How to design the right investment plan … specific action steps to take today … preparing for whatever the market brings this year The S&P trades at one of its highest valuations in history… the “Santa Rally” we all wanted fell flat… in December, the S&P was propped up by Big Tech – while most other sectors were a sea of red… and for the first time in history, 100 basis points of interest rate cuts from the Fed have resulted in the 10-year Treasury yield climbing 100 basis points… We could go on, but we’ll jump to the bottom line… We’re in a highly unusual market. Now, we’re excited to navigate it with you. However, we’re going to hold off on analysis today. Instead, let’s focus on the one thing that will have the ultimate impact on your net worth in 2025: an investment plan. We begin each new year with a version of today’s Digest because it’s far more important than any single piece of analysis. After all, none of us can control what happens in the market this year. We can only control how we respond to what happens, and that’s where a plan is crucial. So, we’ll pick back up with all the headlines tomorrow. Today, let’s get our investment ducks in a row. Don’t make this investment plan mistake… Research shows that 43% of people expect to give up on their New Year’s Resolutions this year. In fact, this 43% “quit” rate is expected to kick in by February. Not too encouraging. I would guess that results are equally bad – if not worse – when it comes to New Year’s investment resolutions. A big reason why many investment resolutions are flawed is because of their focus on binary goals. “Did I beat the market?” “Did I earn 15% on my portfolio?” “Did my investments generate enough cash-flow to cover the down-payment on the new house?” These are all reasonable goals, but they focus exclusively on the result rather than a process – the “payoff” rather than the “playbook.” Unfortunately, the truth is that the only thing we can control is the process. Think about it. Myriad influences will impact your returns in 2025… The pathway of inflation… when and by how much the Fed will cut rates (or – gasp – may not cut rates) … Artificial Intelligence (AI) tailwinds… valuation headwinds… Trump’s economic agenda and deregulation… potential new legislation we’re not even considering… the Russia/Ukraine and Mideastern conflicts… escalating tension with China… the list goes on and on and on… We have no control over these factors, so let’s forget all the absolute “I will make X%” type resolutions, and instead, focus on what we can control, which is a well-executed process. With that in mind, here on this first trading day of 2025, let’s turn our attention to making an investment plan. What follows isn’t “the right way” to accomplish this. A good plan can be created a million different ways. But the central idea is: “you know what you own, why you own it, and how you’ll handle your positions in response to all sorts of market conditions.” Even if you’re only moderately successful in creating and implementing a plan this year, that small effort will still put you light years ahead of most investors who just wing it. Let’s jump in. | Recommended Link | | | | A website that shows you the biggest potential jumps on 5,000 stocks – to the day – weeks before they occur. In 2024 alone, it would’ve pointed to gains of 250% in 38 days on (TTWO)… 101% in 10 days on (WSM)… 353% in 48 days on (AON) and more in studies, with 83% backtested accuracy. Until January 8, you can claim free access here. |  | | Creating the perfect portfolio for you Step 1: Open your calendar and pick a day/time when you’ll be able to dedicate 100% of your focus to your portfolio. Say at least 30-60 minutes. Step 2: Before you analyze your current portfolio, think about what investments would go into a “perfect” portfolio today, looking forward. For this step, what you presently own is irrelevant. This is a mental exercise to help you identify a “best of” portfolio based on your investment goals and needs. As you consider this, ask yourself… What’s the portfolio’s primary goal? Capital growth? Income? A mix? Why? Over what timeframe? Is it a defensive orientation or are you looking to grow aggressively? How much volatility can you stomach? Next, narrow down. Given your answers so far, what asset classes need to be in this portfolio? From which global markets? Which trends do you want represented? In what allocations? What else? What other considerations need to be reflected in this perfect portfolio? Continue to get more granular... Within each of your chosen asset classes, or markets, or trends, which stocks and/or other investments do you believe offer you the best exposure? This process can be as simple or detailed as you want, tailored to