6 Wonders From 2025 – Common Sense Treasures
My old boss used to say, “It’s okay to be surprised by what happens in the markets. Just don’t be surprised that you’re surprised.”
Here are some surprises for 2025:
1. Only two Mag 7 stocks outperformed the S&P 500. Only Google and Nvidia hit the market in 2025:
Microsoft, Tesla, Amazon, Apple and Meta all underperformed.
That’s surprising given all the AI/tech bubble talk we’ve heard all year.
2. Big tech stock ratings haven’t gone up in a month. With the exception of Tesla, the valuations of major tech stocks were unchanged:
For Broadcom, Nvidia, Amazon, Oracle and Apple, P/E ratios have actually declined.
Of course, there are other metrics you can look at. But on a valuation basis it’s not like tech stocks will burst into a bubble in 2025.
Maybe the bubble is still coming, but it doesn’t seem to have happened last year.
3. Still no recession. Maybe AI didn’t burst into a big bubble but many people believe that all the money that comes from tech companies carries the economy.
This chart from Michael Cembalest puts it in perspective compared to other historical spending patterns:
AI spending appears to have dampened the impact of taxes on the economy.
It seemed like we were close to going down in April with the Tariff Tantrum. The betting markets were quite worried:
Prices, inflation at 9%, mortgage rates at 8%, Fed Funds Rate at 5%…none of it has hurt the economy.
Perhaps the real surprise will be where we are do enter recession.
4. Shares expire in 2025. Chart Kid Matt breaks down the S&P 500 into the descending deciles in 2025:
This shows the stocks that were hit the hardest (all the way to the left) and the stocks that are already doing well (all the way to the right) are the two best performing baskets.
Impulse buying is in play again value games that have been knocked down have worked.
That’s odd in the same year.
5. International stocks performed very well. Finally!
Check out:
Developed and emerging market foreign stocks both outperformed the US stock market by double digits.
According to my calculations, the MSCI EAFE’s over 14% performance over the S&P 500 is the largest gap since 1993.
However, no one seems to care!
I think it will take another year or two before many investors take notice.
We will see.
6. Self-driving cars are here. My family took a trip to Scottsdale this past week to get out of the Midwest cold. The first thing I noticed coming out of the airport was that Waymos was everywhere.
It’s strange to see cars driving everywhere with no one in the driver’s seat.
I make a point of taking one just for the experience. I wanted my children to experience it too.1 It was magic like everyone said. That first ride was surreal, like something you only see in the movies.
Ten years ago it seemed like this would never happen. Waymo now says they will have 14 million rides by 2025.
I told my kids that the next 10-20 years are going to be nuts – self-driving cars, AI, robots, etc.
I know this time will bring challenges. There will be hiccups. Certain jobs and groups of people will be removed. The transition phase will be difficult. We will eventually go into recession at some point. Maybe an AI bubble will pop.
But I can’t imagine being bearish about the future when we can build a self-driving car.
I am always optimistic about the future.
Josh, Michael and I talked about all these wonders and more on The Compound and Friends this week:
Or check out the podcast version here:
Further reading:
Biggest Risks in 2026
1They all made fun of me because I was happy about it.
