5 Things We Learned This Week - 5/03/2025
May 3, 2025
The S&P 500 rose 2.9% this week. The Bloomberg Aggregate Bond Index fell 0.3%, Gold fell 2.2%, and Bitcoin rose 1.7%.
The IMF downgraded the U.S. growth forecast this week due to tariff policies. The IMF now predicts 1.8% growth for 2025, down from 2.7%. The IMF believes tariffs could slow global economic activity and increase inflation pressures. U.S. consumer prices are expected to rise 3% this year, a full percentage point higher than previous estimates. The Fed released its Beige Book this week, highlighting uncertainty around trade policy and reporting that businesses are increasingly cautious about hiring and investment decisions. Some firms are preparing for layoffs, while others are adjusting pricing strategies due to expected cost increases from tariffs.
Warren Buffett Steps Down: A Legacy of Wealth and Wisdom
Warren Buffett announced this week he is stepping down as CEO of Berkshire Hathaway at the end of the year. Over the last 55 years, Buffett transformed a struggling textile mill into a $1 trillion conglomerate. He is the longest serving CEO of any S&P 500 company. With Buffett at the helm, Berkshire’s per-share value compounded at nearly 20% annually, doubling the S&P 500's return. Buffett's legendary investments in GEICO, Coca-Cola, Apple, and Bank of America showcased his discipline, adaptability, and focus on durable competitive advantages.
I've written about Buffett many times over the years. He's one of the four most influential investors in shaping my investing style. In 2018, I wrote a piece for Forbes describing three key investing lessons I gleaned from Buffett. First, price isn’t value—focus on intrinsic worth, using book value or operating earnings as a steady guide amid market swings. Second, quality triumphs; high-ROE businesses with reinvestment potential compound wealth fastest. Third, compounding magic turns small annual edges into vast fortunes over decades.
Buffett's wisdom extends beyond just money. He’s also a role model for anyone who wants to actively manage their lifestyle and legacy. Buffett never let money go to his head. He's lived in the same modest Omaha home since 1958. Berkshire employs almost 400,000 people around the world but only 27 work alongside Buffett at the corporate headquarters. Buffett prefers a de-centralized business structure, partly because he values simplicity and peace in his life. Buffett also values open space on his calendar, which allows him to indulge his relentless curiosity by reserving 5 hours a day for reading. Buffett is also charitable, evidenced by his commitment to give away 99% of his wealth. Buffett has lived a unique life of intentionality and purpose. He didn’t just invest in great businesses; he invested in his own habits, relationships, and values, shaping a rich legacy. As an all around investor, Warren Buffett is the GOAT.
Technical Market Update
Silverlight managed portfolios covered all shorts last Monday when the market was down sharply. Since then, the S&P 500 has been up 9 days in a row. 9-day winning streaks are rare; it hasn't happened since 2004.
Many investors are wondering if this is a bear market rally or another buy-the-dip opportunity. Judging that from a technical perspective is presently murky, because an important short-term trend is about to collide with a long-term trend. There was a monthly DeMark 13 sell signal in November and Silverlight rotated defensively in February based on that signal. In early April, a daily DeMark 13 buy signal printed the day of the recent market bottom. We have been fully invested since then based on that signal. Next week will be a critical proving ground. The S&P 500 is currently at an 8 daily sell setup. That 8 will likely turn into a 9 on Monday, triggering a short-term sell signal. It's normal to see a price correction that lasts between 1 to 4 price bars after that. The key will be watching how the market behaves after we get passed the 1 to 4 price bar window. Here's how I'd sum it up: if the market is higher two weeks from now, the bulls probably have the upper hand until July. If the market is lower two weeks from now, it probably means the bears are going to push the market back toward the prior lows.
One potential bullish factor worth mentioning is systematic exposure. It is very low, clocking in at the 6th percentile. Extremely low levels like this have historically marked contrarian buying opportunities. For example, the last two times systematic equity positioning was this low was near key market bottoms in 2022 and 2020. If the market keeps rising, it will trigger more volatility controlled systematic funds to buy back into the market.
