It's that time of the year. The pomp and circumstance of Independence Day are behind us.
The smell of something else is in the air. It's the prediction factory kicking into high gear.
The second half of the year is upon us, and the soothsayers, wizards, prognosticators, and Instant Experts of the Internet are rushing forth with their predictions for the rest of 2025.
The incense of the predictive priesthood of modern finance is beginning to rise once again. The chicken innards are being spilled, the leaves are being swirled about the cup, and the alignment of the stars is studied. The magic cards are being dealt, the lines are drawn on the chart, and pompous pontifications are being prepared.
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As Charlie Munger once opined, “People have always had this craving to have someone tell them the future. Long ago, kings would hire people to read sheep guts. There’s always been a market for people who pretend to know the future. Listening to today’s forecasters is just as crazy as when the king hired the guy to look at the sheep guts.”
Instead of predicting the market, react to what it’s already doing.
Right now, economists are beating the government reports with great clubs of formula and truncheons of theories in hopes that the battered carcass of data will yield some accurate suggestions of what comes next for the economy and the market.
The number of jobs added last month was fantastic. That is good. Government jobs accounted for more than half of the new jobs added. That is bad.
Infomercial note: Most so-called experts, particularly online “instant experts,” rarely thoroughly review the data. The additional government jobs were in state and local governments. Federal employment shrank last month. If the idea is to cut the size of the federal government and push responsibility to the states, that is exactly what we want to see.
New unemployment claims fell and continuing claims flatlined. That’s good.
This means the Fed is less likely to hike rates in July. In fact, barring a disaster, that will not happen. That is bad.
The U.S. is the clear leader in developing Artificial Intelligence, which should lead to massive productivity improvements. That is good.
AI will replace millions of jobs. That is bad.
President Trump’s so-called “Big Beautiful Bill,” signed into law on the Fourth of July, contains provisions that should lead to corporate profit increases in the second half of the year. That is good.
It raises the deficit by billions of dollars. Maybe even trillions. That is bad.
And so it goes.
Most forecasters will pick either the good lane and be very optimistic about the world and stock prices, while others will choose to stay in the bad lane.
Anyone whose forecast is even slightly accurate will spend tons of cash advertising their brilliance to the world and become somewhat famous.
If history is any guide, they will never be right again.
The big money in the markets is not in predicting what may happen.
It is in reacting to what happens.
The best traders of all time wait for the price to confirm the hypothesis before acting.
The great ones have strict risk control and embrace small losses as the key to success.
If the price does not support the expectation, they move to the sidelines until it does.
When the price proved their assumptions correct, they piled on and made billions.
Right now, stocks are in an uptrend.
Period. Stop. End of Message.
You can hate the Fed.
You can love the Fed.
You can hate the President.
You can love the President.
You can be terrified about the future of the country or think the future is so bright you need to pick up some better sunglasses.
You can be against lowering interest rates or think it is the greatest idea in the history of the world.
What you think about any of this is irrelevant. Stocks are in an uptrend across all time frames.
As Ed Seykota, one of the early devotees of trend-following and one of the best traders of all time, once put it: The best investors have learned to embrace the fact that the fundamentals of the business and the price you pay to own it are far more important than predictions.
Peter Lynch has the greatest track record of any mutual fund manager ever, as far as I can tell. He once suggested that “If you spend 13 minutes a year on economics, you’ve wasted 10 minutes.”
This is one area where I have to be cautious: I do not just enjoy debating and discussing politics, law, and economics. I love it.
I must set aside opinions and theories when it comes to investing money.
The numbers matter much more than the theories.
Buying stocks with strong fundamentals is a market-beating strategy.
Buying companies with strong fundamentals when they are out of favor and available at a bargain price, relative to their asset value and earnings power, is a market-crushing strategy.
Traders should follow trends and ignore the news.
Investors should focus on fundamentals and valuation and ignore the news.
If history is a guide, you will make more money.
Given the results that most investors and traders have achieved by following the so-called Wall Street experts and alleged trading savants, it would be hard to do worse by following these two approaches, which have made more millionaires than everything else combined.
Examining the world through various value-based valuation price lenses, we find that stocks are in a strong uptrend across all time frames, with no signs of momentum fading.
Bonds are still in a long-term uptrend but are building a long trendless base in shorter time frames.
Depending on which economist you have been reading, we should be in the mother of all rallies in bonds or enduring the most painful yield spike in history, but neither is the case just yet.
There are not a lot of cheap stocks with excellent fundamentals at the moment. The few that exist are currently clustered around real estate and energy.
Since I know that most of you read this mainly for stock ideas, I will give you one safe and cheap stock that has the potential to be a massive long-term winner.
The offshore oil and gas industry is priced as if crude oil demand will be replaced by renewable and nuclear energy sometime in the near future.
That is not even close to being true.
Helix Energy Solutions (NYSE:HLX) is a specialty offshore energy services company that focuses on maximizing production from mature offshore oil and gas wells, performing well decommissioning, and supporting offshore wind and subsea infrastructure projects.
Its core segments include Well Intervention, Robotics, Shallow Water Abandonment, and Production Facilities. Helix operates a fleet of advanced vessels and remotely operated vehicles, and its business is increasingly global, with significant operations in Brazil, the North Sea, and the Gulf of Mexico. The company is also playing a growing role in the energy transition, with contracts in offshore wind trenching and seabed restoration that align with its stated mission of enabling sustainable offshore energy.
The key here is that Helix’s balance sheet is in excellent shape. The company ended the quarter with $370 million in cash and a net debt position of negative $59 million. Credit agencies rate its senior unsecured notes at BB– to B+, and upcoming maturities are minimal. Leverage remains modest at roughly 2.3 times EBITDA, and interest coverage is healthy. Helix scores 8 out of 9 on the Piotroski F-score, signaling strong financial health across profitability, leverage, and efficiency metrics.
The stock is relatively inexpensive, and thanks to its strong balance sheet and focus on generating cash flow, Helix Energy is a relatively safe investment. The company has what it takes to survive until it thrives again.
When that happens, a return of several times the current stock price is not an unreasonable expectation.
I have no idea how the economy will play out or the outcome of the trade debacle, but I do know that whatever happens, it will be reflected in either trend or value and create an opportunity for us to profit by reacting to what does happen, rather than predicting what we think might occur.
Editorial content from our expert contributors is intended to be information for the general public and not individualized investment advice. Editors/contributors are presenting their individual opinions and strategies, which are neither expressly nor impliedly approved or endorsed by Benzinga.
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