By Gareth Horsfall
This article is published on: 5th January 2025
Happy New Year to everyone! I hope that you are reading this feeling relaxed and rested. Who knows what 2025 will throw at us from a political and financial point of view, but the most important thing is our health (physical and mental) and making sure we all keep communicating with one another.
So, in this January 2025 Ezine I just wanted to just follow up on my year with you. After sending out my last few Ezines, and writing about our new house and move away from Rome in 2024, many of you have written back to congratulate us and offered many words of support and also wisdom because I know that many of you have also been through, or are continuing to go through a similar experience. I have to say that I wake every morning now feeling fresher and more mentally alert than before. I even started my year this morning (2nd Jan) with some early morning outdoor exercise (no need for the closed gym anymore) to get back into the normal health and fitness regime that I follow (after all the panettone and other goodies during this period).
I wanted to thank you all for your words and thoughts of support in 2024 and thought this E-zine might be a good opportunity to send you some fotos and afterwards to provide some of my own thoughts about the year ahead from a financial and economic point of view (my own thoughts, I must add!)
Below are some pictures from my house adventures in 2024.
The house as it is now – day and night.
The living room, then and now:
My wife has got quite handy at sunrise and sunset shots as well:
Then I am sure you will all be happy to see me doing some hard manual labour for a change:
*From left to right:
My first decespugliatore experience (in 38 degs!), picking pears, excavating a random pipe which led to nowhere, re-laying the same pipe which now goes somewhere!
And my famous ‘trinchea’ for laying the new pipes, which is now filled in and working like a dream!
And finally, our famous kitchen which was finally installed 100% on the ‘Virgilia di Natale’ and we were able to make Xmas dinner in it. (Thankfully, as I didn’t fancy trying it on the camp stove in the outhouse).
My job over the next few months, apart from ongoing work, will be to get all the necessary papers together to present to my commercialista and take advantage of the Bonus Edilizia for 2024. In the end we probably maxxed them all out, playing with the main one of 50% on most works, bonus eletrodomestici and then the other detractions such as the cost of the estate agent. The paperwork will be a mission in itself but I have been quite good at documenting and filing everything as we went along so its just a case of putting it altogether for the commercialista. (I can’t advocate enough for keeping good and regular records if you embark on this kind of journey as the paperwork requirements to take advantage of the bonuses are quite something).
And so, as my thoughts now move away from building to ongoing maintanence, I thought I would share some of my thoughts for what I see from 2025 and to touch on some of the things which are probably in everyone’s mind. (I should add that, as usual, I will be attending the Spectrum IFA Group annual conference again around the 22nd January and will be reporting back on the opinions of the people at the investment coal face, as they see it).
As far as I see things, I think we are in for a volatile ride. This is not to say that I see things turning out negatively for use in 2025, far from it. It could actually turn out to be positive for investment returns, but it will likely come with some periods of volatility during the year, certainly more so than 2024, I suspect this will be driven primarily by President elect Donald Trump. He has been voted for a second term and knows he cannot be voted for a third so he really has nothing to lose. His rhetoric already has been quite interesting, from wanting Canada to become the 51st State of the USA to purchasing Greenland.
It is easy to write him off as a lunatic, and certainly I suspect the Canada comment was really a way to wind up Justin Trudeau, but Greenland would be a much more strategic and important asset for the USA, because of the Arctic shipping corridor which Russia is already utilising to it’s advantage. Rising arctic temparatures now mean that it is open for the whole of the year. (Goods shipped from East Asia to the UK could save up to 10-12 days in shipping time over the traditional Suez Canal route and save over 40% in costs!). Donald Trump is probably very aware of this and would prefer that Russia does not get power and control of this route.
Apart from that he is going to come out of the gate on the 20th January with the tariff gun, is my thinking. I imagine he is going to hit everyone and everything with tariffs, where it is not in the interests of the USA. (The EU needs to prepare itself) I would think that his biggest target will be China to try and balance trade between the 2, but even more so to encourage businesses to return to the USA rather than offshoring production in China. He has also fired off a comment about imposing 100% tariffs on any country that joins a currency union in the newly formed BRICS economic community, so as to preserve the dominance of the US dollar.
