In today's episode, Tyler covers a quick recap of 2024, and, more importantly, he covers the VRA's outlook for 2025. Despite a mixed session for our major indexes to start the year, we are seeing a few important pattern changes that has us very optimistic about what's to come. Join us as we unpack our expectations for a year poised for significant market growth.

Don’t look back because the market is closed. Good Thursday afternoon everyone. Tyler Herriage here with you for today’s VRA investing podcast. First and foremost, Happy New Year. Everyone out there is going to be an incredible 2025 ahead of us. Hope you all had a little bit of time in there to take off for the holidays. Enjoy being around friends and family and focus on what matters most, what’s most important in the world, which of course is friends and family. Absolutely.

So hopefully you got a little bit of time off in there and now are ready to Crush it for 2025. We think it’s going to be an incredible year for us here. Despite the slow end to 2024, we continue to look for fireworks here this year. Our last podcast for the year of 2024 was hard to believe December 23rd. But I can assure you here that Kip and I have been watching this market closely. So I’ll try to keep this podcast short and sweet. Sweet with a little bit of a recap from 2024 and more. So what we see looking forward for from here for our markets and what we saw in the first trading day of the year today as well.

[00:01:23]:
So you know, quick recap here for 2024. It was a strong year for our markets. You know, of course, led by the NASDAQ on the year, exactly what you want to see is tech leading. And even without the semis able to take out their all time highs from mid year last year, the semis still had a strong year as well. So good to see. And now for the VRA, we officially capped 18 out of 21 years. Now that the VRA has beat the market, the final total gains here for 2024 was 27.1% once again outperforming our primary bogey here, which is the Russell 2000. As we see the Russell 2000 having a similar risk profile profile to the VR race as we’ve always compared it to again, 18 out of 21 years beating the market now and we look to make it 19 out of 22 this coming year, which we do expect to be a big year for the markets as a whole.

So we got our work cut out for us, but we’re ready for it. We think we’re positioned well, you know, if you’re, if you’re not with us already. First of all, thank you for tuning into the podcast here with us, but you can sign up to see everything that the VRA has to offer@vraletter.com you’ll find our podcast there. As well. And again, our 14 day free trial going on right now as well. So come and join us. It’s going to be a fantastic year here. We’re very excited, you know, of course, even more exciting that we’re now just 18 days away from the inauguration here getting Trump back into office.

But that’s not all that’s exciting here. It’s going to be a hell of a year, in our view, for this bull market that just began in October of 2022. And I’ll get to this here a little bit throughout the podcast today, but it has been amazing to see how many analysts are negative on this market going into 2025, knowing that we just wrapped up the second year of a bull market, which bull markets on average last over six years. Right. So we’re looking for this bull market to not only last that long, but to outperform that time period as well. I mean, just take a look at our most recent bull market before that, which essentially a 10 year bull market. And we think this could put that to shame as well as we get animal spirits not only back in the markets but into the US economy as well as part of our roaring 2000s theme, which remains unchanged, our innovation revolution theme. And of course the other ones that we’ve laid out in our book, the Big Bribe as well.

[00:04:11]:
We see the those really coming to fruition under Donald Trump as our president and accelerates the timeline for a lot of what we expected to come in the second half of the 2020. So we’re excited. Hope you’re excited here as well. I know it’s been a little bit. It was a rough end to to 2024 and once again, we have none other than the Fed chair Jay Powell to thank for that weakness as well. It’s not all bad news out there, but we are looking like we’re going to get a lower Santa Claus rally, which is the last five trading days of the year and the first two trading days of the incoming year. So it would take a massive move tomorrow to finish positive there. But you know, that doesn’t necessarily mean that the market is going lower in 2025.

There’s still plenty of other analytics to look at and it certainly is not an infallible one. There’s no rule that says a negative Santa Claus rally means the following year has to be negative as well. But again, Jay Powell, thanks a lot, man. Very reminiscent of his performance from December 2018, which if you’re a longtime listener, I had the podcast the Final Day, which was A half day of trading for Christmas Eve where the markets just tanked. Right. You know, Jay Powell, this has now come become a classic move for him, is, you know, telling the market something it doesn’t want to hear in the most illiquid time of the year when the buyers are on break and the, the Bears can kind of play a little bit for a fraction of what they can play on a, on a normal trading day. So we nicknamed the December 2018 the Christmas Eve from hell because that’s when the, the sell off, that was the final flush there. But now Jay Powell has been responsible for two out of the three worst trading days for the final days of the year going back TO I believe 1952.

