HX Weekly: September 22 - September 26, 2025

Hello reader, welcome to the latest issue of HX Weekly!

Each Friday, we bring you a new edition of HX Weekly that includes three distinct sections.

In the first section, Thoughts on the Market, we'll offer insights into current economic and market news.

In the second section, HX Daily Redux, we'll revisit investing concepts, tactics, and more from past issues of HX Daily.

And in the third section, Market Wizard’s Wisdom, we’ll share thoughts, quotes, and theories from the greatest investing minds of all time.

Now, let's dive in!

Thoughts on the Markets

The $1 Billion Pizza and Bitcoin’s Next Breakout

A Pizza Order That Changed Everything

On May 22, 2010, a Florida programmer named Laszlo Hanyecz made history when he paid 10,000 bitcoin for two Papa John’s pizzas.

At the time, the transaction was more of an experiment than a purchase.

Bitcoin was a curiosity in small online communities, mined on personal computers and valued at less than half a cent per coin.

No one knew if this strange new digital currency could be used for anything practical. Hanyecz wanted to prove it could.

He found someone willing to send over two pizzas in exchange for his coins, and “Bitcoin Pizza Day” was born.

Of course, hindsight makes the story legendary.

The 10,000 bitcoin he spent that day were worth about $41. At Bitcoin’s peak this summer, that same stack of coins would have been valued at over $1.2 billion!

What started as a novelty order for pizza became the most expensive lunch in history.

More importantly, it was the first time anyone had used cryptocurrency to buy something in the real world.

The experiment worked, and a global financial revolution was set in motion.

Bitcoin’s Simple but Powerful Design

Bitcoin’s first use case was simple. Move coins from one wallet to another without relying on a bank or middleman.

But simplicity turned out to be its greatest strength.

The network was secure, transparent, and decentralized. It had a hard supply cap, which meant no one could water it down or inflate it away.

And like gold, it could be divided into smaller and smaller units, making it useful for both large and small transactions.

Bitcoin was designed to be a new kind of store of value, and over the past fifteen years, it has lived up to that design.

A Market Signal in 2025

This year, Bitcoin has once again proven itself as a technological curiosity and a powerful barometer for broader market trends.

Since January, Bitcoin has shown a remarkable pattern. Each time equity markets stumbled, Bitcoin had already pulled back in advance.

And when stocks began to find their footing, Bitcoin was already climbing higher.

Far from being just a speculative plaything, Bitcoin has behaved like an early signal for risk sentiment across the financial system.

Interestingly, gold has moved in near lockstep with Bitcoin for much of this period.

That may surprise some investors who view gold as a conservative hedge and Bitcoin as a high-flying gamble. But both are store-of-value assets, driven by investor appetite for alternatives to paper money and traditional equities.

Gold spent the first half of the year consolidating, only to break out to trade at or near all-time highs as summer turned to fall.

Apart from its “Tariff Liberation Day,” related selloff, Bitcoin has followed a similar path, surging to new highs in August before settling into a consolidation range of its own.

As you can see in the current year-to-date chart above, Bitcoin and Gold have recently diverged.

And therein lies the opportunity…

The Q4 Setup

Now the stage is set for the final act of 2025. The Federal Reserve cut interest rates once this year.

This was a cautious move meant to acknowledge slowing growth while keeping pressure on inflation.

As we head into the final quarter, investors watch closely for signs of another cut. If the Fed delivers, it could be the spark Bitcoin needs to break free from its current range.

Today, Bitcoin is holding its ground between its 100-day and 200-day moving averages, a technical zone that often acts as the launching pad for a new trend.

Traders call this “coiling the spring.”

Consolidation within those bands builds pressure, and it tends to be forceful when the breakout comes.

Combine that setup with renewed optimism for looser monetary policy, and Bitcoin appears primed for a fresh rally before the year's end.

In fact, Bitcoin made a big move in Q4 last year. Is it primed for a similar move now?