your unique situation. For instance, say you generally outsource your portfolio selection to experts, so you have an assortment of picks from our stable of analysts… Perhaps some long-term buy-and-hold stocks from Louis Navellier, Eric Fry, and Luke Lango… short- and/or medium-term trades from each of these analysts as well… altcoins from Luke… various commodity plays from Eric and Louis… perhaps opportunistic trades from Jonathan Rose and Jeff Clark… maybe you venture over to our corporate partner, TradeSmith, to follow Jason Bodner, Keith Kaplan, or John Jagerson and Wade Hansen. In this situation, you might consider how much weight you want to give each analyst’s picks within the framework of your overall portfolio. Whatever feels appropriate for your specific financial situation and goals, write it down. Whether you’re highlighting specific stocks or allocations toward the picks of specific analysts, it can be helpful to detail why you’ve made this choice – which will tie it back to your overall portfolio goal. For instance, “I will weight 10% of my overall portfolio to small- and medium-cap AI plays from Luke Lango, because it will offer diversification from the mega-cap component of my portfolio, while also giving me exposure to AI.” Or “With 15% of my portfolio, I will make shorter-term trades following Louis Navellier’s Accelerated Profits system because it will limit my exposure to volatility in 2025 while still enabling me to shoot for double- or triple digit gains.” Basically, document the reason for all your choices and how they support your investing goals. As part of this, be realistic about your desire to swing for the fences. Most of us harbor a fantasy of throwing a few bucks at, say, a penny stock, and watching it explode in value. Three months later, we’re driving that new Porsche, or taking the European vacation, or putting the kids into the elite private school … So, let’s honor this fantasy in a responsible way. Pick a percentage of your investable assets you’re willing to gamble with. The amount should be no greater than what you could completely lose without having it affect your sleep. Whether that’s 0.05%, 1%, or 15%, be honest with yourself. It often helps to turn your chosen percentage into an actual dollar amount based on your portfolio size. Then, imagine burning that cash. Are you still comfortable? If so, great. If not, lower your gambling percentage until you are. What’s working, and what needs changing? Step 3: Now, it’s time to review your existing portfolio. Line up your current portfolio next to this “perfect” portfolio you just created. Note any discrepancies. Is there a stock in your existing portfolio you wouldn’t include today with new money? It gets the axe. Do you have 95% of your stocks in U.S.-centered companies when you want it to be just 65%? You need to do some trimming. Is there zero exposure to small-cap AI plays in your current portfolio and yet this is an investment theme you want to own? Time to buy. “But wait!” you say. “It’s not that easy. I have major capital gains in some of my current stocks that I’d otherwise sell” (or you have some other reason to avoid making a portfolio change). Okay, there are always complications. But if so, at least identify when and how you’re going to make the necessary change – regardless. Consider why… Allowing an underperforming investment to stay in your portfolio year-in-year-out to avoid paying a capital gain carries a huge opportunity cost. Yes, you’ll suffer the short-term pain of a tax-hit from a capital gain, but consider the negative possibilities… What if that investment suffers a big earnings disappointment? What if it nosedives and your unrealized paper loss is far greater than the actual loss that you’d have suffered had you just sold it and paid taxes? On the other hand, even if it doesn’t perform poorly, but just trades sideways, consider the opportunity cost you’re suffering compared to being in a much stronger investment. Even a money market fund at 4.5% would be a better use for your capital than a stock that goes nowhere (or down). So, if you have a reason why you don’t want to sell a legacy holding, okay. But at least be intellectually honest with yourself about why you won’t sell, recognizing the opportunity cost. And remember, you don’t have to sell an underperforming legacy holding all at once. Perhaps you’d stomach it better if you sold it in chunks, offsetting some of those gains with some dogs in your portfolio that turned into losses. Be creative about how you might address the problem. Just don’t let a toxic investment drag down your portfolio without being intentional about it. | Recommended Link | | | | As new allies, Trump and Musk could reshape America’s AI future. Elon