You know, one of the only other worst Decembers in this, in 2018, was, was 2008. So Jay Powell thinks he’s got two out of three of them for us now. But the important part here is that our optimism has not dampened at all for 2025. But it has dampened for many market analysts, for investors, for economists, which actually has us much more bullish going forward. Believe it or not, when everyone is on one side of the market, we like to take the other side. So if as natural contrarians here, that’s not always the case, you know, the facts have to dictate that as well. But you know, if we were looking at a year where everyone was looking for a rocket ship kind of year, we might be a little bit worried. But when you’re having a year where people are talk, talking about a pause from the market and the headlines, a rather benign year expected for 2025.

[00:07:16]:
We like those odds. It’s much like going in, I believe it was 2021, the year after Covid, the year before the bear market, which was a very strong year going into the year. 100 of economists polled believed that the economy was going to tank that year. It was an incredible year of gains for the stock market. We’re seeing a very similar setup now. Take a look at just a few of our sentiment index, our sentiment indicators that we look at here. First and foremost, the fear and greed index is firmly in fear mode now. Just one point away from extreme greed here.

Despite the fact we’re just percentage points away. I think it’s roughly 5% away from an all time high in the s and P500. You know, we were just there a couple weeks ago. Right, Let me just run those numbers real quick. I mean, yeah, less than 5% based off where you go from. I mean, less than 4%. Let me run that again. Yeah.

Less than 4% away from an all time high and we’re 11 point away from extreme greed. If you take a look at AII the investor sentiment survey, this one had come in skewing more bullish over the last few readings, but declining there. Now we’re almost at 50, 50 bullish to bearish investors. It’s, it’s 35 bullish, 34% bearish and we still have 30% neutral. So a combined 64% of investors right now are either neutral or bearish on this market going into the year. Again, we like being on the other side of that. The put call ratio today. Any reading? The average reading here is about a seven.

[00:09:00]:
I know we talk about this here a lot, but for any new listeners, the average reading on the put call ratio is a 0.7. Below that would be overly bullish. Above that and really above a 1 is seen as excessive bearishness. Right. There’s usually more calls being bought than put. So over A one is seen as excessive bearishness. Well, we closed the day above A one on the put call ratio as well and just saw this earlier today as well. I don’t care much for surveys.

Right. It’s tough to tell facts from an opinion based survey. But this is interesting from a sentiment point of view. Take a look at consumer sentiment which has been on the rise since the reelection in November, since Trump’s reelection. But we are far below where we were during Trump’s first term and far below where we were in the pre Covid era period. We’ve never gotten back to those kinds of levels. It’s time to get back to again, animal spirits in this market and consumers that are positive. Take a look at consumer real income expectations.

These are the lowest real income expectations from consumers since the financial crisis. We’re not even in a bare market right now. So again, these are just simply put, not signs of a market top. And as a matter of fact, I, I would say this is a sign that the party hasn’t even started yet. Add to this again that market analysts and economists, like I said earlier, predicting a benign year has been kind of the headline words that they’ve been going to. Right. If you listened to these so called experts at the beginning of the last couple of years, you just missed out on back to back years of 20% plus returns, the S&P 500. Right.

[00:10:56]:
They’re keeping people out of the market. And again that has us even more bullish here. The problem with these analysts and these Perma bears is that they always, always, always overweight the bad news and they underweight the good news. Right. The good news is just kind of in one ear and out the other. They’ve hyper fixate on the bad news. And that’s why so many perma bears do sound so smart, because their research is very well done on the bad news side of things. But again, they overweight those things so they don’t matter as much as they think they might.