If we zoom out to a one-year chart of bitcoin compared to gold, you can see that bitcoin made a huge upward move in November 2024.

While much of that may be attributed to the results of the presidential election, it’s also crucial to remember the Fed cut rates on three occasions immediately before, and during, bitcoin’s Q4 ’24 pump.

Those cuts occurred on September 18 (0.50%), November 7 (0.25%) and December 18 (0.25%).

Does this setup look familiar to you?

History Meets the Future

None of this erases Bitcoin’s volatility.

Like gold, it can fall sharply when investors rush to safety.

But history shows that consolidation after new highs is often the pause before another leg higher, not the end of the story.

The pizza experiment fifteen years ago proved Bitcoin could function in the real world.

Its behavior this year suggests it has matured into something more.

It’s now an asset that reflects, and perhaps even predicts, the ebbs and flows of global markets.

The next time you hear someone dismiss Bitcoin as nothing more than speculation, remember the pizzas.

A novelty transaction turned into a global movement. A $41 order became a billion-dollar legend.

And today, Bitcoin stands at another crossroads.

With gold at record levels, equities searching for direction, and the Fed weighing its next move, the conditions are lining up for Bitcoin to write the next chapter in its remarkable story.

If the pattern of 2025 holds, Bitcoin may not just be along for the ride. It may once again be leading the way.

We're not telling you what to do, but it may be a smart move to put some money into Bitcoin at these levels ahead of Q4.

And hey, it’s Friday, treat yourself to a pizza. Just don’t pay in Bitcoin….

Until next time…

HX Daily Redux

Don’t Fight the Fed? The Impact of the FIRST Rate Cut

To complement our lead piece, we'd like to share a post we first published last September on rate cuts.

It's worth a fresh read.

Enjoy!

When you listen to the financial media, you will hear much talk about many "macro-economic" indicators. They discuss inflation, unemployment, economic growth, interest, the yield curve, and other factors.

On any given day, they will be emphasizing different factors.

There has been much discussion recently about the jobs report. We wrote about it a week ago today and explained what it really means for the stock market.

The key thing to remember when you listen to the media discuss these factors is that they are NOT on your side. They are not trying to educate you or make you a better investor, and they certainly are not trying to make you money.

They are trying to get you engaged. Most often, that means getting you worried.

We often discuss how human beings respond eight times more to negative stimuli than to positive stimuli. The media knows this, and that is why most of the news we hear is bad.

This plays itself out in an interesting way regarding the macroeconomic indicators.

Our favorite response when someone asks us about the impact of these indicators is – “It depends.”

We are not trying to be elusive but rather acknowledging that the movement of these indicators has different meanings at different points in the economic cycle.

This brings us to today's HX Daily topic: the impact of the Federal Reserve Bank's interest rate cuts.

As we are sure most of you know, the Fed is likely to make its first rate cut in several years at its upcoming September meeting.

From a big-picture perspective, this should be a good thing.

Lower interest rates reduce the cost of interest for both consumers and businesses.

Mortgage rates, auto loan rates, and credit card rates will go down, giving consumers more cash. Business loan costs will also go down, allowing businesses to make more investments.

So, the Fed's first rate cut should be good for the stock market. Is that correct?

Not necessarily if you listen to the media!

Recently, they have brought on many pundits who will tell you that the stock market tends to go DOWN most of the time after the first rate cut.

Here is the thing – they aren’t wrong. However, it depends.

Here is a great post from Grant Hawkridge on Twitter/X…

(By the way, you should give Grant a follow and subscribe to his newsletter. He does excellent work.)

This is a busy chart, but it has a great insight.

You can clearly see the line showing where the "First Cut" takes place. Then Grant differentiates between times when the Fed cuts rates gradually (blue) and rapidly (red).

The chart is quite clear—EVERY TIME the Fed gradually cuts rates, the stock market increases.

When they cut rates rapidly, the picture is much more mixed. Sometimes, it sends the stock market soaring, but most of the time, it drives it lower. In fact, the worst one-year performances are when they cut rates in this manner.

