The Roaring '20s Economy and Stock Market
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On this podcast, we take you inside those conversations, the stories, the ideas, and the stocks to watch so you can invest smarter. Now, let's dial in.

Hello everyone and welcome to Barron's Live, our weekly webcast and podcast. I'm Lauren Rudland, Senior Managing Editor at Barron's. Thanks for joining us today for a market update. My guests are Barron's Deputy Editor Ben Levison and Dr. Ed Yardeni, President of Yardeni Research.

I wanted to close the year at Barron's Live with an external guest who has been right about the markets this year. And Ed's bullish call has certainly been right. We are big fans of your daily research here at Barron's. This is the last episode of Barron's Live this year. And I want to thank everyone for joining us. Ben and I have started to line up guests for 2025. So please, please let us know in the chat box about anyone you'd like to hear from in the year ahead.

And with that, let's dive into today's call. So, Ed, I'm going to start with you. You have put high odds on what you call your roaring 20s scenario. We know that America roared in the 1920s, but we're talking here about the 2020s. So based on the market's performance, so far, so good. So far, so good. Absolutely. But perhaps you can explain why you are so bullish on this decade and how you expect the rest of it to unfold.

Well, I first started talking about a roaring 2020 scenario back in 2019. So I started thinking about the decade ahead. And it just seemed to me that we were probably going to see a real shortage of labor, particularly skilled labor. And coincident with that, I saw the technology revolution. I call it the digital revolution, the digital revolution,

uh was uh evolving uh into uh more and more technologies that would allow us to process more and more data faster cheaper and that that could have tremendous impacts on productivity so the roaring 2020s is all based on productivity better than expected productivity growth which is what happened

in the 1920s. In the 1920s, we also had a whole host of technologies that basically fueled the industrial revolution back then, and standard of livings improved dramatically. People's real purchasing powers increased significantly. We had a great stock market. The only problem is it ended badly with the Smoot-Hawley tariff in June, in May of 1930.

And I suppose that's a risk up ahead here. We'll see whether the tariffs initiatives of the incoming administration causes economic mess anywhere like what happened back then. I seriously doubt it. And I think that if we couldn't get a recession after the Fed raised interest rates from zero to five and a quarter percent, I kind of think that the odds of a recession are pretty low

over the rest of the decade. And I do think better than expected growth, lower than expected inflation, record profit margins and real wages going up all make for a roaring 2020 scenario. And just to top it all off, I have the stock market going to 10,000 by the end of the decade, the S&P 500. And right into the 30s?

Yeah, I think it could really go right into the roaring at 2030s. There's no particular reason why it couldn't. I know that...

People have this notion that good times can't last forever. And that's kind of true. But, you know, we're largely experiencing good times with all the troubles we've had. The economy continues to perform remarkably well, as does the stock market. You know, basically, I would say I've been so far half right, right? Correct me if I'm wrong, but in the sense that we're already in the middle of the 2020s and it's been roaring.

That's why you're on today's call. As I said, we wanted to find somebody with the correct forecast. Thank you. I want to ask you, though, there are two potential issues in the near term, it seems to me. One is that the market is already richly priced. And the other is that the Fed, having yet to definitively conquer inflation, might actually slow the pace of rate cuts next year. And some economists think the Fed might be forced to raise interest.

rates. So let's start with the market's valuation. The S&P is trading for more than 20 times earnings. How much higher can it go? Well, clearly some of that has to do with the concentration of the market. The Magnificent Seven account for about 30% of the market cap of the S&P 500. They have a forward PE of 30. The rest of the market is about 19. It's getting close to 20.

So it's definitely not cheap, but it's not as though all stocks are selling at the same multiples as the Magnificent Seven. I'm assuming the Magnificent Seven are here to stay. These are remarkable companies. They are generating tremendous technologies. They are acquiring technologies that then they help to leverage up to bigger markets and

So I think they're here to stay. I think they will continue to account for a significant portion of the S&P 500 and therefore keep the multiple relatively high. Look, Lauren, I think the important thing on valuation to recognize is probably one of the key determinants is the perceptions, the expectations of how long the economy is going to grow.

