Felix Zulauf, the renowned market strategist and founder of Zulauf Consulting, has a knack for calling market turns. From predicting the early 2025 stock market correction of 15-20% to anticipating increased volatility, his insights are closely followed by institutional investors and family offices globally. So, what’s his latest take on the markets, and how can you leverage it for your own portfolio?

Zulauf sees 2025 as a crucial transition year, potentially presenting a significant buying opportunity later this year. He believes we might retest S&P 500 lows (around 4500) by May 2025, before setting the stage for a substantial rally in 2026 and 2027. This article serves as your hub for understanding and acting on Zulauf’s latest investment strategy. We’ll break down his thinking and point you to deeper dives on specific aspects of his approach.

Understanding Zulauf’s Macroeconomic Outlook: A Rocky Road to Recovery

Zulauf’s current strategy is rooted in a specific macroeconomic outlook. He anticipates a volatile environment driven by factors like global liquidity contraction and persistent trade tensions. This analysis spans across global interest rates, currencies, monetary and fiscal policies, economic measures, and even political activities.

He highlights the increasing risk of a global recession in the latter half of 2025 – estimating a greater than 50% probability. This recessionary environment, while concerning, could create the “buy the dip” opportunity he’s been anticipating, which could lead to an aggressive buying spree for a potential two-year rally.

Given this outlook, Zulauf recommended a defensive investment posture at the beginning of 2025. This included reducing equity exposure, avoiding long-duration bonds, and increasing holdings in safer assets like T-bills and gold. The key is to preserve capital now, positioning yourself to capitalize on the opportunities that arise during the expected market pullback.

Here are key actions to consider from Zulauf’s outlook:

  • Reduce Equity Exposure: Take profits where appropriate and trim positions in overvalued stocks.
  • Avoid Long-Duration Bonds: Rising interest rates could negatively impact long-duration bonds.
  • Increase T-Bill Holdings: T-bills offer a safe haven and a decent return in a volatile environment.
  • Consider Gold: Gold historically performs well during times of economic uncertainty.

Sector Selection: Key Industries for a Two-Year Rally

While a broad market rally is expected in 2026-2027, certain sectors are likely to outperform. Zulauf Consulting provides in-depth sector outlooks to help investors make informed allocation decisions. Identifying these sectors now and understanding their potential in a recovering economy is crucial for maximizing returns. This is a critical piece in understanding his longer-term vision for 2026-2027.

Capitalizing on Currency and Commodity Fluctuations

Zulauf Consulting also closely monitors currencies and commodities, including precious metals, oil, and agricultural products. Understanding the interplay between these assets and the broader market environment can provide additional opportunities for profit. For example, fluctuations in currency values can impact the profitability of international investments.

Preparing for the Future: Building Dry Powder

Zulauf’s core strategy for the remainder of 2025 revolves around building “dry powder” – holding cash reserves to deploy when the market dips. This involves carefully managing your portfolio to ensure you have sufficient capital available to take advantage of the anticipated buying opportunity. It’s about patience and discipline, waiting for the right moment to strike.

Zulauf’s perspective emphasizes the importance of adapting to evolving market dynamics. His analysis and commentary on global stocks and bonds help his clients to make the necessary adjustments. Instead of blindly following trends, Zulauf advocates for a strategic approach based on sound macroeconomic principles and rigorous research. His target of 7500 on the S&P 500 for 2027 demonstrates substantial potential upside, but only if you’re strategically positioned to capture it. The next 1-2 years will be key for maximizing value and timing the market.