#291: The Biggest Investing Stories and Stocks of 2025

0:00Google's up about 60 % year to date. It's by far the best performance stock in the Magnificent Seven. Actually going through this, it's interesting. NVIDIA is the only one out of the rest of them outperforming the NASDAQ at the time of recording. Tesla is about level. Meta, Microsoft, Apple, and Amazon are all training it. Amazon and Meta by a good way. So this conversation is about kind of the complete 180 in terms of sentiment on Wall Street that Google has gone through. With 2025 kind of rubber stamping it.

0:32Emmet:hey emid how we get on good to see you mike how are you today i'm good i'm good i'm looking forward to this episode we're talking about for a while so we're kind of looking back on 2025 as a whole um so i gave you three categories to work on for this episode story of the year stock of the year and then the christmas turkey of the year so yeah perceive that however i want i only had a whole year to prepare for it and you gave me plenty of notice but when you suggested this morning we record the podcast a day early I was like ah now I know I had 350 odd days to get ready for this but anyway let's see how it goes folks because I think we've some very interesting conversations to have today Mike 100 % all right uh before we get into it though you want to ladies and gentlemen the final enrollment for Horizon at a massive discount to last year's prices or earlier this year's prices are available if you email frank at my wall street.com get it before it's gone forever and before we publish my favorite stock from nexus one two and three next week in horizon which will include a fleeting insight into the stock that i think is most likely going to 50x in my life and all long subscribers to horizon know exactly what stock i'm talking about but they will get an insight that i don't think they'll find anywhere else apart from that i've also started to prepare for the reincarnation of spotlight which i had to stop doing for a little while uh which is a video service where i review three of the stocks that i've bought in the service and every few months kind of go back and look at ones i pitched in the past to see what story is today.

2:18Emmet:And the first of those three in the next spotlight, which isn't going to go live till I suppose week one in January, is truly fascinating because I bought it as a wild card, which is a stock I buy in Horizon or a stock I buy in my life that I don't put onto the Horizon scoreboard because I believe it has an abnormally high risk reward profile, even higher than I usually go. And in the research I've been conducting in the last week or so, I have found a business or re-found a business that I really truly believe is the next Tesla in its field. So that's coming in early January for Horizon subscribers.

3:05Emmet:Anyway, what I'm trying to say is email frank at my wall street.com before the 22nd of december he'll send you a link to buy it and lock in on a price for a couple of hundred bucks as opposed to several thousand bucks so uh closing days of me hitting you with that pitch folks and we are very proud i'm very proud of the service and i'm going to keep going until success is apparent and there for all to see nice one okay Okay, so 2025, year in review. We're going to go story of the year first. I'll kick us off. Yeah, go for it. I think this is so boring. I'm kind of going on a little bit, especially seeing what you said for your three picks.

3:48I don't know what you're going to say about them, but I've gone way more boring than you have. But I don't think we can go past AI. But we're framing it in a certain way here. So AI, again, clearly the dominant theme of 2025. I think it's kind of salvaged the stock market, really, the AI trade. There's no way we can go on about the year and not talk about it. But in general, it's not really the stocks we were expecting to be the leaders, if that makes sense. So, you know, we've talked about kind of at length the level of CapEx, especially among the hyperscalers. So Google, Amazon, Microsoft and Meta have spent or expect to spend throughout the entirety of 2025,$400 billion on CapEx.

4:32that's four companies alone. Do you know what I mean? Almost all of it aimed at this AI infrastructure build out. But what's interesting is that apart from Google, these businesses have underperformed this year. You know, the market is concerned about ROI, the sheer amount of cash being spent. Of course, these businesses are like the few to have resources to do it. And they would much rather be caught spending the money now than be left behind. But they haven't been the beneficiaries of the AI trade in 2025. The ones that have been reaping rewards have been the pick and shovel plates, whether it's OpenAI or Google or Amazon or Facebook or whoever, that comes out on top in this race for AI supremacy.