If people really thought that the economy was going to fall into recession in the next six to 12 months, I doubt that the multiples will be this high. And as a matter of fact, when the bear market, the latest bear market ended, it ended with a forward PE of 15 because the market came around to agree with my position that despite the Fed's tightening, there might not be a recession after all. You know, we,

Over the past three years, we've had the most widely anticipated recession of all times that didn't happen. I call it the Godot recession, the no-show recession. And I had several explanations for why the economy would remain resilient. And now I think that that's become a recognized view.

I think people are willing to pay a higher P.E. because they believe that the economy has the potential to continue to grow without a downturn. And if that's the case, then that gives the market more time for earnings to grow into valuation multiples. Does that make sense to you? It does. But I do want to ask you how concerned you are about what the Fed might or might not do in the year ahead. Are you worried? I'm not cutting.

You know, I would say I'm not worried at all because I think they shouldn't have done what they've done already. You know, they have this bizarre idea that there's some sort of neutral fantasy mythical interest rate out there that they call our star, the neutral rate, the rate at which the economy is at full employment and inflation is down to 2%.

Well, Lauren, aren't we there? I mean, the unemployment rate's around 4%. I think that's full employment. The inflation rate's close to 2%. And we've done this, we've been doing this with a Fed funds rate that was 50 to 100 basis points higher only a few months ago, September 18th, that they started lowering the interest rate.

I think what they're risking is creating a melt-up scenario. The roaring 2020s is my base case, and I give that a 55% subjective probability. I also give 25% to a melt-up, kind of similar to what happened in the 1990s. I'm not rooting for that, but it's a real possibility. What's the difference between a melt-up and a roaring 20s?

Well, if the market keeps going up on valuation, I think it's a melt-up.

In other words, we're sort of at the edge here of where I don't want to see multiples go any higher. I'd much rather see an earnings-led bull market, and I think that's what we're going to have in 2025. I'm at the top end of the range of investment strategists on the street. I've got $285 a share for earnings in 2025. Everybody else is below that.

So I'm very optimistic on earnings because I'm optimistic on productivity in my roaring 2020 scenario.

All right, so the obligatory question, I guess, what could go wrong? What are you worried about? Well, that leaves the 20% subjective probability. That bucket's got everything that could possibly go wrong. For a while there, you know, I thought, well, maybe the geopolitical situations were pretty ugly in Russia, Ukraine, the Middle East was watching the price of oil. And I kept staring at it and it kept going down and not up.

I know, amazing. Yeah. I mean, in the past, recessions were caused by tightening a monetary policy. And we didn't think that was going to happen because we thought the economy had become less interest rate sensitive and consumers were going to spend because people my age, the baby boomers, were going to retire and spend their retirement assets. But then we thought, OK, so what else could cause a recession? How about a spike in oil prices, a shortage of oil and like the 1970s?

And that didn't pan out so far. Then we thought, okay, what else could do? So monetary policy tightening didn't do it. Wealth prices going up. Okay, Trump's coming in and he's going to come in with a lot of terrorization

And as I mentioned before, it could get out of hand. It could become a trade war that creates a Smoot-Hawley kind of situation. But I put that in the 20% bucket. I don't think that's a very high probability. I think Trump is using tariffs to a large extent as a negotiating stick. I think he does want to raise some revenues with it. And I think if he imposes a 10%, 15%, even a 20% tariff across the board, that actually will bring in some revenues.

But I don't think that's going to start a trade war. So I don't know. Help me, Lauren. What else? I have an optimistic attitude in life. So, you know, I'm always reaching out to the bears to tell me what else could go wrong. Oh, I know what else. How about a debt crisis? Well, you're implying that I'm a bear and I'm not going to go there. No, no, not at all, Lauren. I'm implying that you're...

You're very knowledgeable and you know a lot of bears and bulls. And so I just need some help here on what else could go wrong. And I think a debt crisis certainly is in the realm of possibilities. As you know, we had something like that in August, September, October of last year. Ray Dalio was going around implying it was imminent. And we got to 5% and then that was it.

