Turning the Page: Insights and Strategies for a Strong 2025
6 min read
As we step into the new year, aligning your investment strategy with current market dynamics becomes essential. Many investors are still holding cash, waiting for the right catalyst to enter sectors or companies they believe will outperform. These decisions often hinge on individual investment styles and risk tolerance. With that in mind, here are two ETFs I find particularly compelling as we head into January:
Industrial Select Sector SPDR Fund (XLI)
XLI offers exposure to the industrial sector, encompassing industries such as aerospace, defense, construction, and engineering. As of EOD today, it closed with a price of $131.92 per share and YTD of 15.73%
- Beta: 0.88, indicating slightly lower volatility compared to the broader market.
50-Day Moving Average: Approximately $138.93. / 200-Day Moving Average: Approximately $128.10.
XLI is trading below its 50-day moving average but above the 200-day moving average, suggesting a potential buying opportunity for investors anticipating growth in the industrial sector. XLI holds companies such as, Caterpillar, Honeywell and Uber Technologies.
Vanguard Energy ETF (VDE)
VDE provides exposure to the energy sector, including companies involved in oil, natural gas, and renewable energy. As of EOD today, it closed with a price of $120.00 per share and YTD of 2.02%
- Beta: 0.70, indicating slightly lower volatility compared to the broader market and $XLI.
50-Day Moving Average: Approximately $128.94. / 200-Day Moving Average: Approximately $126.59.
VDE is currently trading below both its 50-day and 200-day moving averages, which may indicate a bearish trend. However, for investors with a long-term perspective, this could present a buying opportunity, especially considering potential policy shifts with the upcoming presidential administration that may favor the energy sector.
SIDE NOTE: Not sure how much weight this could hold in your decision but Berkshire Hathaway just this month added 8.9 million shares of Occidental Petroleum for $405 million. (avg. price of $45.51) to their existing position. Occidental Petroleum Corporation (OXY). A potential positive long-term outlook on the energy sector and also $OXY is 1 of the top 20 holdings of the VDE.
GRAPH representing YTD returns of the S&P 500 in the Pink line, XLI in green and VDE in blue.
OPINION:
Be aware that for conservative investors, XLI’s exposure to established industrial companies offers stability and steady growth potential. Conversely, VDE may appeal to those with a higher risk tolerance, given its sensitivity to energy price fluctuations.
The impending change in the presidential administration can significantly impact these sectors. The anticipated infrastructure spending and renewable energy incentives under the upcoming administration may provide tailwinds for XLI and VDE, respectively. Staying informed about proposed policies and adjusting your investment strategy accordingly is essential.
RECAP:
Just as we did in 2023, below we’ll list the best or worst performing individual securities of the BMG portfolio. With the last day of trading for year the portfolio stands, as of EOD today, with 26.55% vs. the S&P 500 23.76%.
Best/Worst Performing Securities
Ticker Symbol: $MSTR - Company Name: MicroStrategy Inc. - 2024 Performance: 391.55%
Avg. Entry Price: $142.69 - Avg. Exit Price: $329 - Realized Gain: 130.56%
Ticker Symbol: $ORCL - Company Name: Oracle Corp. - 2024 Performance: 58.84%
Avg. Entry Price: $129.17 - Current Price: $167.46 - Unrealized Gain: + 29.44%
NOTE: Oracle was in our worst performer list at the end of 2023.
Ticker symbol: $BAH - Company Name: Booz Allen Hamilton Holding Corporation - 2024 Performance: 0.82%
Entry Price: $154.20 - Current Price: $128.96 - Unrealized Loss: (- 16.36%)
Ticker symbol: $MLM - Company Name: Martin Marietta Materials, Inc. - 2024 Performance: 5.19%
Entry Price: $577.71 - Current Price: $523.42 - Unrealized Loss: (- 9.16%)
2024 highlighted the importance of diversification and the value of holding positions through short-term volatility, as seen in Oracle's remarkable turnaround.
CLOSING REMARKS:
Active hobbies foster discipline and focus, qualities vital for both physical health and successful investing.
Incorporating active hobbies into your routine can effectively combat negative habits and behaviors. I know it did for us!
- Physical Health: Activities like running, tennis, or pickleball improve cardiovascular health and physical fitness.
- Mental Well-being: Engaging in Brazilian Jiu-Jitsu or joining a Yoga club can reduce stress, enhance mood, and provide a sense of community.
- Discipline and Focus: Hobbies that require skill development and practice foster discipline and can redirect focus from negative behaviors to positive growth.
Starting 2025 with informed investment choices and a commitment to active hobbies can set a positive trajectory for the year. Regularly review your portfolio in light of market trends and policy changes, and embrace activities that promote both physical and mental well-being.
The start of a new year is the perfect time to take control of your financial future. Whether you're exploring investment opportunities or seeking guidance to refine your existing financial strategy, BMG is here to support you every step of the way. Let’s unlock your full potential—both financially and personally.
Are You Ready to take the first step? Click here to begin your journey today!
*Disclaimer: This information is for educational purposes only and should not be considered financial advice. Consult with a financial advisor before making investment decisions.*
