The Year of the Red Horse

Every year after Chinese New Year, I write a short blog about global economies and markets, viewed through the lens of Chinese astrology. The Chinese calendar follows a 60‑year cycle, combining twelve animals with five elements — wood, fire, earth, metal, and water. 

This year’s animal is the horse, and the element is fire. So, if you put the two together, you get a horse on fire. Yes — a red horse. 

Now, we all know the horse is a highly energetic animal. Fire, unsurprisingly, is full of power too. Combine the two, and you end up with something extremely energetic — perhaps too energetic. A red horse, after all, isn’t the easiest thing to keep under control. 

Traditionally, a year of the red horse has often been associated with great disturbance. The last red horse year was 1966. I’m not sure there were many earth‑shattering events that year… apart from the escalation of the Vietnam War and the start of the Cultural Revolution in China. And, for England football fans, it was also the year we won the World Cup. So who knows — maybe this is finally the year England wins the title again? 

If this year is all about energy, then perhaps the energy sector will perform well. Other fast‑paced, high‑octane industries like technology could continue to shine. Maybe the red horse will reward those who believe in AI’s impact on global economies. Perhaps Kevin Warsh could even use Chinese astrology to help justify his optimism about AI-driven productivity this year.

Of course, an energetic red horse is hard to rein in. So don’t be surprised if market volatility sticks around. Unpredictable geopolitics may become even more unpredictable, and the ups and downs of markets could unsettle some investors. The key, as always, is to stay focused on the long term and spend time in the market rather than trying to time it. 

In fact, in a red horse year, the best antidote to the intensity, noise, and volatility is to stay cool, calm, and flexible. Or, as Bruce Lee famously put it: “Be water, my friend.” 

James Chu, CFA

Head of Investment Solutions