Musk’s AI startup, xAI, might gain the edge it needs to dominate the industry. A shift in government support, fewer barriers, and a potential “backdoor” into the AI race are just the beginning. Is xAI set to become Elon’s most powerful venture yet? Click here to uncover this opportunity before it's too late. |  | | Next, look at all your positions (old ones and prospective new purchases) and decide if they are trades or long-term holds Step 4: For each holding in your portfolio, categorize it as either a low-conviction and high-conviction hold. A high-conviction stock is a holding that you believe is a multi-year (or multi-decade) portfolio cornerstone. You believe its long-term merit makes its current valuation irrelevant. You have no qualms about holding it here in 2025, even if it’s overvalued by historical standards. You recognize that such a stock will lose value in a bear market, but you’re fine with that. You can imagine this holding imploding, say, 55%, and you would still hold without batting an eye. A low-conviction stock is anything that doesn’t fit this description. After sorting your stocks (and intended stock purchases) along this binary, forget your high-conviction stocks. Delete them from whatever app you use to monitor the market. After all, their price movements are irrelevant. You don’t want to be tempted to sell them if you see a major decline and your emotions tempt you to act rashly. But for your low-conviction stocks, a different approach is mandatory. Decide how big of a position size you’ll use, and what trailing stop loss percentage you’ll apply to the position. This is a critical step for preserving your capital. It prevents small, reasonable losses (which all investors endure) from snowballing into massive portfolio-busting losses. As to incorporating a stop-loss system, you can do it yourself, but I’d point you toward our corporate partner, TradeSmith. They’re one of the leading quant shops in the investment industry. Unlike how most investors use trailing stops (a blanket “20%” lower), TradeSmith’s trailing stop system factors in the specific volatility of any given stock/ETF to help investors answer a crucial question… When you’re in a pullback, how do you know whether it’s just normal volatility to ride through, versus a “this time is different” drawdown to avoid immediately? You can learn more about it here. Putting everything all together Step 5: At this point, write down your entire investment plan. It can be as detailed as you want. But in general, it’s going to have the following features: - Your overall portfolio goal. Growth? Income? A mixture?
- Your desired “perfect” holdings (and an awareness of how each of those individual holdings will support your overall portfolio goal)
- Your current holdings (some of which might be getting axed over the new few weeks/months based on your analysis today)
- The strategy (and timeframe) you’ll use to transition from your current, legacy portfolio to your new perfect portfolio (including the reality of taxes and whatnot)
- Your plan to scratch your gambling itch – will you let those investments ride all the way to $0 if necessary? Or will you sell at some stop-loss? What about profits? Will you sell when you’re up “x%” or let it ride? Think through these scenarios
- A clear understanding of the difference between your high-conviction “buy-and-hold portfolio pillars that don’t need price monitoring” versus lower-conviction “shorter-term trades that need deliberate positions sizes and stop losses”
- The specific position sizes and stop-loss amounts for all your lower-conviction holdings
- The future date upon which you’ll rebalance and/or re-evaluate your broad portfolio
- The criteria by which you’ll remove an asset from your portfolio. (Did it hit a stop-loss? Has it quadrupled and you’re taking profits? Did your reason for owning it change due to various reasons? And so on…)
- How you’ll use new money to add to your portfolio this year. For instance, will you increase the size of each of your existing stocks? Or will you add more to only those stocks that are down, trading at lower valuations? Or will any new money go toward buying brand new stocks as recommended by Louis, Eric, or Luke?
Your investment plan obviously can be far more granular, but if you do just this, you’ll be miles ahead of 99% of other investors. I hope 2025 is fantastic for you and your family. And one way to make it “financially” fantastic is by creating your own investment plan – today. We don’t know what this year will bring, but we do know that a little planning today will prepare you to ride through whatever comes our way. Have a good evening and a great 2025, Jeff Remsburg | 
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