2025: In An Insane World It Is The Sane Who Is Called Crazy
14 min read

The beginning of the new year is a very traditional time for people to reflect on their past while looking forward to the future. This practice is a very well-trod road, starting perhaps with the Babylonians in Ancient Mesopotamia thousands of years ago to promote a healthy and fruitful harvest. Over time it has had both significant political, religious, and personal uses, including promoting policy reforms, establishing a stronger devotion to one’s faith, or for developing better personal habits and working toward new goals. These themes spread globally and universally in a wide range of contexts and forms.
For me today in this forum, the exercise of writing the annual letter brings considerable joy; I truly look forward to it each year. I found my roots in this practice through the writings of Warren Buffett and the example he has set across the last several decades. My letter to you is similar in spirit, with some notable characteristics. It does serve as part of the annual regulatory requirement of delivering our updated Form ADV and Privacy Policy. It also is an opportunity for me to shine a spotlight on – nay, to brag – about the wonderful team that works for you each day and the progress this team has made over the past year, along with what we are looking forward to accomplishing in the following year. But finally, and very importantly, I discuss my thoughts and ideas about where we have come from, where we are at now, and the range bound of what may come and how to think about being well prepared for it.
This letter will essentially be divided into two parts. I will begin by highlighting some of the key successes our firm has achieved in this past year, as well as our goals for firm growth and expansion in the upcoming year along with a handful of policy changes going forward. I will then turn our attention to the economic environment and what opportunities, challenges, and risks I am thinking most about heading into the new year.
Welcome Emma to the Briggs Financial Team!
In October, we hired Emma Miele as our new Associate Tax Accountant. Emma will be spearheading a burgeoning aspect of our firm’s operations as we expand our capacity of tax preparation services as well as look to add tax resolution and accountancy services in the second half of 2025. Emma has currently passed two of the three IRS exams to earn her Enrolled Agent designation. After tax season, Emma will be working through accounting coursework with the eventual goal of becoming a Certified Public Accountant (CPA). Welcome to our team Emma and congratulations on the very strong start!
Tax Season is Coming, Again!
It seems only fitting to point out after the introduction of Emma that we are currently accepting new clients for the upcoming tax season. We have already received well over 100 contracts back and hope to prepare upwards of 200 returns or more this upcoming filing year. Please let us know if we can help you file your tax return, and please let anyone who is looking for tax preparation services to reach out. We really appreciate your business!
Major Administrative Platform Migration in Progress
An important aspect of building and growing any business is the process of self-reflection and working toward an even better version of oneself. In April, we began that process by hoping to solve a very basic problem – how can we improve the sharing and organization of documents for our clients, in particular for tax preparation? The answer we came up with was much more comprehensive than our original scope, helping consolidate several platforms we have been using into a single platform that is easier for clients to organize and collaborate with our team. Alexis Richards, our Associate Firm Administrator, has done an admirable job of spearheading both the research of and implementation of this solution. Frankly, I am confident that this would not have been possible without her efforts, and we collectively are thankful for and excited by the work she has done.
New Website!
Another key piece of our infrastructure reform was the rebuilding of our firm’s website. I originally built and made improvements to it since the firm started back in 2018, which served its purpose and I think did well for what it was. But it was time for performance improvement, and frankly it was time for me to surrender at least some of the responsibility of building out and maintaining a platform to a team with the passion and acumen to accomplish such. We have partnered with Flamingo Theory Marketing out of Middleton, WI (a NW suburb of Madison) who has done a wonderful job not only of improving the layout and functionality of the website on both mobile and desktop platforms, but has vastly improved load times and structure. It showcases who we are as a team and the work we do, so I encourage you to check out the newly designed Briggs Financial website.
Secure Email: Expect More Of It, Please Open It
In 2019, J.P. Morgan Chase Bank allocated $600 million to cybersecurity. In 2024, they allocated $15,000 million ($15 billion) to cybersecurity. With a massive amount of various forms of fraud on the rise, driven by humans and AI alike, we need you to help us protect you and your assets as much as possible. This means that when any of our team (and most times, Alexis) is reaching out via secure email with communication, you need to heed that and take the time to open it. We don’t use end-to-end encryption to make your life challenging, we promise. We do it to keep you informed in a protected capacity. Please take the time to carefully read and respond to our emails, particularly when they come in an encrypted format, and thank you for your vigilance.
New Policy: Missed Meetings
This year was easily one of the most challenging years with respect to missed meetings. Tracking this over 2024, I estimate that both Shawn and I each had an average of 6 hours worth of last-minute cancellations (less than 24 hours’ notice) per month that did not stem from illness. This translates into a five-figure loss of productivity annually. But honestly, far more importantly than that is that it just stinks to prepare for a meeting, be ramped up ready to go, only to have that meeting get rescheduled and essentially have to commit twice the amount of time as a result.
Starting in 2025, if you have a cancellation with less than 24 hours notice, we will by default not be making up those meetings. If we have to cancel, we will absolutely reschedule your meeting. If you have an emergency, we’ll work with you on a case-by-case basis. But if it’s not either of those situations, please appreciate our expectation to meet with you the following month.