And they underweight the good things that could happen in the future. We’ve seen it time and time again from the bull, from the perma bears. So bull markets at the end of the day don’t end when. No, when everyone. Excuse me. Bull markets don’t end when everyone is saying that it’s a top. Right. Bull markets end when everyone thinks that stocks cannot go down and we’re just nowhere near that environment yet at all.

So that being said, let’s take a look at our market action on the day today. Again, you’re not an impressive session. It was an impressive start to the session, an impressive open for the day, but we pulled back around midday. But we had a little rally into the close to finish off the lows of the day. But what we like to see from today’s action was the semiconductors. As I mentioned earlier, they’ve been unable to re reclaim their all time highs from July. It was still enough to have a good year for the semis. Despite that, even though they didn’t participate in the rally in the second half of the year, in our view, it’s now time for the semis to resume their outperformance.

[00:12:44]:
And seasonality here bodes well as well. Trendspider pointed this out yesterday. In post election years the semis lead the pack with an average return on the year of 30.1%. And once again here we at the VRA are looking for an above average year of returns for the semis. And so we like the action we saw today. This is what we think is an important pattern change, which is that the semis are leading on a day where the market is lower. We haven’t seen as much of that as we would have liked. We’ve seen days where the market was higher without the semis participating.

Right. This is much like seeing the market head higher without the Magnificent Seven participating. That’s. We don’t necessarily look at that as a bad thing, but as an opportunity. And that’s what we think we’re seeing right now in the semis is a massive opportunity to outperform going forward from here. We also saw an interesting pattern change from our internals today. So two major pattern changes today that I’ll get to the second one here in a minute. But first, final recap of our major indexes.

The small caps did manage to finish higher just fractionally on the day to 2,231 after that. We did have the Nasdaq which was lagging earlier in the session, played a little catch up, still finished down just slightly on the day. 0.16% after that. Excuse me, I do want to cover here one more topic before I move on from the Nasdaq. Nasdaq again, good to see a day where the semis finished positive on a day with tech lower. But one of the reasons for tech being lower today, maybe not a major reason, but it was Tesla, which I’m sure many of you know we are extremely bullish on and we remain extremely bullish on here. But Tesla had a rough day. Down over 6% as their fourth quarter.

[00:14:37]:
Fourth quarter deliveries came in today. And if you saw headlines, I will say if you just took the headlines at face value, you’re grossly. Or you’re going to be grossly misinformed about what happened today actually, right? I saw it on Bloomberg, cnbc, Fox Business, you saw it online on Market Watch, everywhere talked about this. It’s incredibly misleading. Makes this sound like bad news that Tesla missed estimates for fourth quarter deliveries. Estimates were for roughly over 500000 deliveries and they came in at like 496, right? So first and foremost, not a massive miss there. Second and most importantly is that this, was this the highest delivery Tesla has ever had in a quarter, A record setting quarter for deliveries from Tesla. But you don’t see that in the headlines, right? Who cares what an analyst thinks? They, these are, they’re guessing, right? They’re taking the previous quarter numbers, applying a percentage to percentage increase to it and then boom, there’s my estimate, right? They don’t have insider information.

These again, these are analyst guesses that we’re talking about here. Estimates is another word for a guess essentially from an analyst. So think about that. The financial mainstream media would rather focus on a analyst guess than an actual all time high. If you need any more proof that not only the mainstream media, but the financial mainstream media is there to misinform you and to keep you scared and to keep you out of the market, there it is right there. Instead of saying Tesla missed analyst estimates, they should have said Tesla record breaking quarter for deliveries, right? But that’s even besides the point of what we like about Tesla. At the end of the day, we have to remember Tesla is not a car company, it is a technology company and is valued as such and in some respects undervalued as such. Right.

Too much emphasis put on the cars, not enough emphasis put on their other divisions. Right. The AI that goes into self driving, self driving itself, but the artificial intelligence side of things that they’re able to use in other areas as well, and the potential for licensing that full self driving. Remember, Tesla has over 7 million cars on the road, making it the largest data source for autonomous vehicles out there. Because companies like Ford, gm, Toyota have canceled their self driving test, so they’re not collecting the same amount of data that Tesla is. Their closest competitor. Waymo has less than a thousand vehicles in its fleet. Right.

