Paper Alfa's 2025

How has 2024 turned out and what's changing next year?

Once again, we find ourselves at the end of the year, which has thrown many surprises at us. What has been your best trade? Which one was your worst? I have plenty in both categories. As for every turn in the year, we read huge swats of outlooks and best trades for the coming year. Rest assured, the majority of them will have stopped out by the end of the first quarter. Read one or two of them to know where the consensus is.

Forecasting is a futility, and I wrote about it in last year’s edition, which you can find below.

To remind ourselves, the futility of forecasting lies in its inherent reliance on predicting an uncertain future, a task that is often fraught with error. No matter how advanced the tools or methods used, forecasts are ultimately based on assumptions about complex systems influenced by countless variables, many of which are unpredictable or interdependent. Markets, economies, and even weather systems can be shaped by random events, behavioural biases, and feedback loops, all of which defy precise predictions. While patterns and trends can be analyzed, the chaotic and non-linear nature of most systems ensures that long-term forecasts often deviate significantly from reality. The allure of certainty in a world ruled by uncertainty makes forecasting a seductive but fundamentally flawed pursuit.

Source: Dall-E

That’s why we are focused on a disciplined process supported by long-term tools, models, and charts to assess probabilities of various outcomes. This is the bread and butter of any money management system. In addition, we apply a risk framework outlined in the PAMB series, building an entire investment process from start to finish. 

Let’s now look at how the 2024 portfolio has fared and what changes I will apply to the buy-and-hold allocation for 2025.

Have a wonderful, happy, healthy and prosperous New Year!