10 days to go until President Donald Trump resumes tariffs. Then again, the worst of the trade war is already over.
And markets are partying like it’s 2021 again. All three benchmarks have hit new records.
Year to date:
- S&P 500 is up 5.2%
- Nasdaq Composite is up 5%
- DJIA is up 3%
Markets have enjoyed a sharp recovery from the lows earlier in April at the height of trade policy tensions.
What’s driving markets?
The rollback of tariffs have sent AI stocks jumping back on the bandwagon. Semiconductor stocks have surged higher. And I expect tech giants to resume their massive capex of more than US$300 billion in 2025.
Singapore’s potentially biggest REIT listing in past decade
In fact, Japanese telco NTT has filed for its billion-dollar listing, which will be Singapore Exchange’s biggest Singapore REIT in the past decade. It will comprise six data centres worth ~US$1.6 billion.
If there’s one thing I’ve learnt about AI after meeting NTT’s management in Tokyo earlier in Feb this year: If we don’t build it (data centres), others will.
Met NTT Data’s management team earlier this year
I’ve said previously NTT Data will continue to invest >JPY1.5 trillion (~US$10 billion) over the next few years in data centres to fight for market share. Now, that’s massive.
Having said that, the IPO craze is coming back. US IPOs have raised US$29 billion this year, growing 45% more than the same period last year.
In Hong Kong, there’s already a total of 36 IPOs this year, including CATL, which is the world’s biggest maker of lithium-ion batteries for EVs. Even Insurer FWD Group, backed by billionaire Richard Li, is looking to raise HK$3.4 billion in the Hong Kong IPO.
We don’t need to have a backache like Geroge Soros. There’s something odd about markets.
Just look at how investment bankers are aggressive in pushing out deals when the stock market trades at a “rich valuation” today.
Risky assets are leading the way
Put it this way, one of the most crucial indicators we see are usually risky assets coming back — trading at all time high:
Risky assets leading the market
Diligence members will know I wrote this back in my Diligence Research Report August 2022:
Investing is not about winning the stock market.
It’s about being successful in building long-term wealth. And being successful is not getting distracted by short-term opportunities. It means we avoid gambling — even when it looks like you could win.
Especially now, when the market shows a brief recovery, there’s an itch to jump into what I call speculative stocks again. As the stock market continues in a whirlwind, I rather pick the losers now, than bet on Alpha.
These are defensive, cash flow generative, resilient businesses that can weather the vicissitudes of the market. It’s betting the losers.
If you recall, in 2021, at the peak of post-COVID market sentiments, when everyone was in euphoria mode…. There were massive launches of SPAC deals, IPOs and the infamous meme stocks. One of my good friend who started investing during the pandemic said he lost ~80% in a stock called Unity Software.
The last IPO boom was in late 2018.
By then the pandemic struck and shut down financial markets.
So… What I’m doing for 2025
I want to becareful when risky assets are making a comeback.
Here’s the thing, I don’t need to wait for another meme stock to tell me the market is getting more euphoric.
I’ve (thankfully) avoided the 2022 massive tech crash, stayed away from cryptocurrencies and now markets are starting to heat up again.
When investors start to get more optimistic than they should be — and pile up money like there’s no tomorrow…
It’s a tell-tale sign for us long-term dividend investors to stay cautious. And no, I don’t mean to sell everything.
Instead, what I’m doing:
- Limit my exposure to high-risk assets
- Avoid heavy leverage like margins
- Not chasing what’s already doubled, or even tripled in gains.
More crucially, I’m sticking to high-quality dividend growers and dividend dominators – the kind that continue to pay you passive income during a topsy-turvy market.
It’s easy to get caught up when everything’s going up. But my job as an investor isn’t to chase the quick wins.
It’s my job to make sure I protect my capital, accumulate my wealth and compound my passive income — just like crossing the dessert.
Sometimes, investing can be simple.
Willie Keng, CFA
Founder, Dividend Titan
