Last year, Dan Niles said that stocks were likely to have a big year, and indeed they did. When we spoke early in 2024, he was advocating long positions in Amazon (AMZN), Meta (META) and Chinese tech (KWEB) alongside biotech stocks (XBI). That core bullish equity view proved prescient, the two Mag 7 trades were indeed magnificent, and even those latter two trades had moments of glory despite underperforming.

This year, his tune sounds quite different. 

Cash is the best move for 2025, Niles told me in the latest episode of Market Overtime, which features an in-depth macro discussion with several stock and sector-specific analyses as well. We also talk a bit about how Niles gained a reputation for tech-stock expertise, given his quantitative background as an engineer and experience in the tech workforce early on in his career.

For technology, his favorite pick is Cisco Systems (CSCO). This is an interesting one to me because it arguably threads the needle between Magnificence and Value. It had a choppy start to the Artificial Intelligence trade but eventually made a big move in the second half of last year and is one of the few true tech giants that hasn’t had a formal technical breakout on its chart yet. But as I write, it’s only about four bucks away from getting there.

Niles’ call for a big cash position stems from his concern about a fresh wave of inflation in the economy that will require the Fed to raise rates in reaction to consumer strength and pro-U.S. fiscal policies by the second Trump administration. While markets are looking for cuts to begin in the fall, and some Fed speakers like Christopher Waller see multiple happening this year, Niles says there’s a 50% chance the central bank stays on hold or has to raise rates by late 2025.

Check out the full interview for details:

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