Why is this?

The reason is that if the Fed cuts rates rapidly, it is most often when the US economy goes into recession or some manner of crisis. Sometimes, it may be in response to an outside event (COVID), but mostly, it is done to "save" the economy.

The economy needing to be "saved" means it is in bad shape. When the economy is bad, the stock market is bad. That is a good rule.

Look at the dates on the bottom. You will see that these rapid rate cuts have only occurred in the last twenty-five years. They were in response to the collapse of the Internet Bubble, the Global Financial Crisis, and COVID-19.

Most investors know this, so they fear a rate cut, given the track record over the last quarter century.

Go back further, though, and you can see that in the previous two decades, the Fed cut rates mostly gradually. We wrote about this period last year here.

We wrote about how the US economy doesn’t always need to be in crisis.

Again, most investors weren’t investing twenty-five years ago and don’t remember those times.

Here at HX Research, though, we WERE! We were running hundreds of millions of dollars in the 1990s and remember these times clearly.

Do we think this is what is going to happen THIS time with the Fed rate cuts?

It is. We think the 1990s playbook makes a ton of sense andthat—unless there is a big outside shock—we are likely to see something like this play out.

Please don't listen to the media and fall into their engagement trap.

Do the work. Learn the history. Follow the data. It will make you a better investor!

Market Wizard’s Wisdom

Vanguard Value Master: John Neff

For this week's "Market Wizard's Wisdom," we're revisiting a note we first published last September about legendary value investor John Neff.

Neff is most well-known for building the value-focused Vanguard Windsor Fund. Over his 31-year career running Windsor, he compounded at a +13.7% annual return versus +10.6% over the same period.

Neff was born in Ohio on September 19, 1931. After graduating summa cum laude from the University of Toledo, he joined the investment firm Wellington Management Company.

Neff became well known in the 1970s and 1980s, when we saw the emergence of "star" mutual fund managers like Peter Lynch and Sir John Templeton. He was also known for his value investment style, which contrasted with many of the other star managers of his time.

Neff posted an admirable track record of consistency that stands out amongst his peers.

Here is some choice wisdom of his over the years…

We often explain how the "sell high" part of the famous saying "buy low, sell high" is the hardest part of the equation.

When the greed kicks in, and you feel like you have figured it all out, it is hard to maintain the discipline of trading.

To "buy low," though, you need to position yourself to take advantage of opportunities. The "sell high" move is the key to this.

One last note on this—and this is maybe the hardest one—do not ever regret making a big profit!

Enjoy your wins and avoid your losses. That is the psychological key to sustainable success.

One of our key mottos is “Do the Work.”

Like anything else in life, the key to success is preparation. We are not advocates for doing work for work's sake, but studying and refining your process is necessary.

Think about the importance of your money and the amount of research you would do if you were buying a house or starting a new business.

Do the same amount – or even more – when investing your money.

We think the "buy on the cannons" is the more powerful of the two.

We have had tremendous success during BEAR markets by putting our investors in a position to be able to buy during periods of maximum pessimism. Again, the "sell high" portion of the equation is necessary to put you in that position.

The biggest short-term returns in stock market history have ALL happened during these periods. Put yourself in a position to take advantage of them.

This is such an important statement.

Markets trend. That underlying trend should help define your investment process at the time.

The hardest part is that these trends eventually change, and it is not clearly obvious when these changes occur.

You need to have a process in place to deal with and adjust to these inflection points. These points can make or break your long-term investment success.

Adapting but having a short memory is a key to surviving in the stock market.

If you are unwilling to accept and learn from a loss while moving on, you will not ultimately be successful as an investor.

Losing is a guarantee in the stock market. Master losing, and you will set yourself up to win.

We hope that you’ve enjoyed this week’s issue of HX Weekly…

Do you have any thoughts, questions, or feedback? Tell us more in the comment section or at [email protected].