Felix Zulauf: Build Dry Powder Until Fall & Then Go Long For A 2-Year Rally In Stocks

**Felix Zulauf** (0:00)
This is a classic bottoming action. You know, when people get scary and they fear about losing their money, and then they chase stocks when they bounce and they shouldn't. And what I want to say to them is, keep your powder dry whenever there are sell-offs. Put them to work in the stocks and segments you want to belong. And do not fear and sell when you have sharp setbacks. This is part of the process. Whenever it goes up, the news are good, and the market looks strong. And whenever it goes down, it looks weak. And your stomach feeling is you should sell. You should do exactly the opposite of how you feel. And then it will work out very well. And I think by fall the latest, you should be fully invested again for the nice ride through 26 into 27

**Adam Taggart** (1:08)
Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart. When today's guest was on this program last back in December, he predicted the following, that a contraction in global liquidity could set the stage for severe market corrections and increased volatility. Well, check. That stocks would peak early in 2025 and then experience a 15 to 20% correction. Yeah, check. That new US trade tariffs could lead to retaliatory measures from trading partners triggering a global trade war. Check, especially in regards to China. So, so far, he's three for three. He also recommended that investors start 2025 defensively, reducing equity exposure, avoiding long-duration bonds, and instead load up on T-bills and gold. Again, this was a winning combination. So who is this remarkably prescient forecaster? Well, none other than Felix Zulauf, founder and CEO of Zulauf Consulting. He usually only does public interviews once a year, but given the recent market turbulence, he's decided to return early to help investors make sense of what's most likely to happen next from here. We're extremely fortunate and grateful that he selected Thoughtful Money as one of the few platforms he's granting an interview to this week. Felix, thank you so much for joining us today.

**Felix Zulauf** (2:27)
It's my pleasure, Adam. It's always great to be back and talking to you and your audience. Thank you for having me.

**Adam Taggart** (2:34)
Well, look, this is going to cheer a lot of people. Felix, people are always asking me, when's Felix coming back on? That has reached a deafening crescendo as volatile as the markets have become. I think folks should be very, very happy that you've chosen to come out early in your cycle and give us an update here. Two things, one, again, congratulations on the prescience of your predictions so far this year for 2025 You really nailed it. Like I said, in the intro, why the early return to update us on your outlook?
Why now come out and say, hey, it's time for me to help call an audible and help folks understand where things are going? Is it just the volatility alone or is there a particular reason that you're coming back out early?

**Felix Zulauf** (3:23)
Well, I think everything fits into the scenario, the very long-term scenario that I described of a roller coaster environment in the 2020s, and particularly the second half of the 2020s.
I think a lot of people are asking for advice, and they are lost, and the media has panicked, and some are hesitantly bullish, some are still bearish. Even the classic perma bulls have cut their forecasts, which is interesting. And I am just actually raising mine and turning a little bit more constructive here. So far, we have had the takeout and correction that I expected. Of course, the environment is such that we will likely have some sort of global recession in the second half of this year. And we could see some retest at that time in the market. And it could go a little bit lower than I thought. I thought we would go to 5,000 or slightly below. We were at 4835 in the S&P. I thought we would go to Nasdaq 117,000 and we went slightly below that. So, I think instead of panicking now, people should have a cool head and look at what is best to do and how to play this environment. There is a lot going on and the shakeout is part of a major rearrangement of geopolitics and economics and capital flows that is going on in the world and will take many years to play out. And I think if you do not understand the process at work, then you are lost because you cannot deal with this environment as you dealt with in the, you know, 10 years ago, 20 years ago or whatever. I think it's a completely different environment and people should be aware of that and the risk and the opportunities.