Time To Get In?

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Key Takeaways

  • Several things lend to optimism for the rest of 2025. Collective data shows that global stocks have been strongest in October to December historically.

  • Interest rate futures and administration announcements seem to be positioning the market in a slow rate-cut cycle, a situation in which markets usually do better.

  • The risk signal was triggered on 7 Apr poses less significance the further we move away from the date. Couple this with the activation of positive market rally signals since May, and we seem to be in for a decent rest of the year.

  • Despite our optimistic outlook, we still have protective measures in place for our portfolios should things turn south.


After the April blip this year, markets have been on a recovery uptrend. It may feel like you may have missed the boat, and maybe it is too late to invest. But the threat of tariffs still has not gone away, and we are headed to the typically weaker months of the year for equity markets. The opportunity still lies ahead.

Q4 Is Usually The Best Quarter For The Year

Since 1987, global stocks have historically experienced their strongest period from October to December. The months of November and December have had the largest mean monthly return of +3.23%. October to November has had the highest probability of earning a positive return in 78% of the instances.

Conversely, August and September have been the worst months in terms of mean monthly declines, on average declining -2.04%. If markets do experience a pullback, that would represent an opportunity for you to deploy capital in these seasonally weak months, which are right upon us.

Stocks tend to do better in slow-cutting cycles

According to President Trump, Fed Chair Jerome Powell is behind the curve in terms of rate cuts, citing lower inflationary pressures. Whether or not he is correct in saying so, interest rate futures are currently pricing in the possibility of two more rate cuts by the end of 2025 for a possible total of 50bps.

If this comes true, then the US Fed would have completed a total of 150bps of cuts over 2 years, putting us squarely into a slow rate-cut cycle.

You can see from the chart below that the market has done better during slow rate cut cycles in the past, and it should be the case this time round as well.

Mixed Risk Signals But More Positive Than Negative

Various measures of market risk still indicate the possibility of a potential correction in the double digits. However, this risk signal was triggered on 7 Apr this year, and the further away we move from the date, the less significance it poses and the higher likelihood that it would reset given the positive underpinnings in the market currently. Couple this with the activation of positive market rally signals since May — this creates a higher probability of positive market performance at least till the end of the year.

We are mindful that risks remain, and that is one of the primary reasons why there is a put option spread implemented within the United G Strategic Fund at the moment to hedge downside risks in US equity markets.

Inflation Not An Issue For Markets Yet

Many questions remain about tariffs and how they will affect the economy and financial markets. What will the final tariff rates be, and which countries will be better off with their deals? How much of the cost will be borne by manufacturers or consumers? Does this affect corporate profits and how much do prices move up?

The bottom line is that whilst inflation appears to be moving up slightly, most indicators remain bullish for stocks. In addition, the chart below shows that when the CPI remains below its medium-term average, stocks tend to do the best relative to bonds, cash and commodities.

While nobody knows the future with any certainty, whether the Federal Reserve will be cutting rates, how tariffs would affect the world, or whether markets will follow their seasonal patterns, the historical patterns provide a useful guidepost. At this juncture, the path of least resistance for markets is higher.

However, if market conditions do change, we are guided by our objective market Risk Matrix that helps signal to us when market risk rises and the probability of a bear market is high; in such instances, we can conserve capital for you, our clients and ensure that your investments are protected in the best way possible.

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