What’s Happening in 2025: Key Topics You Should Know

The Big Three:

War, Tariffs, and Taxes—three massive issues shaping 2025. You are impacted by them. But you don’t have any control over them. How you invest, how much money you save, how diligent you plan, and how completely you implement that plan is all within your control, and that’s where I’d focus your attention.

I Believe in People:

It’s not that I believe everyone has good intent, but at my core I trust that most people are working toward progress. Whether for their individual gain, families, communities, country, or the world - I believe that most people are working each day toward progress within their sphere. Here's how I see it:

  • Hundreds of millions of people working toward progress is mighty.

  • Smart regulation helps ensure that personal progress doesn’t turn into chaos.

  • The U.S. works very well within this system of allowing personal progress with regulatory guardrails and is why we remain the largest economy in the world.

The system of growth plus regulation is powerful. I believe it will continue to carry us through challenges, just like in the past. So, despite today's volatility, long-term results will likely mirror historical patterns.

War:

It seems certain that somewhere in the world there will always be a battle. Thank you to the men and women who serve to keep the rest of us safe.

  • America strives to have the most powerful military force in the world in hopes that we never have to fully use it.

  • The sad reality: every war has lasting consequences, even if “successful.”

My own family’s history reflects that. My biological Grandpa James died in WWII in the Sea of Japan. My mother never met him. One of the saddest times I saw my grandmother was the day we went to war in the Middle East. My grandmother understood the perils of war, and that the hardship doesn’t stop when the fighting ends.

Investment Takeaway:
I am not making investment decisions based on the potential outcomes of the current wars. I don’t assume they will end anytime soon. And that even if there is perceived “success”, there will be continued years of hardship.

Tariffs:

Change is necessary for more balanced prosperity, and tariffs get the most headlines as the lever being used to achieve that.

Our current position:

  • We have a huge income disparity in our country.

  • Our supply chains are fragile, and we're overexposed to global production—especially in non-fossil fuel, manufacturing, and emerging technologies.

  • We rely heavily on countries that are, or have threatened to be, hostile toward our needs—many of which are not democratically governed.

  • Our fiscal balance sheet is ugly and unsustainable.

Tariffs are a piece of Trump’s attempt at addressing some of these structural problems. In isolation, they can drive up the cost of things. However, other aspects like accelerated expensing of capital investment might offset the cost of tariffs.

What’s next?

  • Many companies say they don’t know how to act in this tariff environment because they lack certainty.

  • On one hand, that concern is understandable. But on the other hand, the direction is already clear for those paying attention: we need to produce more things domestically and reduce reliance on fragile supply chains.

  • From my vantage point, clarity is already here—it’s how companies decide to follow-through with it that’s uncertain.

Long-term?

  • Companies will adapt and discover new pathways to success. Innovation thrives when forced to evolve.

  • While tariffs have created short-term volatility, businesses will figure out how to thrive at whatever level tariffs remain.

  • I suspect that trade negotiations will remain a central issue throughout most of Trump’s term. So, if you're waiting for perfect clarity before taking action, that’s likely a hopeless objective.

Big Beautiful Bill:

Initial Expectations: Going into it, I expected disappointment. I’ve long believed we have a serious fiscal problem, and simply lowering taxes isn’t the way to solve it.

Reality: The tax cuts weren’t as aggressive as I feared. They were more tempered, and the new ones are temporary—set to end in December 2028.

Tax Cut Specifics:

  • Most of the cuts target lower tax brackets and might not end up significantly reducing federal tax receipts.

  • The real estate tax deduction cap was increased from $10,000 to $40,000, but that benefit phases out quickly once income exceeds $500,000.

  • Most people with $40,000 in property taxes likely have high incomes to begin with—so it’s unclear how many high-income earners will meaningfully benefit.

The top 10% of income earners already pay around 72% of all income taxes, and nothing in this bill appears to reduce their obligation. In fact, they may end up shouldering an even larger share.

Bottom line:

  • It’s difficult to see how the tax cuts in the bill will reduce our deficit.

  • While tax cuts can grow the economy, we only tax the economy at about 17%. That means if we cut taxes by $100 billion, we’d need the economy to grow by nearly $600 billion just to break even on revenue.

