Animal Spirits and 7 Stocks to Buy Now
Addison Wiggin / March 10, 2025

“The biggest losses in stocks come from companies with poor balance sheets.”
– Peter Lynch
March 10, 2025 — Goldman Sachs and Morgan Stanley have released revised growth expectations for the U.S. economy.
Neither bank is forecasting a recession at the moment. But both see a slowing economy, with a half-point haircut to GDP.
Altogether, the largest banks on Wall Street appear to be taking Donald Trump’s promise of “a little wrinkle” caused by DOGE “chaos” and cliche tariff uncertainty seriously.
JPMorgan Chase’s forecast is the most philosophical. The nation’s largest bank is citing “animal spirits,” the phrase John Maynard Keynes coined to allow economists freedom from admitting they have no idea what’s going to happen next.
Bloomberg reports:
JPMorgan’s team has one scenario where “U.S. animal spirits lift” to secure 3% growth, and that’s calculated at a 10% probability. Tied for the most likely scenario — at a 30% chance for each — is “U.S. exceptionalism ends” with growth below 2%, or “sentiment/policy shock,” where extreme policies trigger a recession in the second half of this year.
In another specimen of history rhyming, Donald Trump promised a “golden age” of America, striking a fearful comparison to Irving Fisher’s 1929 pronouncement about stocks reaching a “permanently high plateau.”
Markets would then decline 89% peak-to-trough by 1932.
The Trump push for deregulation echoes the banking deregulation of the Gramm-Leach-Bliley Act. It passed in November 1999, within weeks of the tech bubble peaking.
During the current tech bubble, the Magnificent Seven stocks now account for 28% of the weighting of the S&P 500 index. But as a group, they’ve been down 16% since the beginning of the calendar year.
Even if you’re just a passive investor, it’s time to pay attention.
Nvidia has been the poster child for the AI boom. Its valuation relative to U.S. GDP still exceeds the dot-com bubble peak of then-market darling Cisco. In fact, it’s now more than double.
And you thought the tech bubble was bad. (source: Crescat Capital)
History tells us this won’t end well. But a market juiced on visions of a golden age could still send valuations even higher.
In the Grey Swan model portfolio, we prefer to look for the best opportunities and safest places to invest elsewhere.
Finding Opportunity in a Jittery Market
The bull market that started in late 2022 may not be over, but it’s certainly shifting.
And that means a new set of opportunities while high-flying tech stocks like the Mag 7 take a much-needed breather.
The market is starting to get selective. Industries that are sensitive to tariffs are taking it on the chin.
The homebuilders, for instance, depend on considerable imported quantities, such as lumber from Canada. They’ve been hit hard by rising tariff fears.
In contrast, the healthcare sector has been trending higher. It hasn’t been soaring like a tech stock, but after being a significant laggard in 2024, it’s refreshing to see. And we can’t help but notice that last week, the CEO of Moderna bought over $1 million in shares, a year after shares got cut in half.
We’ve just released some new research on this sideways market trend. We see plenty of opportunities as tax rates stay at their current relatively low levels and as deregulation takes effect.
However, we also recognize that high-debt companies and tariff-sensitive firms may be in trouble in current market conditions.
The overall result will likely be a violently sideways market. And that’s always a market where you can’t just buy the index and ride it up. You need to sort out the losers, like homeowners right now, and look for winners, like health care.
Every sideways market is unique.
This time around, tariff uncertainty for manufacturers and companies that rely on global supply lines will be similar to that of 2018, but not precisely the same.
2025’s sideways market also brings in a new twist: uncertainty in the economy sparked by DOGE activities and the realigning of the idea of the government’s role in the economy.
As government spending lowers, we may get the opportunity to cheer a lower deficit. But we’ll also have lower spending in the private sector from government sources.
No matter what happens, it’s important to remember that historically, every boom has ended with a bust. A jittery market is a prerequisite for a grey swan event.
The specific pin always comes from some unanticipated locale and surprises the market.
Right now, the grey swan of tariff impacts is something we noted in our Seven Grey Swans of 2025 series on December 26. We’ve been anticipating the “end of cheap” since the Fall of 2023.
The China wild card also encompasses shock events like the launch of DeepSeek, which threw the whole AI rally into caution mode. China’s recent push for more stimulus measures may also help keep commodities trending higher.
In a wild card market, a sideways trend marked by winners and losers is often the case. Tread lightly. If you’re a paid reader of the Grey Swan Investment Fraternity, you can find 7 Maga Stocks we expect to do well in the next two year, right here.
Regards,
Addison Wiggin,
Grey Swan
P.S. “The big problem with MAGA mania is that young people are not students of history,” writes Robert R., anticipating today’s theme with the subject line “History Rhymes Again.” Robert:
There are lots of books and studies available for anyone to read that will show how close the MAGA sophistry comes to the story of “The Life and Death of Adolf Hitler” by Robert Payne, 1972…it has pictures that are remarkably similar to Trump and his cadre of sycophants that are following orders to destroy the government that they disdain, as somehow detrimental to our “freedom.”
Simple-minded people who get their news from propaganda paid for by oligarchs are always easy to manage. TikTock and Facebook snippets are more compelling to uneducated people than reading-based research, which is available in any number of legitimate journals or fact-based books like: “Giants of the Global Power Elite” and “Titans of Capital” by Peter Phillips…just sayin’.
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