[00:17:36]:
So you can see Tesla is a clear winner. You know, you’ve got the Cyber Cab robo taxi rollout this year as well. These are incredible innovations. We have even talked about Optimus, we haven’t talked about battery storage, we haven’t talked about the potential for their solar division as well. These are all things that are under one roof with Tesla and why we see it as such a massive, massive opportunity here. And while it shocks many people, we would say undervalued at these levels. So there you go, kind of my take. You know, it’s frustrating to see those kinds of headlines on a record setting day for Tesla.

All right, next up, final indexes here, the S P down just over 2/10 of 1%. And the Dow Jones again, all of these finishing off their lows of the day, which is good to see. Dow Jones finishing down just over 3/10 of 1% as well on the day today. All right, next up here, the internals. Again, important pattern change we saw from the internals to just day at the open. As our market major indexes were higher, you might expect the internals to be positive. But we had seen a lot of days in December where the market was positive and the internals were not. So we kind of expected that as the market had headed lower, so would the internals.

Right? And now they finish off their highs of the day. But we came in positive just about across the board here. So again, another important pattern change is positive internals a day where the market is negative. We saw that on New Year’s Eve as well. So a lot of people out of the office might not have caught that. But we see this as an important pattern change. So today, again, even though our major indexes were lower. We still came in with more advancing stocks than declining stocks on both the NYSE and the Nasdaq.

[00:19:30]:
Slightly lower on 52 we highs and lows just a little bit more 52e lows than highs on the NYSE. But enough on the Nasdaq to where we came in at a combined positive here today. So we’ll count that as a win for sure. Lastly, volume solid here as well. Big beat on the NASDAQ. Well over 2 to 1 positive there and positive on the NYSE. So we’ll call that positive across the board from the internals today. Next up are sectors here on the day.

Energy leading the way. You’ll find out why here in the VRA Commodity watch followed there by utilities. We did have the 10 year was higher earlier in the session. What was the high of the day though? Let me run a quick screen on that one. We got almost just right to 3 point or sorry 4.6 on the 10 year finished below though at a 4.57. Again we’ve talked about this a lot. Yields at these low levels even if they go up not a concern for us here during the dot com era melt up that we’ve cons compared this to so much yields averaged above a 6%. So no 4 1/2% doesn’t scare us here.

And what’s interesting is that it doesn’t scare the utilities either. The utilities are the biggest borrowers in the nation. Very interest rate sensitive. Utilities finished up 7/10 of 1% on the day today day. Next up communication services also higher on the day and healthcare just fractionally higher but managed to finish positive. Our laggards on the day, Consumer discretionary materials and real estate. Finally here for today our VR commodity watch. Some green on the screen here today.

[00:21:13]:
Gold now up on the day to $2,671 an hour ounce. Good day here today. My screens aren’t reloading here but it was up just over 1% on the day and just what you want to see from this group. The gold miners. Outperforming gold miners. GDX up 4.22% on the day so nearly a 4 to 1 outperformance. Exactly what you want to see from this group. And gold had an impressive 2024 as well.

Know a lot of people like to hate on the gold bugs but gold actually outperformed the S&P 500 in 2024. Gold up 27%. The S&P up 23%. So gold actually beat all of our major indexes other than the Nasdaq on the year. And we do remain bullish on gold here and the miners as well. Silver also up on the day, up 2 1/2% to $29.98 an ounce. Copper up slightly but above $4 a pound, up a quarter of 1% to $4 and 3 cents a pound. And oil had a big day today, you know, making some headway above $70 a barrel, up nearly 2% to $73.13 a barrel.

Explain some of the move in energy stocks there as well. And finally for today, bitcoin also having a rally as well, off slightly of its highs of the day, still up 2.3% at $96,968 a Bitcoin. Folks, great to be back here with you for 2025. Looking forward to a great year. You know, as I said earlier, if you’re not with us already, we’d love to have you with us here for the year. You can find out more information@v letter.com you’ll also find the podcast link at the top to sign up as well. So thanks again for tuning in. Until next time.

[00:23:09]:
We’ll see you back here tomorrow for the close.