Like every end of the year, investors look back to take stock and see where the money has really moved. Some investments have given extraordinary returns unexpectedly, and those who bet on them can celebrate in style with champagne. Others, on the other hand, have been a bigger failure than expected. And, as always, there are two or three surprises that came out of nowhere to give crazy benefits.
The winners: bitcoin, ETFs, China and Japan
If there is an investment that has succeeded in recent months, it has been bitcoin and cryptocurrencies in general. Donald Trump’s turn from critic to fan of these assets has shaken the market. And the movements have followed one another: the triumphant entry of Elon Musk into the president-elect’s closest circle, the appointment of a bitcoin advocate to lead the Securities and Markets Commission and projects to create a strategic reserve of bitcoins. The result has been that the price of this asset has skyrocketed to $100,000, while the effervescence of the sector has pushed almost all other small cryptos up. And not only has the ‘rally’ ended there: companies like MicroStrategy, whose business model is based almost entirely on buying bitcoins, have also grown like wildfire.
But in a year of increases in large market values, ETFs have also emerged. The great advantage of these assets is that they allow you to multiply investments in the most successful assets, thanks to leverage: why buy Nvidia shares when you can buy a fund that doubles the movements of the chip firm? ETFs that invest in stocks of a single firm have raised $6.5 billion this yearand the fund that bets on Nvidia has had profits of 350% in 2024. And let alone the bitcoin ETFs: they have shot to the moon. In years when the market goes badly, the tears would be much greater. But in a year in which the three major Wall Street indices have not stopped breaking records, the benefits of this strategy have been gargantuan.
Asian investments have also been successful, despite the fears that plagued Japan and China throughout the year. The case of Japan is paradigmatic: the famous ‘black Monday’ of Augustin which the Asian stock markets collapsed, dragging down Europe and Wall Street, was caused by a movement by the Bank of Japan that could affect the ‘carry trade’. This investment consists of borrowing money in a cheap currency – the yen, in this case – and then investing in dollars. That collapse occurred because investors were overcome by fear that the yen would appreciateleading to losses to all those who had requested cheap loans of this currency. And yet… that didn’t happen, the market recovered in a matter of weeksand those that kept their foot on the accelerator during those curves, like AT Global Markets and Pepperstone, are going to end the year with profits.
They have experienced similar success investors in china. After several years of economic disappointments, due to the total closure for more than two years to avoid covid and a much more chaotic reopening than expected in a dictatorship, the giant has been reactivated this year. Not enough to calm doubts about its medium-term future, since it continues to have a domestic consumption problem, a worrying demographic profile and a lot of toxic real estate debt. But it has been enough to boost bonds: ETFs tracking 30-year Chinese debt have gained 21% for the year. And shares have rebounded 14% after three years of declines.
The losers: US bonds, mergers and retail investors
If Chinese bonds have clearly emerged, the Americans have taken the other side. At the beginning of the year, the expectation was that the US would border on recession, if not fall directly into one, and the Federal Reserve would have to respond with numerous rate cuts, probably seven, followed by more next year. In reality, there have only been fourand the Fed appears poised to close the cycle of cuts after just one or two more next year. A disappointment that has boosted 10-year bond yields by 68 basis pointssinking its price. As a result, US Treasuries have once again lagged money for four consecutive years: gains of 0.7% compared to a 5.1% revaluation of the dollar. Better to have had bills in our pockets than to have bought bonds.
They have experienced a similar disappointment those who were betting on mergers in the US to obtain benefits. Hedge funds that are dedicated to buying shares of firms over which an acquisition or merger is hovering, hoping to take the purchase premiums when the deal is closed They have barely earned an average of 3%. The US Government has not helped in the least to make some of these operations go ahead, denouncing them for anti-competitive practices and stopping or diluting several of them. Who knows what attitude the second Trump Administration will have, but Biden’s administration has not left a good taste in their mouths.
The other big losers have been retail investors. Normally, small savers in the stock market tend to have somewhat lower profits than the results of the indicators, because they buy and sell in a more inefficient way. But this year has been worse than normal: from winning a couple of points less in 2023, small savers have earned less than half of what the indices have risen. The causes have been several: the August panic made them sell shares of large firms like Nvidia or Tesla just before they experienced their biggest increases, and The falls of recent weeks have caught us on the wrong foot to many who bought after seeing the start of the ‘Trump rally’.
In any case, it is not just the little ‘amateurs’ who have left money on the table. 77% of large funds that are dedicated to buying and selling shares at the ‘right time’ have failed in its mission, registering increases lower than those of the indicators. Index funds have won again.
The surprises: Argentina, the AI ’rescues’… and a bonus from Santander
And among the big winners of the year, there were three that very few people saw coming and that ended up surprising everyone and everyone. Argentina perhaps it was the one that could be most suspected, although not to the level that has occurred. Javier Milei has taken out the chainsaw he promised, repealing dozens of laws, reforming an economic system full of obstacles and protectionism, and promoting a moribund peso. A brutal budget cut and a pension freeze They have made it possible to balance the accounts, eliminate the deficit and boost the credibility of its debt. And the markets have celebrated it with 104% increases in their bonuses. Even so, 2025 is full of doubts, with much larger payments to the IMF and legislative elections where Peronism will try to regain control of Congress. If Milei survives those two challenges, who knows.
Another sector that has surprised is very specific. The saying points out that, When there’s a gold rush, the real winners are the pick and shovel sellers.. In the AI market, the big beneficiary has been Nvidia, which sells the chips for these systems. But there have also been other firms that have come out of hell to supply giants like Amazon or Microsoft. Talen Energy, a nuclear operatorwas bankrupt until Amazon decided to invest in its plants to supply clean energy for its AI systems. The owner of Three Mile Island, the plant known for the largest nuclear disaster in US history, will start up again after five years closed, led by the giant founded by Bill Gates. AND Lumen, a teleco on the verge of bankruptcyhas been resurrected with multibillion-dollar deals to sell fiber optics to Microsoft and other AI firms.
But perhaps the most unexpected surprise of the year is in some preferred shares of Santander. Or, rather, some of the Banco Pastor, issued in 2009in the midst of the financial crisis, when numerous entities were issuing these controversial instruments to cover the growing holes that appeared in their balance sheets. The century-old Galician entity ended up in the hands of Popular, and Popular was absorbed by Santander after its bankruptcy. Those preferred ones were left for dead after the two absorptions, and were trading at just 3% of their value. But officially that bonus still existed, and this year, Santander decided to pay those who still had those preferences to get rid of them and ‘clean up’ your balance sheet. The winners recovered all their money, and those who bought the bond at 3 cents per euro made a 2,900% profit. One of the few ‘happy endings’ of the preferred ones.
#won #lost #wildest #investments #year
