"I Expect To Become A Raging Bear Later This Year" | Darius Dale

**Darius Dale** (0:00)
I would say, I'm a cautious bull now, but I do believe there is a reasonably high probability scenario where I will be a raging bear at some point in 2025 Kind of our general expectation is that, you know, sometime by late Q2 or early Q3, we're probably going to be engaged in a significant drawdown in asset markets.

**Adam Taggart** (0:24)
Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart. Darius Dale, founder and CEO of 42 Macro, has had a remarkably impressive track record in correctly forecasting the markets over recent years. Having turned bullish at the start of 2023, he remains so ever since, helping his subscribers successfully ride the wave of ferocious back-to-back annual returns of over 20% in stocks. He also helped them catch Bitcoin's price doubling over the past several months. So here at the start of 2025, where does his model see markets going next? Should we expect more of the same, or is a trend change in store? To find out, we'll talk to the man himself. Darius, thanks so much for joining us today.

**Darius Dale** (1:09)
Such a great pleasure to be here, man. I'm so grateful to be here.

**Adam Taggart** (1:12)
All right. Well, Darius, look, so much to talk about. Kudos again for the wonderful performance you and your hardworking team at 42 Macro put in. Folks, real quick, just a housekeeping note, we're going to have a great discussion here today. Darius' next appearance on Thoughtful Money is going to be at Thoughtful Money's spring online conference on Saturday, March 15th. Haven't officially announced it yet, but since Darius was here today, I thought I'd give you all the advance warning, details to come out soon, more details to come out soon about how to buy tickets and everything and who's going to be, who else will be participating. But right now, just mark your calendars. Saturday, March 15th. That's our next big online conference. All right, Darius, well, look, just to recap again real quickly, in your past couple of appearances on this channel, you have just continued to hit the ball out of the park again and again and again. A little over a year ago, at November of 2023, at the end of a surprisingly great year, everybody started the year thinking that it was going to be a recession and Armageddon turned out to be a great year.
I think it was November of 2023, you came on and I asked you, Darius, are we getting ahead of our skis now here? And you said, I don't think so. In fact, I'm about the most bullish I've ever been. We then went into 2024, which was another amazing up year. So kudos for that great call. When you were on in the summer, you mentioned you were still optimistic that this party still had more room to run. That was a correct call. When you were here a few months ago at our fall online conference, I asked you, okay, look, is this thing beginning to run out of steam, Darius? And you said, no, we've actually just, after a little wobble, looking like we might dip into disinflation, we're back in Goldilocks, and for the foreseeable future, the dips should be bought. Again, the right call. So as we begin a brand new year here, can this train keep running or not? So what is your current assessment of the global economy and financial markets?

**Darius Dale** (3:09)
Yeah, thanks again for having me, man. I really appreciate that warm introduction, man. It definitely helps us grow our reach and the number of people that we can help retire on time and comfortably with our research. So I'll start by saying, it's obviously been a great run. And we are now, as a function of that great run, we are at a very asymmetric point in the positioning cycle. A lot of investors, investors generally speaking are kind of on one side of the boat, the bullish side of the boat, with extreme bullish positioning across a variety of indicators. And so as an investor, when you think about this in risk management terms, you have to kind of really be focused on, okay, what could potentially go wrong and cause some of that positioning to unwind, because I think it's pretty clear what the drivers of that positioning were. It was the persistency of our resilient US economy theme. It was the persistency of our J want the soft landing theme, whereby the Fed had this asymmetrically dovish reaction function that was supporting the expansion of risk asset valuations, etc. And so are those things going to become less true, or are we going to get barraged with the advent of new themes or the waking up of old things that have become dormant? I think about our sticky inflation theme in the latter category, and I think about our SSS theme in the former category, specifically as it relates to the size, sequence, and scope of the potential fiscal and regulatory policy changes we're going to see out of DC. If you think about what we're going to see this year from a fiscal and regulatory policy perspective, it's going to be a lot of things, but there are five major categories that the Republican Party have outlined as their main policy agenda of this year. There's obviously tax cuts being the most number one thing. There's deregulation, and there's accelerated and energy production. All those three things are positive for both the economy and asset markets, and they ultimately should result in a positive supply shock in the economy, which obviously is supportive of corporate profit growth. There are negative things, however, that are likely to offset that, and the size and sequence of those negative things could either create significant problems in asset markets, or they could create sort of relatively minor problems in asset markets. And then those are obviously tariffs being the kind of the biggest issue there. And then this sort of concept of securing the border and reducing net migration flows into the US. So those two things could create a negative supply shock in the economy, support inflation higher, and ultimately cause some problems in asset markets through the lens of potentially tighter monetary policy, a continued hawkish move in interest rates, and ultimately more dollar strength, which if you have those three things or those two things continuing, you could potentially wind up with a goal of refinancing air pocket. So kind of summarizing all that, this is a year which we generally think investors probably will get some sort of positive return out of the market. However, I do believe there's a high probability, I wouldn't say high probability, but a reasonably high probability scenario whereby the market crashes in 2025 Now, I don't think this is the beginning of the end of the secular world market. I do believe even if the market crashes here in 2025, the dip will be bought. You still have the AI super cycle ongoing. You obviously have tax cuts and deregulation that are coming down the pike. So I don't believe that if we did see a significant correction or crash in the stock market and across risk assets in 2025, I don't believe this is the start of a multi-year or even a multi-quarter type process, but it could just be a rinsing out of all that asymmetrically bullish positioning because we don't get enough good news to support that positioning in succession. So we can unpack any element of that, but that's where we are for right now.