Rich Habits Podcast - Episode 100: Our 2025 Market Predictions
Release Date: January 13, 2025
Episode Overview
In the celebratory 100th Monday morning episode of the Rich Habits Podcast, hosts Austin Hankwitz and Robert Croak delve into their insightful market predictions for 2025. Combining Robert's extensive 30+ years in business with Austin's fresh entrepreneurial perspective, the duo provides a comprehensive analysis of the financial landscape ahead. This episode not only highlights their forecasts but also offers actionable advice for investors looking to navigate the upcoming market dynamics.
Market Prediction 1: IPO Market Heating Up
Robert Croak initiates the discussion by forecasting a resurgence in the Initial Public Offering (IPO) market for 2025. Despite a subdued IPO environment since 2021, Robert anticipates a significant uptick driven by favorable market conditions.
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Key Points:
- Recovery in IPO Numbers: After a peak of 908 IPOs in 2021, the numbers dwindled to 151 in 2022, 100 in 2023, and 210 in 2024. Robert expects this trend to reverse in 2025.
- Positive Market Sentiment: With the Federal Reserve cutting interest rates and the S&P 500 posting strong gains for two consecutive years, investor appetite for risk is rising.
- Pent-up Demand: Companies like Stripe, SpaceX, OpenAI, Klarna, and Databricks are poised to launch their IPOs, capitalizing on the improved market sentiment.
- Texas Stock Exchange Launch: The upcoming Texas Stock Exchange, set to launch in late 2025 or early 2026, is expected to lower costs and simplify regulatory processes, further stimulating the IPO market.
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Notable Quote:
"Bull markets create ideal conditions for IPOs. Higher valuations, more available capital, and more appetite for risk from investors."
— Austin Hankwitz [02:28]
Market Prediction 2: Increased Market Volatility
Transitioning to the second prediction, Austin Hankwitz warns of heightened market volatility in 2025, drawing parallels to historical market behaviors.
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Key Points:
- Historical Comparisons: The S&P 500 experienced its best consecutive years in 2023 and 2024 since 1997-1998, a period that preceded the dot-com bubble burst.
- Expected Pullbacks: With the average annual pullback of the S&P 500 being 12-14%, Austin anticipates multiple double-digit corrections in 2025.
- Investment Strategies: To mitigate volatility, Austin recommends incorporating hedged equity income strategies, such as the newly launched NUSI ETF, which combines covered calls with put options to cushion against market downturns.
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Notable Quotes:
"I firmly believe we'll see a couple of double-digit pullbacks throughout the year of 2025."
— Austin Hankwitz [05:17]"Don't let all of this scare you... we are always here to help you guys understand what's going on in the markets and educate you so you can make great decisions."
— Robert Croak [09:36]
Market Prediction 3: Crypto Bull Market Peaks
Robert Croak presents his bullish outlook on the cryptocurrency market, predicting that the current bull market will peak in 2025 or early 2026.
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Key Points:
- Impressive Returns: Bitcoin delivered a 124% return in 2024 and 108% in 2023, outperforming traditional investments.
- Indicators of a Peak:
- Net Unrealized Profit Loss Indicator: Currently at 60%, nearing the typical peak threshold of 75%.
- App Store Rankings: Coinbase App has surged to the top 10, signaling increased public interest.
- Search Trends: Google searches and Wikipedia visits for Bitcoin have skyrocketed, indicating heightened awareness.
- Future Outlook: Enhanced regulations and mass adoption are expected to stabilize crypto markets, reducing volatility and aligning them closer to traditional asset classes.
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Notable Quotes:
"Bitcoin delivered 124% return in 2024, 108% in 2023. If you didn't have crypto or Bitcoin in your portfolio, what were you thinking?"
— Robert Croak [11:15]"I personally don't think we'll see a 60 or 70% bear market after this market top due to better regulations with a pro crypto government."
