How Low Can Stocks & Crypto Go? May 5th, 2025 - Driven By Braman Motorcars
The Markets Are Testing Your Nerves—Here’s What You Need to Know
Bottom Line: My first rule of money... Never let your money and emotions cross paths. This isn’t a doomscroll though after the past week you might feel that you’re living through one. This story is a weekly wake-up call to show you the near-worst-case scenario for stocks and crypto. Why? So, you can plan your financial future with a cool head, not a racing pulse. The odds of a near-worst case outcome almost certainly won’t happen, however if your plan accounts for it – it can help you manage through even the most trying markets like what we’re experiencing right now.
The US stock market is history’s ultimate wealth-building beast. Crypto? It’s minted millionaires from early believers. Fact: Over 90% of the time, investors who try to “time” the market end up poorer than if they’d just stuck to their original investments. This is about dodging that trap.
Here’s how the big three indexes are faring in 2025 so far:
- DOW: -3% (+3% last week)
- S&P 500: -3% (+3% last week)
- Nasdaq: -7% (+4% last week)
And just like that we’re back! The stock market enters this week riding the longest winning streak for the S&P 500 in over 20 years, and having recovered all losses from the bear market selloff following President Trump’s Liberation Day tariff announcement on April 2nd. The combination of positive trade developments, including a Ukraine mineral rights deal, a trade deal with India that’s being finalized, news that trade deals are in the works for a total of 16 of our top 17 trading partners – and that the one that’s excluded – China is asking to negotiate too fueled a historic stock market recovery. But that wasn’t all. Friday’s jobs report came in stronger than expected and earnings have been terrific thus far.
Entering today, 72% of companies had reported earnings. Average earnings growth has paced 12.8% year-over-year which is much better than the 7.2% expected. On April 7th at the peak of the tariff tantrum selloff I said this in that day’s takeaways: As much as some of my biggest calls and biggest decisions have happened through the application of the 180-degree theory at various flashpoints in modern American history, the decision to do so is remarkably easy. I’ll explain. Are you a believer in this country? Do you believe that this country will be better off by the time President Trump’s done with his presidency than it is today? If the answer to those two questions is yes – the rest is particularly easy to digest. Here’s a fact. Every major stock market selloff in American history has proven to be a historically good time to invest in American companies. Fear and human nature always have people thinking that maybe “this time” will turn out differently. At a certain level that’s an absolute possibility. Every world superpower has eventually fallen. But unless you believe that this is that time, that truly the American dream is dead and that our country’s best days have come and gone – there's no doubt that what’s happening in the financial markets is presenting excellent opportunities. Again, American history is 100% on this.
As for cryptos...
It was the best week of the year for cryptos as more investors have diversified into digital currencies, mostly bitcoin, as a hedge against a weaker US Dollar. That helps the base case by many crypto bulls that bitcoin is in effect “digital gold”. Here’s a look at where they stand.
- Bitcoin: +2%, last week -2% YTD
- Ether: +2% last week -46% YTD
- BitwiseETF (Top 10 cryptos): -1% last week, -13% YTD
I can’t value cryptos because they have no inherent value. Stocks, though? They’ve got bones. Let’s break down the S&P 500:
- Current P/E: 28.37
- Historic Avg. P/E: 16.14
Translation: On earnings alone, the maximum downside risk is 43% drop from here—2% more expensive than last week as stock prices advanced faster than fundamentals over the past week. The market is still slightly historically expensive; however, we have seen a 5% improvement in the fundamental value of the market during this correction cycle.
So, What’s Your Move?
If a 43% dip wouldn’t derail your life, you’re probably golden. If it would? Time to call a pro and build a plan that doesn’t leave you sweating bullets—or broke.
The markets don’t care about your feelings. Don’t let them hijack your wallet.