January 2025

The Slice

A Monthly Market Update & Investment News Roundup

Cutting through the noise...so you don't have to.

Good morning ,

For those ringing in the new year with a diet, you might have felt the need to eat one last cookie (or two) before starting the new regimen. The Fed did something similar at their December meeting. Their so-called “hawkish cut” of 0.25% to interest rates was indeed a small cookie for the markets, but it’s likely the last one that we’ll be getting for a while. The Fed now expects just two rate cuts in all of 2025, down from four in September’s meeting.

Stocks were expecting the cookie, but not the pronouncement about the diet that followed: The S&P 500 sold off 3% and the Nasdaq 3.6% following the announcement, putting stocks in the red for the month.

Does that mean 2025 will be all pain, and no gain? Not according to market strategist and fellow pie-enthusiast Warren Pies of Three Fourteen Research. To relieve growth concerns in the first half of 2025 stemming from higher interest rates, Pies believes the Fed will need to cut more than they are letting on. “Aggressive Fed action will pull down longer-term yields and keep the soft landing intact, ” says Pies, who sees the 10 year Treasury trading below 3.5% and averaging 4% in the new year.  And lower rates are good for stocks too.  Pies’ S&P 500 target is 6800, up about 14% from today’s levels, a solid move after 2024's 25% gain.

Here's what you need to know.

Markets

News & Notes

• Outlook for 2025: Market strategists are broadly positive on the outlook for 2025. The year end price target for a selection of buy and sell side institutions are shown below for the S&P 500, along with the implied move up or down from year end levels. (Business Insider)

• IRS Limits for 2025: There are no changes to maximum contribution limits this year for IRAs, but the employee portion of the retirement plan contribution limit goes up to $23,500 for the new year. Those over 50 can contribute $31,000, and new this year, ages 60-63 can contribute $34,750 in a "super catch-up." (Fidelity)
   
• Interview with Jeff Bezos [Video]: In an interview with Andrew Ross Sorkin at the DealBook Summit, Bezos shared his vision of space for future generations. "This planet ...you can think of it as being zoned residential and light industry...and if you want to use large amounts of energy and pollutants, you go do that off Earth." Bezos also shared thoughts on equity compensation for founders, American dynamism, and his most important role at Amazon now. (NYT)
  
  Also:
  • Ken Griffin, CEO & Founder, Citadel (NYT)
  • Sam Altman, CEO & Founder, Open AI (NYT)
  • Jerome Powell, Chairman, Federal Reserve (NYT)
     
• Retirement: There are roughly 11,200 people retiring each day the next two years. How to make your nest egg last for the next 30 years. (NYT)
   
• China & Technology: Outgoing Secretary of Commerce Gina Raimondo says export controls [on technology] won't hold China back, and that more federal funding for domestic innovation is needed. (WSJ)

• Commercial Real Estate: With office vacancy rates at record levels, conversions of office buildings into residential real estate are gaining traction. (WSJ)
   
• Homebuilders: Costly incentives from homebuilders to buyers are stimulating demand but depressing profit margins on new homes. (WSJ)
   
• Travel & Spend:
  36 Hours: Palm Springs (NYT)
  36 Hours: Innsbruck, Austria (NYT)
  36 Hours: Venice (NYT)
  36 Hours: Dubai (NYT)

(Pie)Chart of the Month

A lesson in portfolio construction: Stockpicking is hard! The average stock is up nearly 23,000%, but the median stock is down over its lifetime. It's something to consider as you think about portfolio construction--and one of the reasons we use index funds for public equity exposure at PieCapital.

Source: The Compound Media, chart created from data sourced by Hendrik Bessembinder in the CRSP database. Original paper: “Which US Stocks Generated the Highest Long-Term Returns?"

Firm News

Year 1 Recap

Twelve months ago, I left a good paying job to start something that I hoped would make a big difference in the lives of 50 families - and I am proud to report that we are well on our way to doing just that. Last quarter, we crossed the threshold of $100 million in assets under advisement in less than a year!

Thanks to all who of you who have helped give PieCapital a great start. This short video recaps our achievements in our first twelve months.

Thank you (and turn the sound up)!

Military Veterans Startup Conference

PieCapital will be at the Military Veterans Startup Conference in San Francisco Feb 5-6. If you're a founder seeking advice on your personal balance sheet, have questions about plans to exit your company, or just want to connect, schedule a 30-minute meeting by sending an email to hello@piecapital.com. 

Ben Wins!

The Revels family started a new tradition this year by doing our own Barron's Roundtable. Cate, Ben, and Jack each "researched" a stock they thought would perform the best over the next 12 months, shared their "thesis", and bought a share to track its progress. 

Ben, age 8, picked Amazon (AMZN), citing the company's brand recognition and growing market share in its consumer segment. "It's a well known business that a lot of people are choosing to order from." Ben beat out his siblings (Cate - Target, Jack - Starbucks), and the S&P 500.

Merry Christmas! 

Last month, we spent a weekend at Christy's alma mater, Wake Forest, and got to attend the Moravian Lovefeast service. 

Jack got everything he wanted!

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