2025: A Double-Edged Sword for Investors and Real Estate

Don’t worry. The world is not really one fire. This is a world shifting its weight. In 2025, investors find themselves in a geopolitical environment that feels unfamiliar. Headlines filled with trade wars, rising authoritarianism, and saber-rattling over tech and resources. But unlike previous eras, the global economic system is too interwoven, and too fragile, to respond cleanly. We’re watching tectonic plates grind.

Below is an adversarial breakdown of my random thoughts and what this might mean for capital allocators, particularly in real estate, where I measure my decisions in years, not quarters.

Macroeconomic Volatility: Chaos or Calibration?

The Return of Industrial Policy and Tariffs

Argument:
The U.S., China, and parts of Europe are leaning into protectionist policies. From semiconductor bans to steel tariffs, national governments are weaponizing supply chains in the name of national security. On the surface, this creates short-term dislocation but long-term opportunity for domestic industry. Which seems to be our president’s main point here. Bringing all these resources back home ensures operational security as well ensuring America’s dominant position as resource independent.

Devil’s Advocate:
But the idea that reshoring and “Made in America” will be a net positive assumes we can replicate global efficiency at home. What if rising labor, material, and compliance costs choke margin before manufacturing even gains traction? What if this new nationalism is structurally inflationary? And can America afford the burden of all the tax incentives needed to make financial sense of manufacturing on American soil? As Adam Smith says in the Wealth of Nations “To expect that the freedom of trade should ever be entirely restored in any country is as absurd as to expect that Utopia should ever be established in it.”

Persistent Inflation or Overstated Panic?

Argument:
Supply shocks, fiscal expansion, and demographic shifts (shrinking labor pools) point to an inflationary era that won’t be tamed by rate hikes alone. This challenges the entire financial model for real estate and long-dated assets. We are all seeing increases in pricing for raw materials like lumber and concrete, and also a decrease in skilled labor needed to complete certain trades. This has made it entirely entirely unaffordable to develop new product like we have been doing in the past 12 years.

Counterpoint:
Yet inflation has historically proven to be cyclical. With rising prices, and construction demand dwindling, we historically have seen a compression in contractor margins and a return to a lower labor cost. With consumer demand softening globally, the disinflationary forces and aging populations could resume and balance the overall cost again. And new construction techniques including standardized panelling and pre fabrication are allowing us to reduce the overall need of skilled labor.

The U.S. Dollar Is Still King—For Now

Argument:
Yes, the U.S. dollar is still the world’s reserve currency. Yes, when there’s a crisis, capital runs to Treasurys, not the yuan or the pound. And yes our president is selling treasuries to the global market like a car salesman at the year end sale. The global financial system is dollar-clearing, dollar-settled, and dollar-indexed. Trillions in oil contracts, debt issuances, and cross-border transactions are priced in greenbacks. The infrastructure of dollar dominance—clearing houses, U.S. custody banks, SWIFT, Fed liquidity—still gives America global monetary power. You can’t unwind that overnight.

But here’s the real question: Is the dollar strong—or just the cleanest dirty shirt in the laundry?

1. Two Credit Downgrades in 10 Years
Moody’s just followed Fitch and S&P in sounding the alarm. The U.S. is no longer AAA by most standards. This isn’t just about politics, it’s simply about debt-to-GDP ratios above 120%, interest payments surpassing defense spending, and structurally unfixable entitlement liabilities. This is the canary dying in the coal mine and we’re still printing.

2. A Weakening Dollar Is a Tax on Global Trade
If the dollar weakens further, it makes every transaction denominated in USD more expensive. That doesn’t just hurt U.S. imports. It gums up global trade. Emerging markets suffer. Energy markets tighten. The global system gets brittle. And eventually, players start looking for exits.

3. BRICS May Be a Joke, but De-Dollarization Isn’t
Nobody’s saying the yuan will replace the dollar. That’s fantasy. But central banks are reducing dollar holdings. China and Saudi Arabia are signing non-dollar energy deals. Even France cleared a trade in yuan. These are the tremors before the tsunami.

