots took full advantage. What would it take for the Chiefs to break through? How much more could a long suffering Chiefs fan take?

This is where I close with some reality (I am forever a realist).  As a Chiefs fan, with this kind of history, I have felt eternally blessed by the past six seasons. We have all certainly been blessed. There are plenty of others who are much more die hard fans than I, who have a longer history with this organization. Today is for these fans. I know that no fan of any team is entitled to a winning season, much less a championship season. At the end of the day, this is just a football game. I do not put my hopes and dreams in a bunch of football players, or in a football team. To see a team that I have rooted for all my life have a chance not only at a championship season, but to make history is just cool! GO CHIEFS!!

Ten Things For 2025

 

Coming up with a “Ten Things For 2025” list has admittedly been quite difficult. This stems from the fact that 2024 ended up being a year marked by civil unrest, dramatically shifting voting patterns in the election, and a big shift in how people access their news and how they perceive those who deliver the news. The financial markets displayed a great deal of confusion, but in the end, stocks were way up and the rally appeared more broad-based. Going into 2025, things are smooth on the surface, but there is a lot going on underneath that will eventually come to the surface.

Every December, Byron Wien who was the former US Investment Strategist at Morgan Stanley would issue his “10 Surprises” column for the upcoming year. He defined surprises as events that were outside the consensus thinking, but which he thought had a better than 50% probability of happening. I imagine that Mr. Wien would have a field day with the current conditions. This is my inspiration for what I call my “10 Things,” for the upcoming year. Mr. Wien’s focus for his “10 Surprises” list focused on the economy and markets. And I do have some predictions in this area.  Some of my Things are in line with consensus thinking and some will be way outside of the consensus. Last year, two of my predictions for 2024 came through. I had said then that Joe Biden would not be the Democrat’s nominee for President and that the Federal Reserve would only cut interest rates twice (consensus was for 6 cuts). The Fed cut rates for the third time this year just yesterday.

This past year has been one of civil unrest, most notably shown in the two assassination attempts on Presidential candidate Donald Trump. United Healthcare CEO Brian Thompson was assassinated and CashApp co-founder Bob Lee were also murdered, both in targeted hits. San Francisco 49ers first-round draft pick Ricky Pearsall was shot during an attempted robbery. Fortunately, he recovered and played for the 49ers this season. Unfortunately, I think we will see a lot of continued civil unrest in 2025.

Stock market is way overvalued. Stocks do not go into bear markets simply because they are overvauled. They keep going up until they don't. There is usually some sort of financial event that creates a bear market, and the conditions seem to be getting more and more ripe for some sort of credit event to occur.

Economy built on a mountain of debt. Personal debt, government debt is off the charts. Interest on federal government debt is at a record high. This is going to get worse as 5-year and 10-year Treasury notes mature and are rolled over into higher interest rate notes. Initial projections for FY 2025 budget deficit ran $2.3 billion. That budget deficit is now projected to run over $3 trillion. Household debt is manageable as long as employment stays strong. But cracks are developing there. Over the past 16 months, full-time employment (the highest quality jobs) has declined by 1.4 million. The entire creation of jobs over that time has come from contract jobs, gig economy jobs, part-time and seasonal jobs. Further cracks in employment could spell big trouble for household debt, and we may already be seeing this in credit card debt.

Now, onto my “Ten Things For 2025”:

1.      The Federal Reserve’s first interest rate action in 2025 will be to raise interest rates. We have seen 3 rate cuts in 2024, and this has been followed by higher inflation readings and higher long-term rates. The combination of lower short-term rates and higher long-term rates is called the steepening of the yield curve. A steepening yield curve is generally interpreted as a positive event for the economy, and I do expect to see some strong economic numbers coming in the first half of 2025. The Fed has indicated that they are in no hurry to cut rates further. There may not be any rate actions in 2025, but if we do see signs of an over-heating economy, the Fed will be raising rates. They do not want to repeat the mistake of 2021 in which they called inflation “transitory” and that no increases were needed. Inflation only became transitory because the Fed raised rates.