Could we see 5% again in the bond market? Sure, we could see 5% in the bond market. But I think Trump has bought some time here with the bond vigilantes, the folks that I first kind of dubbed back in the early 80s. The bond vigilantes, I think, could take this bond yield up to 5%. But I think Trump bought some time by assigning Elon and

Vivek to deal with the Doge Boys, the

Yes, the Department of Government Efficiency. Yeah, the doge boys, the dogebusters. I mean, I see Elon Musk just tweeted that there's too many people working at the Fed, so we got to get rid of some other people there. I'm wondering whether he's working on starting from the bottom up or from the top down. Well, let's not touch that today. Okay.

And Ed, if I can ask, T. Rowe Price put sort of, I don't think it was their base case, but last week talked about 6% yields on the 10-year. Do you see that being a possibility? That's a possibility, but not very likely. I'd put 5% to 6% bond yields in a debt crisis, which I think that's what it would be. I would put that into the 20% bucket.

But I don't think it's very likely. Again, in my base case scenario, we get productivity. Productivity, every point that you get in better productivity growth, you get in real GDP. And real GDP growth that's led by productivity is very disinflationary because unit labor costs, which is hourly compensation,

divided by productivity, that's the underlying inflation rate. And that inflation rate right now is down to 2.2%. And if productivity rises to 2.5% to 3%, right now it's about 2%. So if it rises to 2.5%, 3%, we're going to get more real growth, less inflation, more real incomes to drive the economy, and better profit margins for better earnings.

So, Ed, I'm scanning the questions that are coming in as you're talking. Here's a fun one from John who asks, how has your thinking changed over the past 25 years when you were just as bullish? And right, I might add. Well, actually, I just finished writing a piece called Permabulls versus Permabears. And so I'm going to put that out shortly. And I've been accused of being a permabull.

And I view that as a compliment. I want my tombstone to say Ed Yardeni. I wanted to say Ed Yardeni, born 1950, died 2050. I'd like to live 100 years. I wouldn't mind living beyond that if all the parts still work. But I would like to say he was usually bullish and usually right. And I'm not bragging. I'm just looking at the stock market, and it usually goes up.

And so I would say that, generally speaking, I have been bullish. When the Cold War ended, economists were pessimistic about the economic consequences. I was bullish on it.

My biggest screw-up was Y2K. I thought that things might shut down. Well, it got enough press that nothing shut down. Everybody bought everything they needed to make the millennium transition easy. And then when they did that, we got a recession anyways because they'd already bought all their technology tools that they needed. But yeah, generally speaking, I've tended to...

Be bullish. And, you know, every time I try to be bearish, I realize there's too much competition there. There's too many really, really smart people doing great work on what could go wrong. And so I say, OK, I'll read them very carefully and see if I can add anything. And usually I can't. They're too good at figuring it out.

And then so I say, okay, so what could go right? And then I come out sounding like a permable because I try to provide some balance. So poor me, that's the way I'm labeled. I can live with it.

All right. I don't know if that was the intended part of the question, but whatever. So you mentioned earnings. And I want to ask Ben, usually we cover companies in the news reporting earnings during the week. Not a single company we follow is actually reporting earnings this week. So in the absence of earnings news, let's talk about the outlook for earnings for the fourth quarter of 2025. Tell me about your crystal ball, Ben. What does it say?

Well, I don't have a crystal ball. I think Ed does, but I can tell you what FactSet says. You know, FactSet sees earnings growth next year of about 15%. I think that's probably high just based on the fact that the estimate that they have for this year is probably going to go up because earnings always beat and

That means that their estimate for this year is probably higher than it actually is right now. And so you're looking at probably low double-digit earnings growth next year. And I think that seems to be a pretty good consensus on the street. Even among some of the bulls I was looking at,

uh georgetown bank they're seeing something along the lines of 11 and i think they are one of the more bullish uh um investment banks i think they have a target right around yours at around 7 000 or so for for next year um you know we've seen estimates come down a little bit but that i think is actually very typical um analysts always start out a little more bullish than um they

They need to be in bringing down estimates over the course of the year. And so we've come down from a peak in May, but it's looking pretty good for next year. I think as long as the economy is growing, those earnings will be too.

