The 2025 Anomaly: When Traditional Cycles Don't Apply

The S&P 500 trades at all-time highs while the Fed cuts rates. Historically, rate cuts occur during recessions, not rallies. The bond market disagrees, treasury yields have risen since cuts began, unprecedented in prior easing cycles. Equities price a soft landing while fixed income anticipates persistent inflation. Historical rotation patterns, such as shifting to economically sensitive sectors during easing cycles, may prove less effective given current market concentration and conflicting signals.

Understanding market cycles remains critical, now more than ever. While 2025 may be breaking the rules, the cycle framework still provides context for what's happening and why. The framework won't guarantee perfect timing, but it prevents you from making decisions blindly

The Four Phases of the Market Cycle:

Phase 1: Early Cycle (Recovery)

Coming out of recession, the Fed slashes rates to stimulate growth, unemployment remains elevated but starts improving. Consumer and business confidence begins recovering from the lows, and fear transitions to cautious optimism. During this phase money rotates into the Technology, Consumer Discretionary, Financials, and Real estate as risk appetite returns and the growth expectations rises on the cheap money expansion.

Phase 2: Mid Cycle (Expansion)

GDP growth here accelerates, corporate earnings surge and unemployment drops rapidly. Business investment ramps up, and confidence is high across all sectors. Mid-cycle is when investing feels effortless. Market rallies lift nearly all sectors. Stock selection matters less because the tide carries most positions higher. This is when portfolio returns make investors feel brilliant but it's the cycle doing the work, not skill. Peak earnings growth occurs here. Economic momentum is strongest. This phase typically lasts the longest and produces the strongest absolute returns.

Phase 3: Late Cycle (Peak)

Growth continues but shows signs of slowing and the Fed shifts to tightening mode, raising rates, and Inflation concerns starts. Valuation concerns increase, and volatility picks up. Inflation beneficiaries outperform in this stage such as Energy, Financials, Consumer Staples, and Healthcare. Rate sensitive growth stocks struggle and investors prioritize earnings stability and cash flow over growth. This is when momentum investors get caught still buying what worked in mid-cycle while institutions rotate to defense.

Phase 4: Recession (Contraction)

GDP contracts, earnings decline broadly and unemployment rises. Credit conditions also tightens which leads to increased defaults and bankruptcies. Fear dominates sentiment, and here the Fed pivots to cutting rates, but it takes time to work. Volatility spikes in the market and headlines turn negative. In this phase, Consumer Staples, Utilities, Healthcare, and Bonds not really lead but they just fall less, dividend safety and value becomes the more important. These sectors usually have negative correlation with the broader market during downturns.

The Rotation Map:

Early Cycle → Buy growth and risk

Mid Cycle → Buy cyclicals and commodities

Late Cycle → Rotate to value and defense

Recession → Consumer Staples, Utilities, Bonds

The key is that The best time to buy each sector is BEFORE it leads, not after. By the time the news is talking about a sector's outperformance, institutional money has already rotated.

Why this time is different

We're in a normalization cycle, not a traditional one. The Fed is mostly unwinding emergency level restriction. This creates opportunity and risk simultaneously.

Market cycles are the natural rhythm of economic expansion and contraction showing in different asset prices. Understanding where we are in the cycle won't make you rich overnight, but it dramatically improves your odds over time.

Most investors will chase what worked last year. The ones who understand cycles will be positioned for what works next year.

Which one will you be?

Biblical Wealth Principles Most People Miss

The Bible contains more references to money than any other topic, yet most people believe scripture discourages wealth creation. Here are the key principles that challenge conventional religious assumptions about prosperity.

 Work Precedes Everything

Genesis 2:15 places work before the creation of woman, establishing labor as part of perfect creation not a punishment for sin. The curse wasn't work itself, but the toil it became. This contradicts the modern retirement fantasy where people spend decades trying to stop working. Men without meaningful work deteriorate psychologically and financially. The biblical model says continuous productive engagement throughout life, though the nature of that work may evolve.

 The Ability to Create Wealth Comes from God

Deuteronomy 8:18 explicitly states: "Remember the Lord your God, for it is he who gives you the ability to produce wealth." This isn't about divine favoritism the ability is available to everyone willing to develop discipline, focus, and work ethic. Those who despise wealthy people often project their own insecurities, assuming success requires evil rather than competence. The capacity for wealth creation is a gift meant for productive use, not something to feel ashamed about.

Excellence Commands Premium Compensation

Proverbs 22:29 promises that skilled workers "will serve before kings." This isn't about comparison with peers or doing the bare minimum for incremental raises. It means striving to become the absolute best in your field. Whatever trade you pursue, excellence opens access to the highest levels of compensation and opportunity.

Family Provision Is Mandatory, Not Optional

First Timothy 5:8 delivers perhaps the Bible's harshest judgment: anyone who doesn't provide for relatives "has denied the faith and is worse than an unbeliever." No other sin receives this condemnation not doubts, not missed prayers, nothing. The verse specifically extends beyond immediate household to broader family. This means relying on government assistance to meet family needs directly violates biblical commands, as does passively hoping God will provide without taking action yourself.

Investing Beats Hoarding

In Matthew 25's parable of the talents, servants who invested and doubled their master's money received praise. The servant who buried his talent out of fear got called "wicked and lazy," had his wealth confiscated, and was "thrown into outer darkness." The master explicitly said he should have at least deposited the money with bankers to earn interest. The lesson: managing wealth requires intelligent risk-taking not fearful hoarding. Those who save in cash while refusing to invest ultimately lose everything through inflation and missed opportunity.

