Astrologers Fund Sees Many Risks That Could Cause Correction In 2025

As the year comes to a close, so too do global market outlooks, with most of the big Wall Street Banks forecasting another good year. However, the Astrologer’s Fund thinks this market will see increased volatility as it faces many risks, including global debt, and a risk of global recession.

Based in New York, the Astrologer’s Fund is the brainchild of Harvey Weingarten, who calls himself a cosmic value investor. He explained his investing philosophy as: “When I invest, I do fundamentals and astrology, and when I trade I do technicals and astrology.” That means he buys undervalued stocks with an active trading component. He focuses on both long-term investing and very short-term volatility.

Preparing for Market Pullbacks in 2025

“When will U.S. market euphoria end?” was the theme of the outlook.

The current market environment is characterized by overinflated asset prices driven by the high valuations of the mega-cap technology stocks, known as the Magnificent 7 – Apple (APPL), Amazon (AMZN), Alphabet (GOOG), Meta Platforms (META), Microsoft (MSFT), Tesla (TSLA), and Nvidia (NVDA).

The big banks remain extremely bullish, expecting a continuation rally that will help the S&P 500 climb 10% next year.

Weingarten says this “euphoria” has to end and predicts three significant downturns this year each between 5% and 30%. The first one started on Dec. 17. The second time is this week which could extend to after the presidential inauguration and another in the June.

Growing global debt, coupled with a potential economic slowdown makes the risk of a correction more likely. Long-term investors should prepare for fluctuations, as major asset classes like stocks, bonds, and commodities may continue to stay “overvalued” for extended periods.

Over the next 18 months, he expects a market in the shape of a “W”, with the risk of market downturns high due to a combination of negative factors:

· high valuations

· tighter bank credit

· sticky inflation

· softer labor market

· trade tensions – including potential tariffs and trade wars –

· high deficits

· global wars in Ukraine and the Middle East

· the lowest cash holdings by asset managers in 13 years

The Trump Factor: A Pro-Market Presidency

Weingarten says one big positive for the stock market will be the change in political leadership, even though the market hit new highs under President Biden. During President-elect Donald Trump’s first term, the market saw a substantial increase in optimism, driven by pro-growth policies, such as tax cuts and deregulation, as well as policies that prioritized boosting corporate profits and stimulating economic activity. Weingarten expect more of the same during this administration.

He thinks Jan. 19 could be turning point for the market as expectations that Trump’s new policies will continue to provide upward pressure on stock prices in the near future.

Focus on Safe Investments and Asset Protection

In an environment of market uncertainty, Weingarten recommends focusing on assets that provide stability and protection against inflation, specifically hard assets, such as gold and silver, which are seen as reliable hedges against economic downturns.

While these assets may be slightly overvalued in the short term, their ability to preserve wealth over time makes them an attractive choice for cautious investors.

Other recommendations include high-quality stocks that offer strong dividends and pricing power as a way to weather market storms. While sectors like biotech and healthcare may face challenges under the current political climate, there are plenty of opportunities in areas such as energy, real estate, and special situations, where market mispricing may offer significant gains.

Over the next two years, investors must be prepared for both volatility and opportunity. The key to success lies in a strategy that combines value investing with an awareness of broader economic and political forces.