Citrini’s Top 25 Trades For 2025
Monetary Matters with Jack Farley
Deep Dive
Why is Citrini considering shorting homebuilders in 2025?
Citrini is considering shorting homebuilders due to rising inventory levels, especially in markets like Florida and the Sunbelt, which historically predict housing price declines. Builders are also facing increasing costs for land and labor, while selling into a softening market where prices are starting to fall. This creates significant downside risk for homebuilders like DR Horton and DreamFinders Homes.
What is the Citrindex and how has it performed in 2024?
The Citrindex is Citrini's thematic investment index, which has gained 65% year-to-date as of December 23, 2024. It focuses on themes like AI, GLP-1 drugs, connectivity, and fiscal beneficiaries, outperforming the S&P 500.
What is the rationale behind the Ukraine normalization trade?
The Ukraine normalization trade is based on the expectation that relations between the US and Russia may improve under a potential Trump administration, leading to decreased government spending on military aid to Ukraine. This could negatively impact defense contractors like Raytheon and Lockheed Martin, while benefiting companies like Georgia Capital and Bank of Georgia.
Why is Citrini bullish on power quality and capacitors in 2025?
Citrini is bullish on power quality and capacitors due to the increasing demand for clean, stable power in data centers, especially with the rise of AI. Companies that produce capacitors, inductors, and other power management components are trading at low valuations due to weak automotive and chemical cycles, but they have significant upside potential from the AI-driven data center boom.
What is the 'temporal moat' concept in Citrini's 2025 trades?
The 'temporal moat' refers to companies that used cheap capital during the zero-interest-rate period (ZIRP) to build lasting infrastructure and competitive advantages. These companies, like Carvana and Applovin, now have cost bases and operational efficiencies that competitors cannot replicate in today's high-cost capital environment, making them potential winners in 2025.
How does Citrini view NVIDIA's prospects in 2025?
Citrini believes NVIDIA's dominance in AI is well understood by the market, and while the company will likely continue to perform well, the stock may not offer significant upside due to its high valuation. There is also a risk of competition from companies like Amazon and Google, which are developing their own AI accelerators, potentially commoditizing NVIDIA's hardware.
What is the 'Schrodinger's recession' concept and why is it bullish for markets?
Schrodinger's recession refers to the market's constant oscillation between fears of a recession and expectations of a soft landing. This dynamic creates 'walls of worry' that, when resolved, lead to a grind higher in stock prices. The uncertainty and its resolution drive investor optimism, making it a bullish environment for equities.
Why is Citrini focused on AI agents in 2025?
Citrini believes AI agents represent the next phase of AI evolution, moving beyond generative AI to integrated frameworks that can reason, execute tasks, and ensure compliance. This shift could benefit companies that provide data labeling, content moderation, and other 'human-in-the-loop' services, as well as those enabling AI infrastructure and operations.
What is the reflexivity concept in relation to MicroStrategy?
Reflexivity, as described by George Soros, refers to the feedback loop where investor perception influences reality. In MicroStrategy's case, the higher its stock price goes, the more Bitcoin it can buy, which drives Bitcoin's price higher, further boosting MicroStrategy's stock. This creates a self-reinforcing cycle that can continue until external factors disrupt it.
What are Citrini's thoughts on the travel normalization trade?
Citrini sees opportunities in travel normalization, particularly in companies that have lagged due to idiosyncratic issues, such as MTM (struggling with low snowfall) and Playa (focused on leisure travel). These companies have asymmetric upside as travel demand remains strong, and they are positioned to benefit from the post-pandemic recovery.
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