International Is Outperforming the US
So far this year, international stocks have outperformed US stocks by the widest margin since 1993. The Financial Times attributes this to a combination of investor anxiety over President Trump’s aggressive tariff policies and a weakening dollar, which together have stoked fears of stagflation. While US equities have long dominated global portfolios, this year’s reversal underscores the risks of over-concentration. The sharp selloff in big tech, especially the “Magnificent Seven,” has stung a lot of portfolios. Meanwhile, international stocks and diversified portfolios have quietly outperformed, highlighting the value of global diversification. The lesson for investors: Don’t assume US outperformance is a given. In today’s volatile environment, spreading risk across regions is more important than ever. The Japanese Nikkei Index recently broke out from a four-decade bear market, and the MSCI EAFE Index is flirting with a breakout from the 2007 high. Multi-decade breakouts like these are rare and usually important.
Bullish Robotics
The global robotics market is projected to reach USD 373 billion by 2034, growing at a CAGR of 15% from 2024, driven by advancements in AI and automation.
When LDRICK the robot drilled a hole-in-one at TPC Scottsdale’s iconic 16th hole, it wasn’t just a viral golf moment. It was a showcase for the remarkable progress in robotics. Created by Golf Laboratories, LDRICK was initially programmed for a much longer shot, forcing a last-minute scramble to adjust for the shorter distance. With time ticking down, Gene Parente made quick, on-the-fly tweaks, and, in a blend of engineering and serendipity, LDRICK’s shot rolled perfectly into the cup, sending the crowd into a frenzy. This feat is emblematic of the latest trends in robotics, where advancements in artificial intelligence, machine vision, and adaptive control allow machines to outperform humans. The same precision and adaptability that let LDRICK ace a par-3 is capable of transforming industries far beyond sports.
In healthcare, for example, robotics pioneers like Intuitive Surgical have revolutionized minimally invasive surgery. Their Da Vinci Surgical System gives surgeons enhanced dexterity and control for complex procedures. As robots become smarter and more autonomous, expect their influence to expand from the operating room and the fairway to everywhere in between.
This week, Silverlight managed portfolios bought Intuitive Surgical (ISRG). Intuitive Surgical’s economic moat stems from its dominance in robotic-assisted surgery, with the Da Vinci system’s high switching costs, extensive patent portfolio, and network effects from surgeon training and hospital adoption. Its recurring revenue from instruments and services ensures stable cash flows. The stock is a quality-at-a-discount investment due to strong fundamentals, a P/E ratio below historical averages, and increasing global demand.
It's Never Too Late To Take Up a New Racquet
This week, Andre Agassi, the tennis legend, stepped onto a pickleball court at the US Open Pickleball Championships in Naples, Florida. At 55, his competitive fire still burned. With a paddle instead of a racket, Agassi showcased his trademark precision, volleying with finesse. The crowd roared as he partnered in doubles, proving his adaptability in a sport that’s captured America’s imagination. He wasn’t chasing tennis glory; he was embracing a new challenge.
Agassi’s shift to pickleball, America’s fastest-growing sport, is a masterclass in preserving the past to secure a better future. By migrating to a less physically demanding game, he’s still winning, growing, and having fun—just in a new way. Pickleball allows him to stay active and competitive while prioritizing longevity. Agassi embodies what it means to age gracefully, showing that reinvention isn’t about abandoning your legacy—it’s about evolving it with purpose and joy.
This material is not intended to be relied upon as a forecast, research or investment advice. The opinions expressed are as of the date indicated and may change as subsequent conditions vary. The information and opinions contained in this post are derived from proprietary and non-proprietary sources deemed by Silverlight Asset Management LLC to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by Silverlight Asset Management LLC, its officers, employees or agents. This post may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any of these views will come to pass. Reliance upon information in this post is at the sole discretion of the reader.