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Magnetic North Financial LLC, 2024 recap and 2025 outlook

  • Writer: Christopher Lakian
    Christopher Lakian
  • Dec 19, 2024
  • 2 min read

My number one comment for 2024 isn't stocks: it's the deficit! Most Americans could overlook a number that doesn't affect daily bills or spark heated conversation around eggnog.

Please make no mistake; it's a big issue that could affect us next year.

 

Over the last three years (post-initial COVID), our federal government has been spending at the highest rate as a percentage of GDP since Nixon in 1973.

We have a 7% revenue-to-deficit ratio, and its complete financial insanity. The United States has never run such a deficit without long-term consequences, and we could be looking at a "come to Jesus’ moment with Congress and budget projections."

 

It is conceivable that next year, there will be a budget crisis that could lead to aggressive cost cuts by the new administration to prevent a "crisis of confidence" with our debt.

Unfortunately, it is hard to predict when this "debt" matters! It could happen next year, in 2026, or no one cares, and nothing happens, and the world keeps rotating. Unless you believe in the "Lizard Illuminati," by definition, we are all screwed.

 

Let's turn the table to an actionable idea.

 

The StarMine software identifies undervalued investments compared to its benchmark. The best-undervalued idea now is not Artificial intelligence. And not the speculative, flashy crypto your neighbor claims; it's the Russell 2000.

This one index is underappreciated by investors. StarMine has been signaling more individual opportunities in this index, compared to the Rusell 1000 by almost 2-1.

 

How this could shake out is quite fascinating.

 

The S&P 500 and these mega Tech stocks are very overcrowded by investors. All they see is a return that others have that they want. Case point Broadcom up 32% in two days (12/16/2024). That kind of speculation leads to a washout and a reallocation into other investments. If we had a rotation away from these overcrowded trades, it would be very productive; I believe in owning nontechnology ideas at the time of this article.

 

 

Progress will continue in 2025 despite concerns over the shift in government. The best thing that could happen is for interest rates to go down, led by a reduced deficit (I believe they are linked, and that's why longer-term rates haven't fallen). Lower interest rates will encourage companies to invest more capital instead of spending it on refinancing loans or shoring up capital loss contingencies. 

 

The bottom line is that progress will continue as long as no significant disruptor exists.

 

That's all I have.

 

Cheers to progress.

 

Chris

 

 

 

Christopher R Lakian

Owner, Portfolio Manager, AIF

 

Magnetic North Financial LLC

1156 Bowman Road Suite 200

Mt Pleasant SC 29464

Main Number: 843-212-4023

Cell: 843-737-6060

Global Relay Secure Text: 843-428-7827

 

 

OneSeven ("OneSeven") is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). Registration with the SEC does not imply a certain level of skill or training. All titles listed for individuals associated with Magnetic North Financial represent the individual's role with Magnetic North Financial, and not their role with OneSeven. Services are provided under the name Magnetic North Financial, a DBA of OneSeven.

 

 
 
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OneSeven ("OneSeven") is a registered investment adviser with the U.S. Securities and Exchange Commission (SEC). Registration with the SEC does not imply a certain level of skill or training. All titles listed for individuals associated with Magnetic North Financial represent the individual's role with Magnetic North Financial, and not their role with OneSeven. Services are provided under the name Magnetic North Financial, a DBA of OneSeven.

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