— Robert Croak [14:45]
Financial Planning Workbook for 2025
To complement their market predictions, Robert introduces the Rich Habits Financial Planning Workbook for 2025, a free digital tool designed to assist listeners in budgeting, debt payoff, and net worth tracking.
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Key Features:
- Budgeting Tools: Helps users create and maintain a monthly budget.
- Debt Management: Guides on strategies to eliminate debt efficiently.
- Net Worth Tracking: Allows users to monitor their financial growth over time.
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Notable Quote:
"It’s free to all of you. All you have to do is download it and go to town. But it'll really help people with budgeting, debt payoff, net worth tracking."
— Robert Croak [10:29]
Q&A Highlights
The episode features a dynamic Q&A segment where Austin and Robert address listener-submitted questions, providing personalized financial advice.
1. Diversifying a Crypto-Heavy IRA
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Question: Edwin's IRA saw significant losses, leading him to transfer funds into a Bitcoin IRA, resulting in a highly concentrated crypto portfolio.
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Advice:
- Austin: Recommends avoiding 100% investment in Bitcoin. Suggests reallocating to diversified index funds like VOO, VTI, or QQQ.
- Robert: Agrees on the need for diversification and advises examining fees associated with Bitcoin IRA platforms.
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Notable Quotes:
"You should not have all of your Roth IRA or any of your retirement accounts be a hundred percent invested into Bitcoin. That's super dangerous, super risky."
— Austin Hankwitz [21:09]
2. Allocating a Lump Sum Payment
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Question: Marissa P. is receiving $50,000 and seeks advice on paying off debts versus investing.
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Advice:
- Robert: Suggests investing the lump sum in the market, maximizing Roth IRA contributions, and maintaining minimum payments on student loans due to uncertain government interventions.
- Austin: Advocates for a hybrid approach—paying off the vehicle and a portion of student loans to free up monthly income while still investing a significant portion.
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Notable Quotes:
"If you can make 10, 12, 14% with this money over the next four or five years... there might be a haircut, they might lose all the interest on it."
— Robert Croak [23:25]"Debt is simple interest where investments are compound interest rate. So like we can invest money into the markets... while the debt just gets cut across the way."
— Austin Hankwitz [24:00]
3. Reinvesting Business Sale Proceeds
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Question: Kristen W.'s husband considers investing $1.2 million from selling his business into dividend ETFs to replace his annual income.
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Advice:
- Robert: Supports taking the lump sum, investing it in diversified funds for long-term growth and income.
- Austin: Emphasizes the power of opportunity cost, illustrating how a lump sum investment can significantly outperform annual investments over time.
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Notable Quotes:
"Opportunity cost is everything... you would have a million dollar difference here over a decade."
— Austin Hankwitz [28:08]"If you're looking for income, having $1.2 million in a NEOs fund like an SPYI or a QQQI should result in about $100 to $120,000 a year, maybe a little bit more of tax-efficient income here."
— Austin Hankwitz [29:18]
Conclusion and Final Predictions
As the episode wraps up, Robert shares an additional prediction:
"I believe because we've been on such a roll, we're going to see the number one spot on Spotify in the coming six to eight weeks."
— Robert Croak [29:36]
Austin encourages listeners to explore previous episodes for tailored advice and emphasizes the availability of the free Financial Planning Workbook to aid in their financial journeys.
Final Thoughts
Episode 100 of the Rich Habits Podcast serves as a pivotal guide for investors anticipating the financial trends of 2025. With a balanced mix of optimism and caution, Austin and Robert equip their audience with the knowledge and tools necessary to make informed decisions in a fluctuating market environment.
Connect with Rich Habits Podcast:
- Newsletter: Join the Rich Habits Newsletter for weekly insights.
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- Financial Workbook: Download the free Financial Planning Workbook from the show notes or the hosts' online stores.
Note: All investment advice is based on the hosts' perspectives and should be considered in conjunction with personal financial circumstances and professional consultations.