5:07It doesn't matter for NVIDIA, who's happy to sell the chips to everybody. Do you know what I mean? And that's kind of been the core theme at the base of this AI trade in 2025. It's these businesses that have been enabling the infrastructure build-out, that have been essentially the receiving end of that$400 billion CapEx bill. They've absolutely dominated this year. Now, the first stop is, of course, NVIDIA. It has to be. You know, it managed to tag on another 25 % this year after going tenfold in the two years previous. It became the largest stock in the market ahead of Apple. It reached the first stock ever to reach a$5 trillion market cap.

5:38It's come down a lot since then. But still, it's posted three blowout quarters in 2025. Now, obviously, people didn't tune in to hear me say, did you hear NVIDIA is doing well? So let's go down the board at some of the other key areas. But they all represent the same theme here. And the first stop I want to make is the memory market. So we're rehashing what we've gone over already recently in the pod about two weeks ago, but four of the top five best performing stocks in the S &P 500 were Sandisk, Western Digital, Seagate and Micron Technology. All four involved in digital storage. It's remarkable, really.

6:12And then if you fly over to Korea to look at Micron's two competitors in the semiconductor memory market, SK Hynix is up over 200 % and Samsung is up nearly 100%. So just an absolute bar and burner of the year, of the year for the memory market industry in general. Going on then to more of the semiconductors foundries, the kind of the building blocks of the semiconductors. We have Taiwan Semiconductor and Intel, the companies that really, you know, they make the kind of Acme bricks that then NVIDIA or AMD, whoever else will buy off them and design them and make their own semiconductors from there, if that makes sense.

6:47Taiwan Semiconductor is up just shy about 40 % this year. Intel nearly doubled. Obviously, it had a huge investment from the industry, NVIDIA, the government. It's really hot stock, but it very much is positioned to bring some chip production back to the US in a big way. It's up nearly double, about 86 % when I checked it at the time of recording. ASML is another one worth mentioning, up about 40 % this year. It's now Europe's largest company as well. And when we talk about moats and single points of failure and a global reliance on one individual company, ASL is right up there alongside probably Taiwan Semiconductor.

7:26It makes what are called photolithography machines, which are used to print the circuits on semiconductors. So they're the world's only supplier of the most advanced type of these machines, the extreme ultraviolet lithography systems. and essentially the entire global chip industry relies on this one individual company. There's loads more we can go through. Cooling comes to mind. The demand for data centers for cooling racks has just completely blown this industry up. You look at the returns of Vertiv Hollins, Comfort Systems USA, both had huge years. Server racks is another one, Supermicrocomputer and Dell.

8:00Big beneficiaries of this increased demand. Energy, we can talk as well. We've seen nuclear stocks have a big year, Constellation, Vistra, to name a few. but it's just been non-stop and we could be here for hours listening out some of the returns that these niche industries have falling into what i find interesting is that it just doesn't really show any signs of letting up anytime so judging from the attitudes among the hyperscalers their commitment to spending big their unwillingness to come second in this race and and the resources that they have available to them they're just they refuse to fall behind on ai and if that means spending hundreds of billions right now, that's what they're going to do because they can.

8:38Do you know what I mean? And now they're even going into the bond markets to do that as well and to raise capital. So it's really interesting what's happening there. Just last week, BlackRock published a big report forecasting AI spending to accelerate from here. It specifically mentioned the pick and shovel plays, which is scary considering how much money has already been sent there. But it goes to show there's plenty of room left to run, especially for this AI trade in terms of the pick and shovel aspect of it. So for me, that's been the story of the year. I think it's where the best performing companies have come from.

9:10And it's just, yeah, it's been an absolute gravy boat for anyone involved in this kind of AI infrastructure build-out, which is crazy to say, because you could probably talk about that in 2024 as well. And it looks at maybe for 2026 too. So that's my story of the year. It's boring, but that's where the money is.

