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Sergey Savastiouk's Avatar
published in Blogs
Apr 06, 2025

Making a Case for Trading vs. Investing in 2025

As we are all in 2025, the investment landscape is poised for significant transformation. The convergence of low liquidity, diminished labor participation, and high interest rates suggests that traditional buy-and-hold strategies may yield only modest long-term returns. With Trump now serving as the current president, his policies—including tariffs reminiscent of those that disrupted markets in the past—continue to shape the economic environment. In such conditions, active trading strategies, particularly those emphasizing hedging and risk management, may offer superior returns compared to a passive approach.

Chart #1 and #2: Market Conditions and Long-Term Returns

 

Chart #1 provides a historical perspective by comparing the anticipated market behavior in 2025 to the downturns experienced during the 1930-1931 period. After Trump's imposed tariff. 

Chart #2 shows that the S&P 500 is expected either to trade sideways or decline, leading to projected long-term returns of approximately +3% over the next decade. This performance echoes the sluggish growth seen during the 2000-2010 period, when low liquidity and high interest rates limited market gains.

 

For investors, these conditions imply that a traditional buy-and-hold strategy may not be enough to generate attractive returns. The modest growth forecast forces a reevaluation of investment strategies, pushing market participants to consider active trading approaches that can capitalize on short-term volatility and hedge against downturns.

Chart #3: The Impact of Missing Key Trading Days

Another compelling piece of evidence is offered by the chart titled "Missing the Best vs. Worst Days." This chart tracks the performance of an initial investment in the S&P 500 from 1998 to 2025 under three different scenarios: staying fully invested, missing the 10 best trading days, and missing the 10 worst trading days.

 

The findings are striking:

  • For Traders:
    When the 10 worst trading days are removed from the performance data, the results significantly outperform the standard buy-and-hold strategy. This observation suggests that active traders who focus on avoiding the most severe downturns—by employing hedging strategies and risk management techniques—can achieve superior returns relative to the broader market.
     
  • For Investors:
    Conversely, missing the 10 best trading days leads to markedly inferior outcomes. This serves as a stark reminder for long-term investors: the market’s largest gains often occur on a few exceptional days, and missing these can severely impact overall performance. Thus, for investors, staying fully invested remains critical to capturing the market’s long-term growth, despite the inherent volatility.
     

These insights illustrate the divergent strategies required by traders and investors. While investors must maintain full market exposure to avoid missing significant upswings, active traders have the opportunity to enhance their returns by tactically managing risks and protecting their portfolios from the market’s worst days.

Chart #4. Trading vs. Investing: Strategic Considerations for 2025

The evidence presented by three charts above and anticipation of the stock market behavior as in Chart #4 below, combined with the tools available to active traders, clearly delineates the different approaches required for trading versus investing. In an environment forecasted to yield only modest long-term growth, active trading offers a viable strategy to outmaneuver market volatility. Traders can utilize inverse ETFs and sophisticated AI-driven systems like the Double Agent Trading Bot to hedge against downturns and capitalize on short-term market inefficiencies.

For long-term investors, the risk lies in the potential of missing the market’s most significant upswings. Despite the appeal of a fully invested portfolio, the historical data suggests that a few key trading days account for a disproportionate share of overall returns. Therefore, maintaining full market exposure is essential for capturing long-term growth, even if it means enduring short-term fluctuations.

The Importance of Inverse ETFs for Hedging

In this challenging market environment, the use of inverse ETFs has emerged as a crucial tool for active traders. Inverse ETFs are designed to move in the opposite direction of a specific index or asset, allowing investors to profit from market declines. They achieve this by utilizing derivatives such as futures contracts and swaps.

Inverse ETFs are particularly valuable for hedging purposes. In an environment where market returns may be modest and the risk of severe downturns is heightened, these instruments allow traders to offset potential losses by providing short exposure without the need for a margin account. However, they are best used as part of a broader risk management strategy, given their higher expense ratios, potential tracking errors, and the compounding effects that make them unsuitable for long-term investments.

The Role of Agentic AI and the Double Agent Trading Bot

Another significant advancement that bolsters the case for active trading in 2025 is the evolution of trading technology. At the forefront is the Double Agent Trading Bot, powered by Agentic AI. This cutting-edge system leverages a multi-agent framework to deliver several key advantages:

  • Real-Time Responsiveness:
    The system adapts to market fluctuations within milliseconds, a critical capability in volatile environments. This real-time responsiveness ensures that trades are executed at optimal moments, capturing fleeting opportunities.
     
  • Robust Risk Management:
    The Double Agent Trading Bot integrates complementary strategies that mitigate risk. Losses in one segment of the portfolio can be offset by gains in another, preserving overall stability even during market downturns.
     
  • Enhanced Precision:
    Each specialized agent within the framework conducts focused analysis, resulting in more accurate trade execution. This precision reduces the likelihood of errors and optimizes the timing of entry and exit points.
     
  • Elimination of Human Bias:
    By relying on automated, data-driven decision-making, the system removes the emotional and psychological biases that often compromise manual trading. This leads to a more disciplined and consistent trading strategy.
     

These technological advancements underscore the potential for active trading strategies to not only mitigate risk but also to capture enhanced returns in a market environment where traditional investment strategies may fall short.

Example: AI Trading Double Agent – Outperforming Alphabet Inc. (GOOG)

The modern trading landscape demands speed and precision, and Agentic AI is revolutionizing the field with multi-agent architectures. One such innovation is the Double Agent Trading Bot, a cutting-edge system designed to capitalize on both bullish and bearish market conditions. By combining advanced pattern recognition with strategic hedging, particularly through inverse ETFs, this bot provides an intelligent and adaptive approach to autotrading. Its dual-strategy framework enables traders to navigate volatile markets more efficiently, making it a powerful tool for both seasoned and novice investors.