All right, Ed, remind us again, what was your earnings forecast? Yeah, so I'm using, I'm at the top of the range of Wall Street strategists, at least the ones that Bloomberg follows. And so I'm at 285. That would be up from 240 this year. I lowered my number this year. I think the Boeing strike had an impact, so did the auto strike. But 240 this year and 285 next year, that's almost 19%.

uh so yeah and again that's consistent with the roaring 2020 scenario which kind of looked delusional at the beginning of the decade but i think it's looking more incredible now

So we'll keep an eye on that. That's good growth for sure. This episode is brought to you by OutSystems, the AI-powered application generation platform for enterprises. Unlike simple Gen AI code suggesters, OutSystems lets you generate modern, governable enterprise apps in minutes, then automates the whole DevSecOps lifecycle from a prompt. The generative software cycle is here. Learn more at OutSystems.com.

Ben, there is one piece of, pardon the echo there, there is one piece of corporate news I did want to ask you about today. And that is the news that the Nordstrom family is planning to take its department store company private with the help of a Mexican retailer. I think we've seen this movie before. It's not the first time the Nordstroms have tried this. Is the latest deal a good one for non-family shareholders?

Well, this one looks like it may actually happen. And I was talking to our Andrew Barry about this, and he doesn't think so. He doesn't think it'll happen or he doesn't think it's a good deal. I mean, his words is that the North Street families are stealing the company. I'm not sure I would put it.

quite like that. Nordstrom is at the deal price, which I think is $24.25. The stock trades at around 12 times forward earnings, and that's quite a bit more than, let's say, Macy's, which I believe trades with a single digit multiple. Macy's is at 6.9. So it's quite a bit more than Macy's.

But it's also a very different company than Macy's. You do have Nordstrom Rack, which is an off-price retailer, and that's more akin to something like a TJX or Burlington. And those stocks trade with much higher multiples, I believe. TJX is at a 26 times, and Burlington is at...

is at 30 times. So those have higher multiples. So you could make the argument that they could be paying more for Nordstrom. But I think what we also have to remember is that the last time they tried to take Nordstrom private and they do this every, oh, I don't know, five, six years or so.

They were offering $50 a share rather than the 23 that they offered when this deal came out. Now the 24, 25 they've agreed to. So it's like half of where it was, which almost makes me think that, you know, I'm sure investors, you know, the shareholders wish they had accepted that deal in 2018. And I wonder what, you know, if you don't get a deal happening now, there will be a vote on it. Do they look back and regret that as well? But we'll find out.

Too late for regrets, but that's been the case with quite a few companies. Macy's has had higher offers too. And interestingly, we got two Chapter 11 filings by retailers over the past week. We had Party City and the Container Store. Any thoughts about that?

I mean, both of those have been struggling. Party City in particular. It's, I think, gone through this a number of times and it's finally going to liquidate. I just think the gap between the winners and losers in retail have really widened out. There are retailers that are doing quite well.

uh william sonoma is one um that uh has uh you know it's done extremely well and trades it over 20 times um and then you have others that struggle and i think that's uh you know it's it is one of these environments where as a retailer you have to be nimble you have to keep costs down and you have to have a customer base that will keep shopping with you and if you can't do that

you're in real trouble. But we're seeing a lot try to start figuring this out. We were bullish on the gap and the gap is starting to make these changes to sort of make their brands relevant again. And that's what's really important. And then you have to be nimble on costs. Keep those costs down as well, because it's just not the kind of environment where you can spend, spend, spend as a retailer.

Well, costs and debt are usually what clobber retailers. And my apologies on Party City. I don't think it's Chapter 11 if you're liquidating. Right. I think it's Chapter 7, I believe. Right. Right.

All right. One more question for you, Ben. You wrote a big piece this past weekend about corporate spinoffs. And as a group, spinoff companies are doing well this year, although there, of course, been a couple of disappointments. What is the theory behind corporate spinoffs and what should investors watch for to assess whether they're getting a good deal or not so good?

Sure. I mean, for most corporate spinoffs, the idea is that these companies can operate better independently than under one roof. And so I think the reason that they've gotten so much attention is just how successful the GE spinoffs have been.

