It’s not too late to revenue from my key calls. Right here’s the place to focus now to seize the most important potential beneficial properties.
Whats up, Reader.
Because the enterprise creator Peter Drucker noticed, “The one factor we all know concerning the future is that it is going to be totally different.”
I wish to preserve this in thoughts every January after I ship out my annual Fry’s Funding Report New 12 months’s “Forecast Situation.”
The saying continues to ring true as we hit the center of the 12 months… and particularly as we have a look again in any respect that has proved “totally different.”
Though President Donald Trump’s unpredictability is arguably predictable at this level, it has nonetheless despatched the markets on a curler coaster.
Simply take into consideration what we’ve already seen:
- The Chinese language AI app DeepSeek triggered an enormous selloff,
- President Trump’s Liberation Day tariffs kicked off a commerce conflict,
- the Federal Reserve held charges regular,
- and the U.S. received pulled into the 12-day battle between Israel and Iran.
With all this chaos, it might be simple to imagine many market predictions made in January could be fully nugatory by now.
However now that we’ve hit the midway level of the 12 months, let’s see how a few of my forecasts are holding up.
Some could shock you…
And a few you continue to have time to get in a single earlier than the 12 months is finished.
Forecast No. 1: The Magnificent Seven Will Underperform
The Magazine 7 rose considerably in the course of the remaining months of 2024, however heading into 2025, I figured these richly valued shares would lose a few of their luster. My reasoning was fairly easy: Valuations had been getting stretched, and the price of staying forward in AI was, and nonetheless is, getting costly.
This turned out to be true.
The seven mega-cap firms returned a median of simply 2.2% within the first half of 2025, lower than half the 5.5% acquire we noticed within the S&P 500 index. Tesla Inc. (TSLA) received hit notably exhausting, falling 21% as markets fearful about its sky-high valuations (and CEO Elon Musk’s political involvement).
Coming into this 12 months, I had a usually upbeat view on the markets; and I did assume the Magazine 7 would hit some bumps – which they did. However I do should admit… I’m a bit shocked by the rebound.
They’ve remained fairly sturdy, and we’ve had a terrific rally from the post-Liberation Day April lows. It’s been fairly risky, however the market has been constructive for 3 or 4 months now.
Forecast No. 2: Company Revenue Margins Will Soar
I anticipated firms to squeeze extra revenue out of their operations this 12 months, and that’s precisely what has occurred.
The S&P 500 reported 12.9% earnings development within the first quarter – the second straight quarter of double-digit development. Analysts are forecasting one other 5% acquire for the second quarter, which reveals this is probably not only a one-time bump.
Forecast No. 3: The Pharma Sector Will Outperform the S&P 500
This one didn’t go as deliberate.
Though the healthcare sector noticed an enormous 43% surge in earnings, traders received spooked by meddling regulators. The pharma trade, as measured by the iShares U.S. Prescribed drugs ETF (IHE), ended up flat for the primary half of the 12 months.
Typically nice fundamentals aren’t sufficient if traders are fearful about authorities interference.
Forecast No. 4: Pure Fuel Will Outperform the S&P 500
This one is generally understanding.
Fuel costs are up 19% this 12 months on a seasonally adjusted foundation, and funds just like the United States 12 Month Pure Fuel Fund (UNL) have gained 6.6%. However remember that non-adjusted costs are literally decrease throughout summer time months, so I’ll want to attend till December to actually declare victory on this forecast.
Forecast No. 5: Choose International Markets Will Outperform the S&P 500
This one’s been spot-on.
The iShares MSCI ex-U.S. ETF (ACWX) has surged 17% as traders fearful about America’s ongoing commerce wars. And smaller funds centered on Poland, Italy, and Austria have executed even higher.
The truth is, one among my worldwide inventory suggestions within the Fry’s Investment Report portfolio is up almost 100% in solely three months. You can learn how to access the details of this stock by clicking here.
The outperformance of overseas shares was particularly noticeable earlier within the 12 months. And proper now, nearly all the things goes up.
International markets caught two good breaks:
- The U.S. greenback has been weak (down about 10% this 12 months).
- These markets had been buying and selling at a lot decrease valuations in comparison with U.S. shares.
The greenback could stabilize a bit from right here, however these low valuations and the broad development we’re seeing abroad ought to preserve pushing overseas shares larger. They haven’t been outperforming currently, however I’m anticipating that to alter as we transfer by the remainder of this 12 months and into 2026.
The basics are nonetheless there – engaging costs and strong development potential.
You possibly can observe together with my overseas market picks together with my Fry’s Funding Report subscribers. Learn how here.
And now, let’s have a look again at what we coated right here at Sensible Cash over the previous week…
Sensible Cash Roundup
July 9, 2025
China’s Shrinking Workforce = Your Biggest AI Opportunity Yet
Whereas headlines keep fixated on chatbots and software program, a deeper AI transformation is occurring proper now: Robots that be taught and function independently are on the rise. And China’s shrinking workforce is driving this megatrend.
Certainly, in that drawback lies one of the crucial explosive investing alternatives we’ve seen in a long time. My InvestorPlace colleague Louis Navellier shares how this demographic disaster is triggering a full-scale robotics revolution… why the U.S. is poised to reply in form… and how a handful of under-the-radar companies could be the biggest beneficiaries of what’s next.
July 10, 2025
Copper at $5.50 Could Signal the Start of an AI Metals Explosion
Throughout the Eighties, merchants used “Dr. Copper” to measure the well being of the financial system. The upper the steel’s value, the rosier the outlook. Now, Dr. Copper is making a brand new prediction. It’s one which spells nice information for the $1 trillion AI trade… and particularly a small subsector you don’t want to miss.
July 12, 2025
Ride the AI Wave With Two Long-Term Leaders
Whereas there isn’t any good funding technique, there’s a option to allocate your belongings intelligently. It will then assist you set your self up for the very best probability at success. Now, there are a number of sides to this technique, however the one I wish to concentrate on at the moment is shares to purchase and maintain eternally. So, I’m sharing two stocks that I consider to be some of the best “Forever Stocks” out there.
Sticking to Our Technique
Though this has fairly the chaotic and unpredictable 12 months, I hit the mark on 4 out of my 5 predictions (with pure fuel nonetheless in play).
Right here’s why: Overvalued firms are falling again to Earth, whereas undervalued ones are surging forward.
That is the premise of how I select firms to spend money on. At Fry’s Investment Report, we’re in search of firms which have a promising runway constructed on sturdy fundamentals and engaging valuations.
In the event you’re inquisitive about studying extra concerning the undervalued alternatives I’ve advisable – and to learn the way my forecasts play out by the top of the 12 months – click here for more on how to join Fry’s Investment Report.
The underside line: Whereas we are able to make educated guesses based mostly on what we find out about valuations and market tendencies, the longer term all the time finds a option to shock us.
The trick is staying versatile and rolling with the punches.
Regards,
Eric Fry
P.S. President Trump’s Government Order #14179 units up a significant coverage transfer on July 22, which Louis Navellier believes will ignite an enormous second wave of AI-related earnings….
However not in typical AI stocks.
As a substitute, the most important beneficial properties will possible come from a forgotten subsector of the market.
Louis has pulled again the curtain on these “pocket change” shares that may lead the subsequent part of the AI increase. Click here to get all of the details.
