My 6 Month Outlook
Words cannot describe the brain-turning, mind-boggling thoughts I have had trying to understand what the future has in store for investors. Each article I read feeds into one of the two devils on my shoulders as I slowly spin myself into my own web of delusions. Is there a bubble? Is it okay that there is a bubble? Are we headed into a recession?
Truthfully, nobody knows what is going to happen.
Despite this, I will try to convey my thoughts onto paper for how I view the next 6 months. I also think it is important to rely on principled investing strategies that can mitigate risk and hopefully not destroy entire portfolios which I will brush over at the end.
My Outlook
I want to be as exact as possible here. I view this as a nothing-to-lose, everything-to-gain scenario, so view this take with a grain of salt.
Recently, the market has had the curtain pulled on it. The technology sector, which has been dragging the market by its ankles, had a major pullback mainly due to consumer skepticism. Some take this as the beginning of the recession that has been alluded to in recent times, saying the bubble has finally been recognized and now we are awaiting the bust. But I think the recent pullback is a blessing in disguise. Untamed gains that we have seen after the April 2025 run are unsustainable. There will inevitably be a pullback, which is what we are seeing right now. I would even go as far as to say it is healthy to have this drawdown in the market. This is where we are today, in the middle of this drawdown and what happens next is the big question.
The SPY has been horizontal for the last month with a 2% drawdown on the back of 13% gains over the last 6 months. I think fear and paranoia are consuming the market while fundamentals are being ignored. When you look into the big hitters in the market such as the MAG 7 and technology-adjacent stocks, we see sound earnings data despite their drawdown. Which leads me to think the consumer sentiment of “tech bubble” is slowly holding less currency. PLTR defied the sentiment. The energy/mining sector is being lifted. There are a healthy amount of merging companies. NVDA’s earnings were the cherry on top yesterday, beating earnings and revenue by a combined 6%.
So what is happening?
My hypothesis
The current drawdown will remain neutral/mildly bearish awaiting the Fed decision.
The December Fed meeting will make no change to rates.
The market will then enter a sharp bearish period.
Very shortly after, we will see a story similar to April 2025 and the market will enter into another bullish cycle.
The drawdowns will consume all supply zones, triggering major buys/calls, and the market will hit all-time highs in the following months.
A huge event being ignored in the market is the government shutdown. Today the government is more than the invisible hand—it actively invests and is a driver of the economy. This situation was a lose–lose, heightening fear while also feeding into that fear by slowing the economy. On top of that, many economics data points were not collected, which only left more questions and paranoia. The vacuum left by the shutdown data, along with rising inflation and a slow market, will lead to no change in the rate cut.
Historically, the turn of the new year sees a drop in consumer spending, but as January ends and February comes, the bull market will commence.
STAY PRINCIPLED
I could be wrong or I could be right in my prediction, but that should not change the way you invest. All data points to DCA (dollar-cost averaging) or lump-sum investing beating timing the market even under ideal conditions that realistically you or I will not achieve. Diversify your portfolio—single stocks should not represent a large portion of your portfolio. Stick to ETFs or mutual funds, and historically the SPY has a 10% return every year. There is no reason to panic sell; time is your biggest ally in investing.