4. U.S. Political Dysfunction Isn’t Just Embarrassing, It’s Threatening our entire way of life
Repeated debt ceiling standoffs. Shutdown threats. Fiscal cliff nonsense. Eventually, capital calls your bluff. If D.C. keeps treating the full faith and credit of the U.S. like a poker chip, the bond market will enforce discipline the hard way.

Real Estate: Still a Safe Haven or the Next Casualty?

Physical Assets in Times of Uncertainty

Argument:
Real estate offers something the markets can’t, tangibility. You can touch the building. Lease the space. It’s seen as an inflation hedge, a scarcity play, and an income generator all at once.

Counterpoint:
But that logic only works if you can afford to sit on it like an unhatched egg. In a market where financing is expensive, tenants are thinning, and insurance costs are exploding, physical assets become physical liabilities. Cash is King.

Domestic Migration and Sunbelt Myths

Argument:
The Sunbelt continues to draw incredible population and investment. Texas, Florida, Tennessee—lower taxes, friendly zoning, and demographic growth. Miami is ridiculously called Wall Street South. New York is under attack as a global city.

Counterpoint:
But those same markets are now overheated. Historically highly cyclical and uninsulated markets, they’ve all boomed and busted over the years. Insurance costs in Florida are up over 40 percent year-over-year. Infrastructure is buckling under the pressure of putting kids in school and the sheer number of people that need to flush a toilet. Multifamily supply is surging and roads are crumbling. Not every city is ready for the growth and if we can learn anything from China’s crumbling ghost apartment scandal, its that we need to prepare for the cycles.

Global Capital Is Still Chasing U.S. Core

Argument:
Despite geopolitical tensions, sovereigns and institutions are still targeting U.S. core assets in gateway cities, trophy buildings, stabilized multifamily. They want income. They want safety.

Counterpoint:
How much of this capital is liquid though? Currency risk, local regulations, and capital controls are slowing cross-border flows to the ice age. Can the US survive if global investment shrinks?

Strategic Behavior in an Uncertain World

Is Boldness Foolish or Necessary?

Argument:
In a chaotic environment, the winners are often the ones who move first. The best assets are bought when nobody else is bidding. The best deals are written when others are afraid.

Counterpoint:
But boldness without discipline is suicide. Most “brave” investments made in 2021 now look like reckless bids. Moving fast doesn’t guarantee victory. Sometimes it guarantees exposure.

The Takeaway:
Move when others are stuck but rely on your fundamentals that you built over years and a generation. Boldness is nothing without discipline. And unfortunately we eventually need to strike at people’s misfortunes.

Can the U.S. Navigate Its Own Internal Instability?

Argument:
For all the chaos abroad, the U.S. still has the rule of law, the world’s deepest capital markets, and a transparent real estate system. That alone makes it unbeatable.

Counterpoint:
But it also has a dysfunctional Congress, looming debt crises, and structural urban decay in major cities. If we keep treating the Fed like a magic wand and real estate like a pension plan, we may be deluding ourselves. How long before the house of cards falls?

What Are You Actually Prepared For?

Argument:
The best investors today aren’t trying to predict, they’re preparing. Scenario planning, liquidity stacking, off-market sourcing. That’s how we win.

Counterpoint:
But preparation is often code for inaction. Sitting on the sidelines can feel smart until the window closes and you’re left watching. I am mostly frozen still, looking at deals that only made sense in the zero interest environment and wondering why I bothered ruining my tee time to look at it. But if you don’t look, you don’t find the needle in the haystacks. We need to keep our eyes open.

Final Word

There are opportunities. No question about it. But its also not for the faint of heart. Nobody will be coming to save us this time so we need to remain steadfast in our theses and execution.

In this environment, your edge isn’t bravery or size. It’s clarity. The boldness to act the moment the facts support it and the discipline to wait when they don’t.

– AM

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