Active Investment Requires Research

Proverbs 14:15 distinguishes the naive who "believe everything" from the sensible who "consider their steps." This applies directly to investing. The fool hears a hot stock tip and buys without research. The wise person investigates thoroughly before committing capital. You need reasonable belief that your investment will generate returns, even if you're ultimately wrong. Learning requires mistakes, but those mistakes should come from educated decisions, not blind speculation.

Additionally, Ecclesiastes 11:2 recommends dividing investments "to seven or even to eight" the biblical prescription for portfolio diversification. Modern investment legend Ray Dalio calls 8-12 low-correlation assets the "Holy Grail of investing," unknowingly echoing this ancient wisdom.

Generational Wealth Is the Standard

Proverbs 13:22 states plainly: "A good person leaves an inheritance for their children's children." Not just for children for grandchildren.

Proverbs 19:14 defines inheritance as "houses and wealth," not abstract moral values. The goal is building wealth large enough to last multiple generations through property and financial assets.

Malachi 3:10 establishes that radical generosity to those who cannot help themselves triggers proportional blessing.

Dependency Leads to Tyranny

Genesis 47 chronicles how Egyptians, failing to prepare despite obvious warnings, progressively traded money, livestock, land, and finally their freedom for government food during famine. This established 20% taxation and set the stage for slavery described in Exodus. The progression is always the same: relinquishing responsibility precedes losing rights. When people abdicate personal responsibility for their welfare, they create the conditions for authoritarian control. Rights and responsibilities are inseparable giving up one inevitably costs you the other. 

 Wealth's True Mission

Scripture treats wealth creation as both duty and skill requiring excellence, discipline, calculated risk-taking, and multi-generational thinking. The ultimate purposes are providing for extended family and generous support for those genuinely unable to help themselves not funding lifestyle consumption or outsourcing responsibility to institutions.

The Self-Funding AI Boom

The AI industry has created a web of circular investments. Companies like OpenAI, Nvidia, AMD and major cloud providers are investing billions in each other while simultaneously becoming customers and suppliers. This interconnected structure raises questions about whether demand is real or artificially inflated.

How the Investment Circle Works

AI companies need chips and infrastructure. Chip makers need customers. So they invest in each other—Nvidia takes stakes in its customers, who then buy Nvidia chips. OpenAI signs massive deals with suppliers, who receive equity in return. Each announcement boosts stock prices, creating a self-reinforcing loop.

The pattern appeared clearly when Nvidia owned 5% of CoreWeave, a company that buys Nvidia chips and rents them out. When CoreWeave's IPO struggled, Nvidia offered to anchor the deal—essentially funding its own customer.

Why the Deals Matter

These arrangements serve multiple purposes: securing supply chains, locking in customers, and aligning incentives. OpenAI committed to half the world's memory capacity, pledged $100 billion with Nvidia who will supply chips back, and signed AMD deals worth tens of billions—with AMD offering OpenAI the right to buy 10% of its stock for cheap.

Amazon invested $8 billion in Anthropic, which committed to using Amazon's cloud and custom chips. Google followed with its own multibillion-dollar investment and infrastructure deal. Both now have financial stakes in Anthropic's success while providing the tools it needs to operate.

The Scale Problem

McKinsey forecasts $5.2 trillion in AI infrastructure spending through 2030. The industry needs $2 trillion in annual revenue just to justify it. OpenAI has $13 billion in revenue today and burns cash rapidly. Anthropic is smaller. Nvidia is profitable, but not enough to fund everything.

The power requirements are staggering: OpenAI's Stargate project alone needs 10 gigawatts—enough to power 26 million Americans. Total OpenAI commitments require 23 gigawatts, equivalent to 23 nuclear power plants. The last U.S. nuclear reactor took over a decade to build and came online in 2024. None are currently under construction.

The GPU Market Signal

Early cracks are appearing. Nvidia B200 chip rental prices dropped from $3.20 to $2.80 per hour in months. Older A100 chips now rent for as low as 40 cents per hour—below break-even for many operators.

If demand doesn't materialize, stranded assets could pile up—data centers sitting half-empty, GPUs never earning back their cost, similar to unused fiber-optic cables from the telecom bubble.

The Monetization Challenge

OpenAI claims 700 million weekly users, but only 5% pay. Enterprise contracts drive most revenue, yet fewer than 15% of business AI pilots succeed. There haven't been mass AI-driven layoffs—only graphic designers, copywriters, and some junior coders have seen employment declines.

The question isn't whether AI works. The question is whether anyone can build a profitable business at this scale.

The Financial Reality

The big tech firms remain financially solid—projected to generate over $200 billion in free cash flow next year, even after capital expenditures. Balance sheets are strong. Valuations sit around 35x forward earnings versus 60x during the dot-com bubble.

Nvidia's largest customers are also its investment targets, using Nvidia's money to buy Nvidia's products. The OpenAI-Nvidia deal represents about 13% of Nvidia's expected 2026 revenue—significant but not overwhelming. Many deals include performance-based conditions, allowing companies to back out if monetization lags.

The Long-Term Outlook

The profits might not flow to model builders but to businesses using the models. AI could boost economy-wide productivity while the labs themselves struggle to monetize—leaving investors, lenders, and utilities holding stranded assets in a buildout that outpaced demand.