9:28Emmet:I don't think it's boring. I think there's a very strong analogy between what we're seeing now today with AI and the foundation of Manhattan. So if you take the year, I don't know when Manhattan was founded, probably around 1750 or something like that. But if you were buying up land in 1800 on the island of Manhattan, you were probably spending money hand over fist, but you had a foresight that most others didn't have. And the analogy for me is That's what we're looking at now. The Manhattan of the internet is being built and it's called AI. So these giants with nearly infinite deep pockets have decided we've got to go buy the land, even though we can't really absolutely define what this thing is going to be.

10:15Emmet:I'm sure if we stood in the middle of public central park in the year 1920, it was, well, there's no question. It was very different to what we see now, but it would have been very difficult to describe what Manhattan will be in the year 2025. Well, that analogy for me is strong for AI because we are looking at it. We're looking at the macroeconomic picture. It goes slightly microeconomic when you talk about the Mag 7 and whether it's Microsoft or NVIDIA or Google, or tesla or whoever with their absolute application of us of dollars for the build out of ai but you can go into smaller companies but what we are looking at here is it is the new industrial revolution and it will bring an awful lot of casualties but it is the creation of something entirely entirely different and i think it deserves to be the defining story of 2025 I never listened to any of our old podcasts, but I suspect it was the story of 2024 as well.

11:16Emmet:Does that ring a bell a bit to you, Mike? I think so, for sure. There was no ignoring NVIDIA in 2024, of course. But I do think more of the market's attention was focused on the big names in 2024, whereas 2025, they're happy to move away from Magnificent 7 towards these industrial players. We were laughing to ourselves like two episodes ago when we were talking about Western Digital and Sanders Corporation, and they're 50, 60-year-old companies that are beating out all the high-tech innovators and disruptors and all this faff, I suppose, that's behind it in the S &P 500 this year. So it is interesting.

11:55But you could talk about bubbles. You could talk about short-termism. You could talk about kind of cyclical nature of a lot of these businesses. And I think you'd be entitled to. But for now, looking backwards, 2025, I think it's definitely defined what we've seen on the markets.

12:14Emmet:Yeah, a bubble is a rally you missed, right? No, that's true as well. right well being as you went with ai and i fully think it's deserving to be the story of the year especially from our perspective i think there's another one um which we can't not say so i'm going to go with the other one which is uh the biggest shock of the year and that was uh liberation day in april or yeah i mean tariffs as introduced by president trump briefly very briefly erased trillions, not billions, but trillions of value. And it sent the NASDAQ market specifically into a bear market, which the annals of history will record as the main scare of 2025.

12:54Emmet:But even that event really became a subplot because we all know that markets rebound sharply. And as you rightfully explained, the AI party just kept continuing. And the reason that I'm picking Liberation Day or the Liberation Day crash, I don't think it's called that, is to remind everyone that in stock investing, shocks are inevitable. They just are inevitable, such as Trump's tariff plan. And recoveries are even more inevitable. They're just as absolutely certain the market will take a beating and the market will recover. And it's a bit like a toothache. When it's over, it's quickly forgotten or eaten bread is soon forgotten.

13:39Emmet:And the pattern of shock and sudden crashes is everywhere in market history. It feels like a lifetime ago, the COVID crash, I dread mentioning it and it was a once in a century pandemic that triggered one of the fastest bear markets ever, possibly the fastest bear market ever. The S &P dropped something like 34 % in a month. Volatility went through the roof. We all grabbed our laptops, stuck it under our arm and went home to drink tea, watch telly and work from home. 2018, and that's forgotten. That's like an old toothache. 2018. You're talking about, sorry, recoveries being inevitable. The bounce back from that crash.

14:21Fastest recovery ever. The best 50 days in stock market history.

