2025 will be remembered as the year of inversions—when established market relationships flipped, forcing a complete rewrite of investment playbooks. Five major inversions defined the year, and understanding them is essential for navigating what comes next.
These aren’t temporary fluctuations. Each inversion reflects a structural shift in how markets price risk, growth, and value. Together, they signal a regime change that demands updated mental models for investors and strategists alike.
1. Growth vs. Value: After years of growth dominance, value stocks outperformed—not because growth slowed, but because valuation discipline reasserted itself.
2. US vs. International: The American exceptionalism trade showed cracks as capital discovered opportunity elsewhere.
3. Large vs. Small Cap: Size stopped guaranteeing safety as nimble smaller companies exploited AI-driven productivity gains.
4. Public vs. Private: The liquidity premium inverted as public markets offered better risk-adjusted returns than illiquid private deals.
5. Safe vs. Risk Assets: Traditional safe havens underperformed as investors recognized that perceived safety came with hidden costs.
The Pattern Within
These inversions share a common driver: the market repricing what actually delivers returns versus what merely feels safe. Years of extreme monetary policy distorted relative values; 2025 marked the normalization.
For strategists, inversions demand second-order thinking. The obvious response—simply flipping positioning—misses the point. The lesson is that all market relationships are conditional, not permanent.
Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
