How Low Can Stocks & Crypto Go? October 27th, 2025
The partial government shutdown, Earnings and Inflation are in Focus
Bottom Line: My first rule of money... Never let your money and emotions cross paths. This story is a weekly wake-up call to show you the near-worst-case scenario for stocks and crypto. Why? So, you can plan your financial future with a cool head, not a racing pulse. The odds of a near-worst case outcome almost certainly won’t happen, however if your plan accounts for it – it can help you manage even the most trying markets like what we’ve experienced this year.
The US stock market is history’s ultimate wealth-building beast. Crypto? It’s minted millionaires from early believers. Fact: Over 90% of the time, investors who try to “time” the market end up poorer than if they just stuck to their original investments. This is about dodging that trap.
Here’s how the big three indexes are faring in 2025 so far:
- DOW: +11% (+2% last week)
- S&P 500: +16% (+2% last week)
- Nasdaq: +20% (+2% last week)
The partial government shutdown continues as it’s nearing four weeks in length, though you wouldn’t know it based upon the performance of the financial markets. Stocks moved to record highs yet again on Friday as inflation came in lighter than expected, and earnings continued to be stronger than expected as well. The remarkably durable bull market has consistently climbed the wall of worry this year as tariff policies largely haven’t had the out-sized impact alleged experts have suggested would have been the case, ditto that of the partial government shutdown most recently as well.
The Consumer Price Index report showed inflation pacing 3% over the past year, which was still higher than August, however, excluding food and energy prices the annualized rate would have been 2.6% - lower than expected and the inflation rate in August. Most recently energy prices have been trending lower – leaving room for optimism that perhaps the overall rate may trend lower from here. As for earnings...
Through Friday, 29% of companies reported earnings. The average increase in earnings year-over-year is 9.2%, a number pacing ahead of the 7.9% increase in earnings expected coming into the reporting season. Heading into this week, aside from shutdown related matters, eyes will largely be on the Federal Reserve pertaining to interest rate policy. Investors have priced a 98% chance of a quarter point cut on Wednesday into the market.
As for cryptos...
Here’s a look at where they stand.
- Bitcoin: +5%, +19% YTD
- Ether: +3% last week, +20% YTD
- BitwiseETF (Top 10 cryptos): +6%, last week +19% YTD
I can’t value cryptos because they have no inherent value. Stocks, though? They’ve got bones. Let’s break down the S&P 500:
- Current P/E: 31.50
- Historic Avg. P/E: 16.18
Translation: On earnings alone, the maximum downside risk is a 49% drop from here—slightly higher than last week as prices rose faster than fundamentals. The market is historically expensive as it’s priced at the highest multiple of the current bull market cycle.
So, What’s Your Move?
If a 49% dip wouldn’t derail your life, you’re probably golden. If it would? Time to call a pro and build a plan that doesn’t leave you sweating bullets—or making mistakes.