14:27Emmet:Absolutely true. And even though Liberation Day, to the point, was the biggest global economic story of 2025, it almost feels like a forgotten chapter in the history books of politics. And while I'm not playing down the economic impact, the stock market impact was fleeting. There's always a fleeting shock that comes your way. In 2018, in Q4, there was this kind of everything is falling sell-off because there was fears that the Fed rate hikes and the US-China trade war sparked this really horrible drawdown. And there was talk of a recession. But who even remembers that? Like at that time, it was like, oh, the sky is falling down.

15:09Emmet:2011 the u.s debt downgrade and the downgrade and the eurozone crisis uh when the loss of when the usa lost its triple a rating do you remember that mike in 2011 no i don't yeah yeah well come yeah okay you've got an excuse and it combined well it combines fears it was combining fears that europe's sovereign debt crisis would break the eurozone and it sent the markets into this really brisk sell-off and of course we forgot that one there was something in 2013 called a temper, what was it? What was it called? It was called a taper tantrum, I think it was called, where the Fed was going to slow bond purchases, Brexit in 2016, you name it.

15:52Emmet:And my point that I'm trying to articulate is that the year ahead will bring shocks. Of course it will, as 2025 brought shocks. And as with the nature of shocks, we've no idea what they're going to be we don't know when they're going to happen but we also know that life moves on very fast and growth is inevitable function of life and markets and i think that for me the big story of the year was liberation day our president trump waltzed out on the walked out into the is it the rose lawn and he had the board yeah the big board it was quite entertaining as long as he didn't live outside of america but what's interesting about that as well and i always harken back to something Bill Mann said in 2024.

16:35It was at our Horizon members meeting. And he said, in anticipation of another Trump presidency, this was after the November election, he said, in terms of stock markets, maybe there'll be volatility, maybe there won't. But there's one thing that Donald Trump loves, and it's his scorecard. And for him, the performance of the S &P 500 is as good a scorecard as you can get for his own success. And when we're talking about Liberation Day, I don't think he realized how much of an impact that would have on global stock markets and especially the American stock market. And the fallout since has kind of been walking it back a little bit, you know, from the big board to what people have actually paid is a big difference.

17:19And he was bringing a lot of people to the table. But it just goes to show that I think he very much cares about stock market performance. If you listen to interviews recently, he's talking about the increase in 401k millionaires in America. And he's touting the performance of the stock market in a way that links it to his own success. And I think for the next however long he's in office for whatever it is, three more years, he will very much look to, I think, protect stock market returns. Even the way his conversations are going around the Fed chair coming in next year about interest rates. he's very interested in a successful stock market.

17:58And that goes a long way, I think, in terms of performance, however it may come, because we don't know, because there will be volatility. There will definitely be political volatility involved. But it harkens back to, yes, he does care about stock market performance and he has the powers to affect it in that way. So, yeah, I think... Yeah, you're right.

18:18Emmet:I mean, it's a very reductive scorecard. The S &P 500's performance is a reductive scorecard for a president, but it's there in history to be observed, rightly or wrongly. And in fact, when you look at big data of Republican versus Democratic presidents over the long term, it really doesn't matter, believe it or not, on the absolute returns. But that doesn't detract from the very point that of all the presidents in our lifetime, Donald Trump is the one who most wants to win. uh like capitalizing those letters win whatever win means that's what matters most to to president trump yeah okay so now we're gonna go stock of the year uh you can lead us off with this one because you've got a much more interesting one than mine set it up set it up for the people okay i'm gonna tee it up i mean like how can you pick stock of the year because like that was it last week the week before i spoke about western digital and sandisk and the ones with the greatest gain and we agree arguably it should be those ones you know yeah Yeah, well, we agreed we would discuss our favorite stock, you know, or at least the best stock.

19:25Emmet:And you told me what you were going to go for, which we'll discuss in a few moments. So I decided to grab two names for this and our next segment that I suspect most people have not heard of. So it's not necessarily my favorite. And I'm not going to go like super deep on these. But what I will tell you is I am for this particular business, I have been hit with a fairly big whack of recency bias because the story of the company I'm about to discuss really only happened a couple of days ago. And the business is called Wave Life Sciences, and it jumped from$7 a pop on the 2nd of December to over$21 a couple of days later off news of an innovation that is every bit as much part of the story of the mid-2020s as AI is, possibly an even bigger one.

