After stocks posted their best performance this century, analysts expect 2025 to continue carrying the torch. FactSet forecasts the best earnings showing in three years, while analysts augur a thaw in the IPO market and economic confidence driving markets higher. While there’s plenty to look forward to, some investors are focusing on the dark side — an increasingly emergent bear case,

End of the honeymoon period: The bulls are always right …right? Well, until they’re not. Since Election Day, stock indexes have given back much of their late-year gains — and bond funds have cratered as political uncertainty weighs on investor optimism. Both have been shaken awake by questions of “What if?” from the incoming administration, the Fed, and the still-strong economy — which has seen consecutive strong jobs reports and stalling progress on inflation. These are all unwelcome developments for investors, who have emptied their cash coffers into assets and embraced the market’s euphoria.

• Trump’s proposed trade policies are worrying CEOs, especially in the S&P 500, which earns 41% of its revenue from outside of the US — and could be disrupted by tariffs.
• The US national debt and deficits created by proposed tax cuts and other policies are also a concern, which have helped push the yield on the US 10-year Treasury to its highest point since 2023.

Alternatives, Alternatives

Late last year, Barron’s wrote that investors should “embrace the bubble” in 2025, but some are approaching the markets in unique ways, taking advantage of its mood swings and uncertainty about …uncertainty.

• Shareholders have poured billions into equal-weight funds like the Invesco S&P 500 Equal Weight ETFRSP
  , seeking refuge from the market’s heavy concentration in tech stocks and hoping to bank on wider success in the index.
• Others have embraced dips in treasuries — the iShares 20+ Year Treasury Bond ETFTLT
  is down over 6.5% over the past six months and is seen as going nowhere but up, all while paying a 4.4% dividend yield.

Cash is still a position: For some, saving is preferable to investing, with interest rates on savings accounts and time deposits like CDs still paying over 4%, which could be preferable to gambling on what the Fed, Trump, or lawmakers might do next. And with the strong economy increasing the specter of a rate hike, having cash might not burn as much as investors thought it would.