However, the BRICS economic community are not going to be phased by this because they are unlikely to be ready to launch any common currency for quite some time and can always wait 4 years until Donald Trump is no longer in power. (Countries and economic unions have a much longer time outlook than a US Presidential term).
One thing which I hope he will achieve is his desire to put an end to the Ukraine Russia war. I am not sure what form this will take, but will likely mean Ukraine ceding already lost territory to Russia in exchange for calling a ceasefire to the war. Whilst I may not agree with the outcome, it will stop a war which seems more like a killing ground than anything else and has only demonstrated that Russia is significanlty more advanced militarily than we may have thought. The recent dropping of their ballistic Oreshnik bomb, as a warning to NATO, was a bit of an eye opener given that reports seem to confirm that it travels so fast that Western/NATO allies have no system to effectively intercept such a weapon. On that basis it’s better that Russia never has a reason to use it, in my opinion.
I suspect the situation in the Middle East, Israel and Gaza and Syria will not get any better in 2025. I can’t see any reason why anything will change there, sadly. More of the horrific images coming from Gaza and human rights abuses on both sides. I was taken a bit by suprise by the falling of the Assad regime in Syria, not more so than by an ex-Al Qaeda second in command, who is now a western ally. Somehow I don’t see that ending well.
And lastly, I will touch on the EU because it warrants some mention given Donald Trumps re-election.
It has become evident that EU nations have been riding on the coat tails of the USA for defence, through NATO since World War 2. I remember when Donald Trump was President first time around that he started demanding that NATO allies contribute their fair share of the defense budget to NATO and ‘requested’ that they increase their expenditure to 3% of GDP. I don’t remember the facts but I don’t think many EU countries did, apart from Estonia if memory serves me correctly.
This time I have seen reports of Donald Trump requesting 5% of GDP or he may withdraw the USA from NATO. This would seem to be a significant worry for the EU, and rightly so because ultimately any defense/borders/war with Russia are going to have to be funded/managed by the EU and no longer by the USA. Additionally, USA Tariffs on goods and increased defense expenditure are going to have a significant impact on EU member states. Already with the increased gas prices that we are paying (DT will also de-regulate energy exploration and production in the USA so they can start drilling and mining and become more resource independent again) many businesses are moving to the US or to places like Dubai to benefit from lower costs and /or lower taxation. This is a long-term serious problem for the EU and the bureaucrats in Brussels are going to have to step up to the plate. In the very short term I see this as having a serious economic impact but could lead to an economic boom time in the EU, especially in defense, as it relies less on the USA for support in the medium term.
There is so much more to say here and I could make some more predictions. The fun thing is that none of this will not define your investment returns in 2025. Would you have predicted that in 2024, whilst Russia was at war with Ukraine, Israel/Gaza were was committing their deeds, the fall of Syria and the re-election of Donald Trump, would produce of return on the US stock market of over 20%? The analysts predict a return of around 14% on the US stock market in 2025.
I will finish this E-zine just by saying that I am a great believer in the Black Swan event. For anyone who is not familiar with this theory it was coined by Nassim Nicholas Taleb in his book The Black Swan. The theory goes that until Western colonial powers discovered and colonised Australia it was believed that all swans were white. N0-one had ever seen a black swan. Therefore to see such a creature was a moment of shaking belief and requiring a re-thinking of ideas and plans.
He overlaid this onto the investment markets explaining that there are events of which we are ignorant, even to go as far as saying we have no knowledge whatsoever, until such time as they become evident, normally because of problems occuring in their respect markets: think mortgage backed securities (2008/9), Long Term Capital Management (Russian debt crisis 1998) The point is that we can never measure, prepare or be cognisant of these things before they happen, but they inevitably have significant consequences and create more stress for investors. The good thing is that they come along rarely and they pass, and we move on.
As always we need to remain diversified, manage costs where we can and have the right people managing our money to get us through such events.
In this E-zine I have shared some thoughts about what will happen politically and economically in 2025, but I remain postive for the year ahead from an investment focus. Good luck to all of us for the year ahead.
From the new house in Amelia….. Auguri alla Befana !!!!