  • We are adding other revenue sources, such as tariffs, that could offset the new tax deductions in the bill.

  • Which means, while tax cuts in isolation might not reduce our deficit, what’s in the entire package just might. Time will tell, and we’ll have a good idea in about a year.

What this means for you:

  • Roth Conversion Window: The window to convert to Roth IRAs just got bigger—an important move for many. We have plenty of videos here on why we think this is such a vital component of financial planning to consider. And a real deep dive video here.

Reduced Regulatory Compliance:

Friedrich Hayek wrote The Constitution of Liberty, and in Chapter Two—The Creative Powers of a Free Civilization—he argues that we benefit more from the distributed knowledge of free individuals than from centralized control. That theme appears to run through this bill.

What we’re seeing:

  • There’s been a massive and abrupt end to many programs under the 2022 Inflation Reduction Act—particularly EV tax credits and home energy efficiency incentives.

  • Initially, this raised concerns about whether the U.S. would lose its technological edge.

But look deeper:

  • The bill redirects billions of government dollars into areas that build long-term strength:

  • Rare earth procurement

  • Space, drone, and battery innovation

  • Shipbuilding and large-scale production

  • The sudden stop in subsidies might help offset the cost of tax cuts elsewhere in the budget.

EV Market Snapshot:

  • According to the Bureau of Transportation, electric vehicles made up just 8% of the new car market in 2024—which means 92% of Americans didn’t buy one.

  • Anecdotally, most people I know still don’t drive an EV, so it’s hard to say whether the tax credit was truly influencing consumer behavior.

Global perspective:

  • China dominates the global EV market and controls roughly 90% of the materials and manufacturing needed to produce them.

  • As the world’s largest oil importer, China is working to reduce dependence on foreign energy—just as we should reduce our dependence on China for energy.

  • It stands to reason that China would pump up their EV production and reduce their oil consumption.

  • The bill focuses less on dictating which type of energy we use and more on making sure it’s reliable and domestic.

Bottom line:

What I read in the bill was not about picking a winner in the energy race but about making sure we’re not left dependent. The government—past and present—is keenly aware of the strain on our energy grid and the pace of technological change. We might still reach the same energy future, but possibly in a more sustainable, more efficient way.

Will 11 Million Americans Lose Their Medical Insurance?

Despite the headlines, I don’t think so. I was surprised that such language could have made it through both the House and Senate, but when I read the bill, I saw an effort to encourage participation—not punish vulnerability.

What’s happening:
Starting in December 2026, Medicaid eligibility will come with new, more structured requirements.

To qualify, individuals can meet at least one of the following:

  • Work 80 hours/month (which can include employment, community service, or job training)

  • Be enrolled in education at least half-time

  • Participate in a work program

There are numerous exceptions for those who:

  • Are pregnant

  • Are minors

  • Are caring for a child under the age of 14

  • Are incarcerated

  • Have a physical or mental disability

  • Are in drug or alcohol treatment

  • Must travel long distances for services

Eligibility language for benefits in the bill include:

  • A Social Security number

  • Legal status (citizenship, green card, legal alien, or a valid visa)

This is not mass disenrollment. There are plenty of productive ways to qualify and many built-in exceptions if you can’t. It’s a thoughtful shift toward personal responsibility with a compassionate framework.

Portfolio Update:

March 2025 Portfolio Shift: Toward the last week of March, we made sweeping portfolio changes to reduce reliance on the so-called “Mag 7+”—the massive U.S. tech companies that also happen to be the largest in the world.

Why we did it:

  • Those companies were the market’s primary growth engine through 2023 and 2024.

  • Meanwhile, the rest of the market had largely not recovered from the declines of 2022.

Around the first week of April, the market, at least for now, bottomed out. Since then, we’ve seen a healthy rebound—and this time, it’s broader participation than just the Mag 7+.

What’s happening now:

  • Some of the largest tech stocks are underperforming.

  • The recovery is more uniform, with strength coming from a wider range of industries and sectors, including industrials among those leading the charge.

  • That’s a healthier sign for long-term market growth.

We’re continuing to monitor the situation, but so far—so good. If this trend continues, we could end 2025 at much more attractive levels than where we started.

Please call if you have any questions or would like to chat further about anything. There is no shortage of topics to discuss.

Thanks,
James

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