New Policy: Use of AI Chatbots in Meetings is Verboten
Yep, that’s the policy. We don’t know where your data is going when they are recording, and compliance is a thing, so we prohibit the use of chatbots in our meetings. Take great notes – it is a terrific study method that promotes long-term cognition!
In an Insane World, it is the Sane who is Called Crazy
The stock market is nearly at all-time highs. Unemployment nationally is presently at a seemingly benign 4.2%, GDP growth is humming along at 2.8% growth for the third quarter and consumer spending is 3.7% higher as well on the back of increased wages. Bond yields are lower as the Federal Reserve cuts rates, and yield spreads – what one earns beyond what U.S. Treasury notes yield – on speculative corporate debt have fallen by 20-25% since the start of the year according to data from Bank of America Merrill Lynch. By all accounts, these data points suggest that America is in a tremendous financial position and all the dice are coming up Yahtzee.
Which then begs the question: If the economy is allegedly in such a strong position, why did voters this past election cycle prioritize the economy as a key factor (31-34% depending on who conducted the survey) in determining who to vote for? Well, let’s take a look at the health and security of the American consumer:
- According to the latest unemployment data from the Fed, unemployment has crept up 11% since the start of the year.
- According to the September JOLTS report (Job Openings and Labor Turnover Survey), the number of job openings is down 20% from this time last year and the percentage of people employed full-time decreased the entirety of 2024.
- While wages currently outpace inflation at the moment, the growth rate of wages has fallen 20% from this time a year ago according to the Atlanta Fed.
- And while “core inflation” has fallen over the past couple of years, PCE inflation on housing and utilities is still 4% and has averaged a 6.3% annual rate of growth over the past three years, translating into 20% higher housing and utility costs.
- Meanwhile, the 90-day delinquent rate of consumer credit cards reached 11.13% in the latest set of data from the New York Fed. The last time credit cards were delinquent at such a high rate was January 2012 in the wake of the financial crisis.
- Moreover, credit card interest rates have soared to 21.76%, an all-time high since they started tracking the data back in 1994. As a point of reference, at no point has any other peak in consumer credit card lending hit 16%, which suggests very high levels of risk and uncertainty in the consumer debt space.
- The personal savings rate in the U.S. currently sits at 4.4%, down 25% from the 20-year average of 5.9% according to the Bureau of Economic Analysis.
This does not sound like a healthy consumer whatsoever. It suggests there are considerable, unavoidable pressures that depending on the demographic may have an outsized impact on the ability to keep up with cost of living. This is not sustainable.
Where Stock Market Growth Has Come From
One dynamic that has been made very clear by the market in the past few years is a favoritism toward the largest companies, and in particular the largest companies in technology (what has been colloquially referred to as the “Magnificent Seven,” referring to Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla). Some have argued that because there has been so much growth in the value of these seven names over the past few years, a few outcomes must eventually take place:
- These larger company valuations must fall, because large companies have grown so much (+96.2% since the last major market bottom in October 2022) compared to their mid and small cap growth peers, which have averaged +64.2% and +41.1% respectively according to J.P. Morgan Asset Management (December 2024)
- The value of smaller and mid-sized companies must rise because they have in fact underperformed to such a large degree that they are due for a rebound.
- Companies based in the United States have grown well ahead of their foreign peers not just in the last couple of years, but in the last fifteen years where only Taiwan has produced the double digit annual growth rate companies in the U.S. have produced. This means that other regions are so inexpensive compared to U.S.-based companies, so there is an opportunity to capitalize on that – to gain more
Plainly, these ideas are logically absurd. Just because one business is terrific does not mean all businesses are terrific. Moreover, relative to other large markets the “top-heaviness” of the United States is not particularly special; Taiwan, France, Germany, the UK, and China are all much more top-heavy than the United States. Nor do the risks and rewards small and medium-sized businesses face equate to the same risks and rewards as larger businesses; in fact, the price to earnings ratio of mid cap companies is only 2.4% lower than large companies, and small cap companies actually carry a 37% premium to large cap companies. While 2023’s growth was mainly a result of multiple expansion as pricing recovered from a disappointing prior year, 2024’s growth and returns were driven mostly by earnings and dividends, outpacing China, the Eurozone, and the emerging markets according to J.P. Morgan’s Q1 2025 Guide to the Markets (December 2024).
The moral of the story: Prioritizing the quality of a company on its individual merits rather than relying on broad-sweeping and often erroneous generalizations is likely the prudent and disciplined – and profitable – approach to investing.
The Sticky Wicket – Inflation vs. Employment Stability
One of the most challenging elements of the current market environment comes down to what feels like a push-pull, at least from the perspective of the Federal Reserve. Inflation may be considerably stickier than what the Fed has led itself to believe up until now, which if true puts the Fed in a considerable bind. If inflation is resilient to further declines, the Fed may choose to continue steadily lowering interest rates. The problem with this is that when they took such a course in 2007, in a rate environment very similar to the one we are currently in, inflation rose precipitously. This led to fears about interest rates rising, which in turn did increase interest rates, eventually resulting in Bear Stearns collapsing in February 2008, followed by Lehman Brothers and AIG in September of that year.