20:20Emmet:So without now, I know you don't know what the company does because we had a quick chat before the microphone started rolling. So what other industry, Mike, is in 2025 almost as big as AI, but in a different industry altogether? I would have assumed gene editing just by its name. Is that correct? I think you're close. And the person serving the meal is kind of. You're very close. It's weight loss drugs. so okay okay yeah so in summary wave life sciences ticker wve popped as a result of a really unexpected and extremely strong phase one result for its obesity drug wve 007 so they've used their ticker and james bond's number so who could forget that but wve 007 is a treatment that has showed i I mean, a lot of people would look at GLP-1 and Ozempic and Wagovi, which I've mispronounced for years after speaking to a patient of it recently.

21:26Emmet:And I realized they're pronouncing it differently, but I'm sticking with Wagovi for now until I get that stuck in my mind. But we kind of looked at it and went, wow, that's pretty innovative. Like humankind now can lose weight by doing effectively nothing, giving themselves a jab. But this really has changed the game of weight loss. But what WAVE are looking at is something that's going to change it all over again. And the treatment has showed massive reductions in visceral fat and overall body fat after a single low dose injection with surprising twist that lean muscle mass increased. So, but hold on, there's more.

22:07Emmet:So let alone, does this drug result in fat basically exiting? but you'll be ripped you'll have big forceps on a washboard stomach and that is truly like a layer up or a power up of of i think what most people wish to achieve but even more disruptive is the possibility that the drug may only need to be taken once a year maybe twice a year far far more convenient than today's GLP-1 drugs, which require weekly dosing and also cause unpleasant gastrointestinal side effects. And as I mentioned in a previous show, I know a few people who've taken GLP-1 drugs with stories ranging from upset stomachs to feeling properly nauseous beyond the stomach and needing higher doses after a while.

23:01Emmet:I was talking to somebody who moved from one provider to another because it was twice as strong. So this WVE007 or 007 works through a different mechanism and it silences the INHBE gene to mimic a naturally protective metabolic profile. So patients showed up to an 85 % reduction in active and E, which was stained for six months. So this basically was what the medical professionals are looking for, for the promise of an ultra infrequent dosing system. A lot of people, I suspect, have looked at Wegovi and Ozempic and the Eli competitor and all those. What's it called? Manjaro or something? Manjaro?

23:59Emmet:and they're not too keen on the idea of having to jab themselves once a week. Nobody really wants that. A lot of people are fine with it, but I'm sure a lot of people will be like, I just don't know if I want to do that. So the thing about WAVE is that the safety data was really clean. There was no zero severe side effects or discontinuations. which really helped fuel this rapid wave of analyst upgrades and soaring price targets. So if you kind of heard it here first on Stock Club, folks, but as with any chemical, especially chemical, but that's being self-administered into the body, the excitement that's suddenly gone into this business comes with a very real risk.

24:41Emmet:And for a start, the data is very, very early. Phase one is just the first milestone of, is it three, four phases you go through to get a drug to market. um patient numbers are very small and wave remains a loss-making clinical stage biotech that's now valued far above its fundamentals which is kind of par for course a start um a pharma company a biotech company a crisper company really is not uh valued on on the fundamentals on the numbers you see in the balance sheet it's your your investors go in because they see a promised land of a revenue line in the billions tens of billions or even hundreds of billions and the company is betting heavily on this program as you can imagine it's raised 350 million dollars to fund this upcoming phase two trials which i'm sure wasn't hard to raise even though it's a third of a billion for a small company that has negligible revenue um you know when you've proven those things then let alone you only have to take one or two shots a year and let alone does the weight fall off you but your muscle mass increases this is kind of like the panacea um uh i don't want to call it a vanity panacea that's absolutely miscategorization but the looking good feeling good panacea and uh so they raised a third of a billion uh phase uh two is going to involve tests with higher doses and larger populations and each new data set in 2026 will be a binary event.

