WEF2025: Final Wrap-Up and Actionable Takeaways

Last year at Davos, my focus was on exploring investment themes around natural capital and climate tech through sessions and conversations. This year, I shifted gears to pay closer attention to opportunities in areas like industrial renaissance, banking dynamics, and the next phase of AI, where actionable insights are emerging.

Trump 2.0: Politics, markets, and the investor’s dilemma

Even as someone who tends to avoid macroeconomic debates, I couldn’t escape the focus on President Trump’s return to office at this year’s WEF. The excitement surrounding the new administration—spanning growth, deregulation, innovation diplomacy, including the revitalization of the Abraham Accords—dominated many discussions. As someone who values progress in the Middle East, I found this renewed attention particularly compelling. While optimism was high, it was also tempered by concerns over broader economic risks.

Ken Rogoff brought the room back down to earth with a sobering analysis of the challenges facing the U.S. dollar. He highlighted rising inflation, escalating national debt, and the potential for currency wars, cautioning that parallels to the 1970s shouldn’t be ignored. While his concerns are valid, the actionable implications for investors remain less clear. These risks are not new, nor do they lend themselves easily to direct investment strategies.

Discussions around the new US administration also touched on market-specific debates, such as the ongoing situation with Fannie Mae (FNMA). Frequently referred to as a “Trump trade,” Fannie Mae’s future depends on whether it could exit conservatorship under the new administration. Personally, I’ve avoided speculative bets like this. Instead, I focus on clear mispricing opportunities. For example, I bought FNMA at $1.52 in October and sold it at $3.31 in November—well before I became aware of Bill Ackman’s campaign. It wasn’t about betting on political outcomes but rather recognizing a defined market catalyst (FED policy) and attractive valuation.

On a forward-looking note, my conversations with delegates from India stood out as particularly compelling. With robust GDP growth of 6-6.5% and a growing reputation for high-tech innovation, India is cementing its position as a key player in the global economy. Strengthening U.S.-India ties across trade and technology further enhance its strategic importance. For investors, India offers a dynamic space of opportunities that cannot be overlooked.

Actionable takeaways: In this evolving geopolitical environment, I’ve identified opportunities in industrial and defense-related sectors. I’m long the First Trust RBA American Industrial Renaissance ETF (AIRR), which aligns with pro-manufacturing policies, and I hold Innovative Solutions & Support Inc. (ISSC), a company I believe is well-positioned to benefit from increased aerospace and defense spending. Additionally, I have been long Rheinmetall (RHM) for a while now, anticipating Germany finally waking up to the reality of boosting its defense capabilities. Beyond defense,? Allianz Global Investors ' India Equity Fund (LU2799986935) stands out as a top performer, capitalizing on India’s strong growth trajectory and its rising prominence in global trade and innovation.

Deregulation: A banking lobby narrative I don’t buy

I am not buying the narrative that the banking lobby tried to spread here in Davos this week. The argument centers on the supposed competitive disadvantage European banks face compared to their American counterparts, driven by lighter regulations in the U.S. “The Trump team is creating a ‘very pro-business environment,’” said J.P. 摩根 ’s Mary Erdoes, while Andrea Orcel of UniCredit warned about the dominance of U.S. banks in Europe. BlackRock ’s Philipp Hildebrand also called for Europe to ease its regulatory stance, albeit without triggering another financial crisis.

This rhetoric feels more like an effort to protect shareholder payouts than to address systemic issues. Calls for lighter regulations ignore growing vulnerabilities on bank balance sheets, from rising credit card defaults to deteriorating commercial real estate (CRE) loans and over-leveraged corporate debt. Credit card delinquency rates have reached their highest since 2012, with defaults expected to surpass 14-year highs this year. These risks are exacerbated by delayed implementation of Basel III rules, leaving banks ill-prepared for the challenges ahead.

I align more with 瑞银集团 CEO Sergio P. Ermotti , who advocates for regulatory simplification rather than sweeping deregulation. Simplifying overlapping requirements can enhance efficiency, but relaxing capital standards at a time when risks are rising would be dangerously shortsighted.

Actionable takeaways: Given the lurking pitfalls in the banking sector, I’ve taken positions in specific financial companies that I believe are navigating these risks effectively. For example, I hold OppFi (OPFI), which focuses on consumer lending with a strong emphasis on responsible practices, Kingstone Companies, Inc. (KINS), a property and casualty insurance company with cheap multiples that’s carved out a focused niche in the New York area, and Qifu Technology Inc. (QFIN), a fast growing Chinese fintech company specializing in innovative, technology-driven consumer lending solutions. For broader exposure, I added the SPDR S&P Regional Banking ETF (KRE) to my watchlist. It offers diversified exposure to regional banks, which often carry less systemic risk than larger peers.

AI after the hype

The main takeaway from Davos for me this year is that the next phase of AI will focus on evolving into agentic systems—learning from its users to adapt dynamically and proactively address challenges, avoiding the glitches of earlier generations of AI. Experts at the AI House Davos expect this phase to become reality starting in 2026 and beyond. One area where this is already happening today is cybersecurity. Platforms like Falcon by CrowdStrike dynamically and constantly learn from cyberattacks on any of their clients. By sharing attack data across the network, these systems self-learn and improve defenses in real time, making them increasingly effective.

In contrast, GenAI is currently not self-learning. Its capabilities are based on pre-trained models that rely on massive data sets curated at a fixed point in time. This static design leaves GenAI vulnerable to outdated knowledge and potential misuse, highlighting the gap between its current state and what systems like CrowdStrike have achieved in terms of adaptability.

Actionable takeaways: In cybersecurity, I’m particularly bullish on Allot (ALLT), an Israeli leader in deep network intelligence technology that has successfully transitioned into a cybersecurity company. Its SECaaS expansion with Verizon, particularly its Mobile Business Internet Security (MBIS) product, has the potential to add $90+ million in ARR long-term. Combined with major telecom partnerships like Vodafone, Allot’s turnaround and market positioning make it a key holding in my portfolio.