Felix Zulauf: Expect A Wild Ride (Up & Down) In Markets From Here

Like a 15-20% correction by Q2?

As 2024 begins to draw to a close, investors are cheering a second blockbuster year in the stock market.

And as we enter 2025, will the party continue? Will today's asset prices shrug off the growing litany of macro concerns and power still higher in the new year?

Or will 2025 be a less enjoyable, or even a more painful, year for investors?

I can't think of anyone better to ask these questions to than today's expert, who is among the world's most highly respected living investors, Felix Zulauf.

He thinks we'll be in for a wild ride in 2025, with stocks peaking in Q1, then falling 15-120%, recovering possibly to new highs, and then ending the year with a serious drawdown.

He believes his predicted "decade of the roller coaster" will enter full swing next year.

For a very important look into 2025, click here or on the video below:

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SET YOURSELF UP FOR SUCCESS IN 2025: The year end is approaching fast. Schedule a free, no-commitment consultation with one of Thoughtful Money’s endorsed financial advisors to identify the right steps (e.g., tax loss harvesting, portfolio rebalancing) to secure your 2024 investment returns and position your portfolio advantageously for 2025

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Adam’s Notes: Felix Zulauf (recorded 12.9.24)

EXECUTIVE SUMMARY:

• Following two exceptional years for the stock market (2023 and 2024), the economic and investment landscape in 2025 is projected to be turbulent. Key risks include potential corrections driven by overvaluation, policy uncertainty from the new U.S. administration, and heightened geopolitical tensions. Investors should brace for volatile market conditions, with significant swings in both equity prices and liquidity levels.

• China is trapped in long-term deflation and economic stagnation due to an oversupplied real estate market and a shrinking, aging population, limiting its ability to stimulate global growth. Europe faces declining economic competitiveness, particularly in Germany, due to over-reliance on aggressive green energy policies and alignment with U.S. foreign policy, which has strained its own economic interests. Meanwhile, the U.S. economy has defied recession predictions, driven by a robust labor market and fiscal measures, but uncertainty looms with the incoming administration's policies.

• New U.S. trade tariffs could lead to retaliatory measures from trading partners, triggering a global trade war. Europe, with its high export dependency (50% of GDP), is particularly vulnerable, especially in sectors like agriculture and autos. The introduction of tariffs could depress global trade, increase protectionism, and create economic instability that could spill over into financial markets.

• Global liquidity remains a critical driver of market stability, but its growth is slowing. Significant injections via reverse repos and other mechanisms have masked systemic vulnerabilities, but these sources are nearly depleted. Japan, a major source of global liquidity through its weak yen and low interest rates, faces pressures that may dry up this flow. A contraction in global liquidity in 2025 could set the stage for severe market corrections and increased volatility.

• Markets may experience a peak in early 2025, followed by