2.      The stock market will return 10% in 2025. I see all the gains coming in the first half of the year and then we will see a flattening out of returns in the second half.

3.      There will be a credit event in 2025. Debt is basically funding all of the strength in the US economy. Debt is one of those areas that show on the surface that things are manageable, the trends appear to be going in the wrong direction. Overall household debt is at a record $17.94 trillion dollars. Credit card debt, which is at a record high $1.17 trillion is particularly concerning. Delinquency rates are still manageable, but that rate has more than doubled since Q3 2021 (1.5% to 3.2%) and it is quickly heading toward problem areas (4%-5%). The current rate is higher than pre-pandemic levels and the highest rate since 2012. The recent stock market rally has also been funded with debt. Margin debt was $890 billion at the end of November, representing a 35% year-over-year increase. Any drop in stock prices could trigger margin calls, which will make that problem even worse. While I am not foreseeing a major credit event in 2025, it will be big enough to be noticed.

4.      Online sports gambling will become a mini-epidemic. The lure of easy money – a tale as old as time. I have a friend who once made the observation that all those fancy casinos in Las Vegas were not built on the backs of gamblers who won. And yet many will try and very, very few will succeed. My guess is that many of those gambling accounts are being funded with credit card debt, which creates a bigger problem with overall debt. Many men get into sports betting because they think they know sports. They have no idea that sports and sports betting are two different things (largely because of odds and point spreads). This problem could also be a manifestation of a bigger societal problem of young men “opting out” of society.

5.      MSNBC will cease to exist as a political commentary channel. Comcast, which owns both NBC News and MSNBC, has announced that they will split up their company next year and NBC News will be split from MSNBC. This is the tell for me as a political commentary channel really needs the strength of a news organization to back it up. Having the backing of a news channel typically adds credibility to the commentary. With MSNBC, the ratings have dropped throughout the year and that drop has accelerated since the election. Being an obvious shill for a political party that is deeply out of favor does not help their cause. Already, we have seen headlines about the on-air talent being offered pay cuts. It is too little, too late. I see the spin-off company wanting to do something like sports or entertainment with this channel.

6.      X (formerly Twitter) will gain momentum as a news source. X owner Elon Musk has been a big proponent of free speech with X, generating mixed results. The 2024 election was, in part, a referendum on the mainstream media, and the MSM did not fare well (which helps explain point #5 above). X was the big winner, with more people turning away from the MSM and towards X. While X is a bit of a Wild West show, with all its messiness, chaos and misinformation, it does need to be noted that the single biggest piece of misinformation during the 2024 election came from the mainstream media and that was the idea that Joe Biden was fit to run for re-election. The messiness of X was on that right away (with a mountain of video evidence), questioning the President’s fitness for office while the MSM swallowed the White House propaganda without question. When President Biden has his disastrous debate vs Donald Trump in June, no one on X was surprised while the MSM felt betrayed.

7.      President Trump will see virtually of his legislatively packages pass in both houses of Congress. The surprise here is that I think we will see at least a small degree of bipartisanship in all of it.

8.      Georgia wins the CFP in January, the Philadelphia Eagles win the Super Bowl in February, and the Florida Gators win the NCAA Basketball Championship in April. Let's face it, if I get one of these three right, it will be a minor miracle.

9.      The Kansas City Royals will win the AL Central, and the Baylor Bears will win the 2025 Big 12 football championship. I am so excited about these two teams next year that they deserve their own line. Plus, I am a deep-seated fan of both, and this is my list and I need this to get me to 10! 

10.  All my best wishes to each of you that 2025 will be better than 2024. For me personally, 2024 has been a very difficult year, and I know that it has been difficult for many others as well. Yet I always look to the future with hope, and I always rest in a God that gives me peace through the most difficult of times. Happy 2025 everyone!