2025 sharpened the way we approach market research. Over the year, the research program expanded across market structure, macro analysis and portfolio construction; the work also clarified the limits of prediction and the importance of an explicit process.
Every market view is conditioned by its information set. The discipline is to define a path with positive expected value, establish a position within explicit constraints, and let outcomes reveal what the process did—and did not—explain. Research, execution and risk control remain connected disciplines.
Several themes defined the year.
A Defining Year for Macro Hedging
This was a major year for macro hedging. A market filled with fat-tail events and amplified volatility rewarded hedges, relative-value pairs, derivatives and tactical trading.
Global growth slowed, supply chains were reorganised and competition over technology, resources and trade intensified. Agreements can stabilise the system without removing the underlying uncertainty.
Higher volatility is likely to remain a feature of the next several years. Policy changes, technology investment and supply-chain reconfiguration can continue to produce discontinuous repricing. AI investment is large but uneven across hardware, software and applications. New use cases may redistribute value across the chain; the relevant research question is where cash flows and durable margins will accrue.
Learning to Make Volatility a Friend
Recent work on volatility has reinforced a simple distinction: events cannot be predicted reliably, but the market states surrounding them can be described and tested. Volatility strategies therefore require explicit definitions of exposure, carry and loss limits.
The analytical response is to treat rallies and selloffs as states with different payoff opportunities. Black swans and extreme events can become more consequential as market structure changes, including through zero-day options and on-chain markets. A volatility strategy must measure the cost of carry, liquidity and model error before treating a turbulent tape as an opportunity.
The Cost of Hesitation
The implementation lesson was clear: insufficient execution can erase a sound view. Portfolio constraints can leave a team waiting for a cleaner tape while the opportunity moves. A robust process therefore defines acceptable uncertainty in advance and records why risk was or was not taken.
Trading practice can force a position before a research note is complete. By the time a note is finished, the market may already have travelled a considerable distance. Major moves often begin in surprise and disagreement, precisely where systematic signals struggle. A systematic process must define when adding risk is justified and when the original thesis has lost its edge. This raises broader methodological questions for future work on uncertainty and convexity.
The Profitability Question for Chinese Companies
Profitability was also a central question for Chinese companies. Cross-country comparisons show that businesses can survive periods of intense price competition, but falling prices compress margins and consume an industry's return on capital. That process cannot continue indefinitely.
When companies rely on territorial expansion, capital accumulation and ever more intense competition as their path to survival, the endpoint can be deflation. Profits become inadequate, supply exceeds demand and companies cut prices to preserve cash flow. Profits at China's industrial enterprises fell 13.1% year over year in November; monthly data are volatile and should not be extrapolated on their own. The combination of volume without pricing power and persistent margin compression points to an imbalance between supply and demand.
Articles That Defined the Year
| Month | Selected Articles |
|---|---|
| April | Trade War 2.0 and the Strategic Contest Between China and the United States |
| May | Twilight of the Dollar |
| June | The Return of the God of Gold |
| July | The Gold Dip; The Fed Capitulates; The Pension-Funded Bull Market |
| August | A September Rate Cut; An Unexpected Dovish Turn |
| September | Outrunning Stagflation; America's Economy of Fire and Ice |
| October | Thoughts on the Selloff; US Credit; Conviction in Gold |
| November | Black Thursday; The Yen Carry Trade |
| December | Year-End Notes; A Dovish Rate Cut |
Predicting markets is an exercise in uncertainty. The disciplined response is to build structures that can absorb it, and to separate what belongs to the research process from what belongs to the market.
The sun still rises. In markets, survival is victory.
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