 

Inverse ETFs play a crucial role in this strategy by offering a means to profit from declining markets. These funds are engineered to move inversely to a specific index, allowing traders to hedge against downturns without short-selling. For instance, if the S&P 500 drops by 2%, an inverse ETF tracking the index is expected to gain roughly 2%. Such ETFs are commonly used for short-term hedging due to their susceptibility to compounding effects and tracking errors over extended periods. The ProShares UltraShort QQQ (QID), for example, is one such inverse ETF based on the NASDAQ-100 index, making it a viable hedge against tech-sector volatility.

 

Anti-correlated Dual-Strategy: Two Masters for GOOG and QID

This dual-strategy approach of two anticorrelated tickers ensures adaptability and enhanced profitability in both bullish and bearish market trends.

BUY LONG: Google LLC (GOOG), a subsidiary of Alphabet Inc., is a leading provider of internet-based search and advertising services. Its core business areas include advertising, search, platforms and operating systems, as well as enterprise and hardware products. Over the past week, GOOG experienced a +2.02% price change, outperforming the average weekly growth of +1.27% across the Internet Software/Services industry. However, the industry's average monthly price growth was -7.45%, indicating some volatility in the sector. Despite this, GOOG's steady quarterly growth of +1.32% suggests resilience in the market.

Buy LONG AS A HEDGE: ProShares UltraShort QQQ (QID), an ETF designed to perform inversely to the NASDAQ-100 index, offering potential downside protection in volatile market conditions. 

Revolutionizing Trading Environments

 

The Double Agent Trading Bot offers much more than its dual-strategy framework. In an era driven by algorithmic and high-frequency trading, its ability to seamlessly adapt to both bullish and bearish market signals distinguishes it from traditional models. Harnessing the collective intelligence of specialized agents, the system delivers unmatched precision and risk management, establishing itself as a game-changer in the world of modern autotrading.

 

Summary 

The traditional buy-and-hold strategy is being challenged by current market conditions—low liquidity, subdued economic participation, and the influence of Trump-era policies. These factors suggest that active trading strategies, which leverage tools such as inverse ETFs and advanced trading bots, may be more effective in managing risk and capitalizing on short-term opportunities. While long-term investors must remain fully invested to capture the market’s best days, active traders can potentially boost returns by avoiding the worst days, depending on their risk tolerance and expertise.

In this context, innovations like Agentic AI’s Double Agent Trading Bot are emerging as key tools for modern traders. This sophisticated system integrates inverse ETFs and a multi-agent framework to offer both intraday and swing trading strategies, ensuring precise, real-time, and unbiased decision-making. Such technologies empower traders to manage volatility more effectively, paving the way for smarter, more efficient autotrading.

Disclaimers and Limitation

Related Ticker: SPY, QQQ, TSLA, DIA

SPY's RSI Oscillator ascends from oversold territory

The RSI Indicator for SPY moved out of oversold territory on April 09, 2025. This could be a sign that the stock is shifting from a downward trend to an upward trend. Traders may want to buy the stock or call options. The A.I.dvisor looked at 21 similar instances when the indicator left oversold territory. In of the 21 cases the stock moved higher. This puts the odds of a move higher at .

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

The Momentum Indicator moved above the 0 level on April 25, 2025. You may want to consider a long position or call options on SPY as a result. In of 70 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .

The Moving Average Convergence Divergence (MACD) for SPY just turned positive on April 22, 2025. Looking at past instances where SPY's MACD turned positive, the stock continued to rise in of 52 cases over the following month. The odds of a continued upward trend are .

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where SPY advanced for three days, in of 367 cases, the price rose further within the following month. The odds of a continued upward trend are .

SPY may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.

Bearish Trend Analysis

The Stochastic Oscillator has been in the overbought zone for 1 day. Expect a price pull-back in the near future.

The 50-day moving average for SPY moved below the 200-day moving average on April 16, 2025. This could be a long-term bearish signal for the stock as the stock shifts to an downward trend.

Following a 3-day decline, the stock is projected to fall further. Considering past instances where SPY declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .

The Aroon Indicator for SPY entered a downward trend on April 10, 2025. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.

Notable companies

The most notable companies in this group are Microsoft Corp (NASDAQ:MSFT), NVIDIA Corp (NASDAQ:NVDA), Apple (NASDAQ:AAPL), Amazon.com (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG), Alphabet (NASDAQ:GOOGL), Meta Platforms (NASDAQ:META), Broadcom Inc. (NASDAQ:AVGO), Walmart (NYSE:WMT), Eli Lilly & Co (NYSE:LLY).

Industry description

The investment seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P 500® Index. The trust seeks to achieve its investment objective by holding a portfolio of the common stocks that are included in the index, with the weight of each stock in the portfolio substantially corresponding to the weight of such stock in the index.

Market Cap

The average market capitalization across the SPDR® S&P 500® ETF ETF is 107.4B. The market cap for tickers in the group ranges from 7.11B to 3.15T. MSFT holds the highest valuation in this group at 3.15T. The lowest valued company is TKO at 7.11B.

High and low price notable news

The average weekly price growth across all stocks in the SPDR® S&P 500® ETF ETF was 5%. For the same ETF, the average monthly price growth was -3%, and the average quarterly price growth was -4%. NOW experienced the highest price growth at 22%, while FI experienced the biggest fall at -15%.

Volume

The average weekly volume growth across all stocks in the SPDR® S&P 500® ETF ETF was -6%. For the same stocks of the ETF, the average monthly volume growth was 2% and the average quarterly volume growth was 30%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 60
P/E Growth Rating: 50
Price Growth Rating: 53
SMR Rating: 50
Profit Risk Rating: 42
Seasonality Score: -6 (-100 ... +100)
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