This weekend, we are all definitely feeling very relaxed and thankful for 2024. This year could not have been better and has definitely surpassed our expectations. Different asset classes have done well giving us an overall wealth effect. As we get ready to leave a very productive year behind, we definitely need to position ourselves for the next year.
This is where our troubles begin. We know that our comfort level is not great with almost every asset class. That is somewhat different from the same time last year when we felt very comfortable with gold, debt, and some parts of equity. Right now, we are definitely not as comfortable investing in most asset classes. But, this situation will change as the year progresses and the markets reprice growth. Repricing growth will bring more assets into a zone of investment comfort. Until then, we need to invest very selectively and judiciously.
Within equity, we must bet on larger companies and stick strictly to valuations in every company we invest in. Gold should be bought on dips. Debt should be a good bet for 2025 given the low expectations being priced in. We must focus on risk taking.
We need to be very selective and cautious in our risk taking. Choosing when to take risks is critical. Where to take risks is also going to be a difficult choice given the limited options to invest and the rising need to deploy capital. This is where conservative asset choices are always going to help. The asset level choices will help us control risks sufficiently and keep us focused mainly on not losing capital.
Capital preservation will be the most important thing to focus upon in 2025. While it may look very easy right now, it can easily become our toughest challenge as the year progresses.