26:13Emmet:So binary one, phase one was, hooray, it worked. Nobody's hurt. No horrible side effects. These people lost weight, gain muscle, look good, one shot. So that's a massive big green light move to phase two. But if phase two brings an unintended consequence and something we don't want, the stock will dramatically fall. And I think, Mike, the broader significance is that the obesity market which is already enormous like to live in ireland in 2025 when i was a kid you went to you got a treat as a scarce reward in the form of sugar at a party or maybe a friday everywhere you go in ireland now there is uh low quality food that tastes delicious everywhere the streets every room you walk into so we are all kind of at war with the sugar rewards that were far more fewer fewer and further between in the 70s so we're looking at a world where obesity is as a secondary consequence of treats being everywhere is a massive problem and it's undergoing a technological shift as companies are developing alternatives to glp1 so we don't want to lose muscle like one of the other ingredients to longevity and living to an old ages muscle strength grip strength the ability to do press-ups and whatever else bone density bone density exactly so this this company wave appears to be on the front end the front of the wave if you excuse the turn of phrase for a power up on these glp ones it offers easier dosing um and it's it's early results hint at something that's genuinely differentiated but the path is long it's going to be competitive when we saw who actually how quickly we forgot was it novartis who came out with the with um osempic and very soon oh nord yeah of course nord nord of course yeah yeah europe speaks how quickly you forget so they all came to market um and now eli with their manjaro were saying it's the latest and greatest and best but the thing is it's hyper competitive it's a very very um sought after solution but for now wave and the reason i to wrap up the reason i chose the story is that i believe it's like a proxy for the story of weight loss breakthroughs and how biotech can create absolutely sudden and spectacular gains from a single promising experiment but equally carry the real possibility that the story is far from guaranteed as positive So we are now looking at a bit.

28:56Emmet:So put it in your black book as one to keep an eye on Mike and listeners. 007, better known as Wave Life Sciences. And I've chosen it as, what was our heading again? The best stock? well just your stock of the year it could be any interpretation of that i'm gonna give it that i'm gonna stick a yellow uh sorry gold rosette on its lapel and say you're stock of the year because you're gonna do glp one better we're gonna gain muscle and lose weight and only have to inject once a year if it all works out yeah no it's a good one because definitely i'd have to say weight loss has been a prominent story for for good and bad for eli lilly good and for nova nordisk bag but then it's also very defining of just investing in biotechs in general you know what i mean this company has a great idea and a promise but there's nothing there yet and there won't be nothing there yet a certification that you got through tollgate one but you also know that the amount of science technology and research behind this drug well it's the accumulation of everything we've learned in humanity into a single molecule yeah okay i went the complete other end of the scale i know you did this is why i decided i go with one that i think most of our listeners were like never heard of that that sounds a bit wild and i'm handing over to you for one everyone has heard of yeah probably the most boring stock i could pick for this but likely the most important in terms of say the overall effect on the stock market but also just 2025 as a whole and its story it's google so google's up about 60 year to date it's by far the best performance stock the magnificent seven actually going through this it's interesting nvidia is the only one out of the rest of them outperforming the Nasdaq at the time of recording.

30:33Tesla is about level. Meta, Microsoft, Apple, and Amazon are all training it. Amazon and Meta by a good way. So this conversation is about kind of the complete 180 in terms of sentiment on Wall Street that Google has gone through with 2025 kind of rubber stamping it. So it's been on the recovery since the end of 2022, where it had a horrible year. And that kind of coincides with the launch of ChatTBT. And for the first time ever, what seemed like a realistic threat to Google's search monopoly. Warren Buffett famously called Google the greatest economic moment in the world. Now, all of a sudden, we have this magic box that spits out results that are better than anything that Google has ever done.

31:14Do you know what I mean? So this was the narrative.