The Institutional Risk Analyst

The upsurge in the price of gold during 2025 has surpassed the rate of increase for stocks and crypto tokens, begging the question as to whether the world is headed back to the future in term of money. Yet for most investors and nations, gold remains at the apex of value in terms of monetary assets, with fiat currencies next in line and crypto still occupying the periphery in terms of mediums of exchange.

If we were to select one characteristic that describes the financial markets today it would be confirmation bias. The human tendency to interpret new evidence as confirmation of one's existing beliefs or theories is among the most powerful and dangerous trends in financial markets, especially when the predominant passive investment strategies favor a net-long position. Nowhere is confirmation bias more apparent than the market for private-equity backed IPOs. 

If we told you that large cap financials are outperforming both the S&P 500 and bitcoin over the past month, what would you say? 

The proliferation of low- or no-cost coin systems is ultimately negative for established players in nonbank finance and payments, including the major card issuers, as we discuss below.  Still worried about interchange fees?

The common penny stocks of these two appendages of the state, Fannie Mae and Freddie Mac, are up over 600% in the past year, generating huge gains for the likes of Bill Ackman and John Paulson. Bitcoin is up a paltry 50% LTM. Indeed, much like old fintech stocks such as PayPal (PYPL) and Block Inc (XTZ), bitcoin seems to be losing the special novelty that always seems to drive these manic stories. Is bitcoin now just another boring Wall Street ETF?

At one point last year, HOOD was up several hundred percent, but has given back much of those gains. Yet the leaders of our finance group have outperformed the broad market.

While GHLD provides a lot of good information about their business, the investor disclosure provided by UWMC is a bad joke, especially when you remember that UWMC is the largest nonbank lender in the US. The Q1 2025 press release is just 9 pages in length and lacks some of the most basic financial information available from UWMC’s peers.

TD was up about 6% over the past three months, the only name in our test group with a positive three-month market return, of note.

Like 2023 and 2024, the year 2025 may end up being relatively stable, yet investors remain worried about stealth externalities.

And just why do financial firms like HOOD, SoFi Technologies (SOFI) and Block (XYZ) talk about EBITDA in their investor materials?

Like many names in the fintech space, growing profits and earnings are usually an indication that a stock is exiting max upside period