However, if they choose not to lower interest rates, let alone if rates are forced to be increased later this year, this will even more pressure on a number of entities:
- Smaller banking institutions (up to $50 billion in assets held) which predominantly hold the riskiest commercial real estate debt and would be subject to substantial losses should those buildings be forced to be refinanced once they have to realize the devaluation of the asset. This could potentially affect hundreds of banking institutions, as well as fintech solutions that rely on working with the same small banking institutions to avoid banking regulations.
- Zombie corporations, meaning companies that do not, have not, and likely will not ever generate a profit, are already being forced to either merge/be sold to another business or face bankruptcy. You can expect layoffs emerging from these being realized.
- Heavily-leveraged established businesses such as Spirit Airlines that, while at one time profitable, have taken on legacy debt for years and run out of options on how to pay it back. While many of these companies will be Chapter 11 bankruptcies focused on rehabilitation/restructuring instead of outright liquidation, these events will still cost jobs.
- The real estate market is locked up with rates as they exist and people not desiring to leave their homes. Continued pressure here from a lack of transactions may force consolidation among mortgage originators, loan officers, and banking institutions as there just simply isn’t the volume of work required to support the size of the industry.
All of this is notwithstanding what the incoming administration has in mind with respect to tariffs, immigration, and foreign policy, all of which seem like wild cards at this stage and could each have a seismic impact that fuels both further inflationary pressures and creates labor shortages in specific industries. This also leads to potential inflation as the cost of goods and services in those areas increases as a result of companies needing to pay more to draw more people into the workforce at a time where historically the United States is already sitting at full or near-full employment.
Combine all of these factors, and you may very well have an economic environment that has inflation rising, the cost of goods rising, bond yields rising, a locked-up real estate market, and more job openings for jobs that no one is either qualified for, wants to work at, or can even afford to work at while unemployment rises. If that happens, I highly doubt that it ends well.
We Are In Extra Time
The media and politicians have done their best to point to what was recently described as “The Golden Age of America.” With the stock market and portfolios at near-record highs and unemployment hovering at a seemingly placid 4.1%, my viewpoint might look rather dour if not outright crazy.
However, as a conservative commentator has famously said, “Facts don’t care about your feelings.”
In last year’s letter, I stated that I felt 2024 was a “safe” year to build cash savings and resources, but that any amount of time past the start of the year would be a bonus, but could not be relied on. The data has reinforced my position from a year ago – we are now in extra time. With so many aspects of both the domestic and global economy stressed by massive amounts of leverage, and interest rates showing no realistic path toward abating meaningfully further, a stark reality will likely set into this market that the cost of debt is no longer free. When that happens, I expect institutions who have facilitated the kicking of cans down the road to attempt, through every possible tactic, to recover their money either through shaking down borrowers or by trying to sell illiquid, despicable private equity – alternative assets – whatever marketing term they want to slap on their turd sandwich – to the general public. And I imagine given the fever pitch meme stocks and crypto and alt coins have had and continue to have, there will be a section of the public gullible enough, or greedy enough, or both, that will purchase these assets thinking they are being savvy. Unfortunately, much like what happened in 2007 going into 2008 with mortgage-backed securities, what they are being is duped – legally perhaps, but duped all the same.
It is important as we approach a potential financial precipice that you take collective inventory of your financial position. If your savings is not ample, cut back your spending and address it meaningfully and aggressively. If you are holding high interest debt holding you back from saving, you need to address it now. If you have your savings in a strong position, this does not mean fear investment, but it does mean that what you may choose to invest in – not just stocks, but thinking about things like home improvements and large purchases and whatnot – that it is deliberate. By living and saving and consuming intentionally, you are setting yourself up for the best chance to ride out whatever calamity may come and be safe on the other side of it.
References
Bureau of Labor Statistics Data. (n.d.). Bureau of Labor Statistics. https://data.bls.gov/timeseries/JTS000000000000000JOL
Commerce data show strong economic gains due to Americans making and spending more. (2024, November 4). U.S. Department of Commerce. https://www.commerce.gov/news/blog/2024/11/commerce-data-show-strong-economic-gains-due-americans-making-and-spending-more
Economic indicators. (n.d.). YCharts. https://ycharts.com/indicators/sources/bank_of_america_merrill_lynch
Federal Reserve Board – Consumer Credit – G.19. (n.d.). https://www.federalreserve.gov/releases/g19/current/default.htm
Household debt and credit report. (n.d.). FEDERAL RESERVE BANK of NEW YORK. https://www.newyorkfed.org/microeconomics/hhdc
J.P. Morgan Asset Management. (2024, December 31). Guide to the markets. Retrieved January 13, 2025, from https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/guide-to-the-markets/
Personal income | U.S. Bureau of Economic Analysis (BEA). (n.d.). https://www.bea.gov/data/income-saving/personal-income
Unemployment rate. (2024, November 1). https://fred.stlouisfed.org/series/UNRATE
Wage Growth Tracker. (n.d.). Federal Reserve Bank of Atlanta. https://www.atlantafed.org/chcs/wage-growth-tracker