Felix Prehn, the founder of Goat Academy, believes that the current tech rally in the stock market is far from over. He shares his thoughts on why certain sectors are showing strong potential, which areas need caution, and how investors can make smarter decisions in 2025.
Semiconductors Lead the Way
According to Felix Prehn, semiconductor companies are at the center of the current market excitement. Semiconductors are tiny chips that power everything from smartphones to cars. While big names like NVIDIA and AMD get most of the attention, Prehn points out that there are smaller companies in this space with even more room to grow. He highlights the SMH, a popular semiconductor ETF (exchange-traded fund), which is reaching new highs. This suggests that the sector is strong and could continue to rise.
Caution with Small Caps
Prehn is more careful when it comes to small-cap stocks. Small caps are companies with a lower total value in the stock market. He explains that these companies face challenges like higher interest rates and fewer tax breaks compared to larger firms. The Russell 2000, a group of small-cap stocks, is still below its 150-day moving average—a line that shows the average price over the last 150 days. This is a sign to be cautious, even though some experts are optimistic about small caps.
Following Simple Rules
Felix Prehn stresses the importance of following simple, proven rules when investing. He says that Wall Street professionals use these rules to avoid emotional decisions and focus on what works. For example, he avoids getting attached to popular CEOs or company stories. Instead, he looks at performance and sticks to his system. This approach has helped him and his community at Goat Academy find more winners than losers.
Market Trends and Seasonality
Prehn also looks at market trends over time. He notes that the NASDAQ, which is a group of technology stocks, usually performs well in the summer months. Historically, the second half of the year brings more gains than the first. With possible tax breaks and policy changes ahead, he expects the tech rally to continue.
Room for Growth
Some investors worry that the market has already gone up too much. However, Prehn points out that very few stocks in the S&P 500 and NASDAQ are at their highest prices for the year. This means the market is not overheated, and there could be more room for growth.
What’s Holding Back the Market?
Prehn explains that big companies like Tesla and Apple have recently pulled down the NASDAQ. He also discusses the future of autonomous vehicles (AVs), which are self-driving cars. Companies like Waymo are already making progress, and Prehn believes this market will grow faster than many expect.
Retail Investors and Tesla
Retail investors—regular people buying stocks—are still very interested in Tesla. A special fund called TSLL, which moves twice as fast as Tesla’s stock, has seen record inflows. This shows that many people are betting on Tesla’s future, even after recent sell-offs.
For more about Felix Prehn and his approach to investing, visit the Felix Prehn and Goat Academy page.