You know, you had GE, which was a struggling company. You know, at one point it looked like it actually might go away. And instead you've under Larry Culp, it was, you know, the debt was brought down across the board. Things were sold off and then the company split into three pieces. GE Aerospace, which is kind of the main company. They do jets for engines, things like that. You have GE Healthcare. You'll see that when you go into your doctor's office.

And then you have GE Vernova, which is its power business. It does green energy, but it also does natural gas. And that's, they've, Vernova in particular has done much better than anyone thought. And GE Aerospace has done incredibly well. And even healthcare, you know, it's not done great, but healthcare sector in general hasn't. But each of these companies has been able to sort of escape, you know,

this trap that they were in when they were all combined and focus on what's really working for them. And I think you've seen a lot of companies look at that and say, hey, we can do that too. So now we have Honeywell. They're going to do a spinoff, try to unlock value in their aerospace business. They even have FedEx last week announced that it would spin off its freight business. And that one, you know, Wall Street really seemed to want that to happen, or at least the analysts were talking about how the stock would fall if they didn't announce it when they announced earnings.

There's one analyst at Citigroup who's not so high on the idea. He thinks that there are actually synergies between the two, between Express and Freight, that if you break them up, it's not such a great thing. And also just doesn't think that the freight business is competitive with some of the others. What we did see is they had some pretty not great earnings coming out of that freight segment, and it caused other freight company stocks to fall.

But, you know, it's just we're starting to see this where there is more focus on, OK, can these companies do better? Can these pieces do better as stocks and as businesses separated out from the full? Well, I think you wrote that the spinoff index was up 63 percent this year. Yeah, it's pretty amazing. That's an index that has all the spinoffs of the past three years in it. And it's done very well. These companies are finding that as as leaner and as leaner independent companies, the stocks are just doing much better right now.

That number caught my attention. So, Ed, two questions for you. Then we'll go on to some listener questions. One of them is about the sectors you like and the sectors you don't like. Can you walk us through your feelings about what is likely to do better this coming year versus what isn't? Well, I do tend to focus my work for the long term. And so I do tend to overweight certain sectors for a while. So, for example, in the 1990s,

I wasn't alone. Lots of people were overweight or recommending overweighting technology, media and telecom. So that was my picks back then.

December 11th, 2001, China joined the World Trade Organization and subsequently recommended overweighting materials, energy and industrials, the stocks that would do well as the global economy boomed, as emerging economies emerged. Following the end of the great financial crisis, I think

lean more towards overweighting the U.S. than the global economy. But since the beginning of this current bull market, I've been recommending and continue to recommend overweighting technology, telecommunications, communication services, I should say, industrials, financials. I had been recommending overweighting energy, but I gave up on that. I thought that was a good...

kind of shock absorber in the case that the geopolitical crisis led to oil prices going up, but it hasn't worked out. So I'm not there. Not too excited about energy materials, maybe. You know, I think it would be kind of a market weight.

Healthcare is very appealing as a contrary, but because it's been beat up so hard, but I find it hard to be a contrarian in that regard just now. It certainly has been beat up. We had a big healthcare Q&A this weekend. A lot of problems in the sector, but opportunities as well.

So, all right. Now, before we go on to listener questions, I should tell our listeners that you're also famous not just for your market calls, but for your movie reviews. So if they can see one movie over the holidays, what would you recommend? Well, my wife and I like to watch movies on Friday nights. And we used to go to the theater, but now we do everything on a big screen at home. And we are...

very much enjoying Day of the Jackal. It's a series based on the original movie. Lioness is another good series that we're very much enjoying. And then, of course, Billy Bob Thornton in Lioness.

uh landsman is uh is really is really a lot of fun so we got we got three series we're kind of juggling right now is there any comparison between day the jackal the tv show and day the jackal the movie yeah i mean it's the same concept uh you know a hired gun an assassin uh you know what i've noticed ever since the sopranos these uh these these shows about uh killers and gangs and

The mafias and all that, they all have a family angle. They all have kids and they've got a wife and they've got troubles at home. So I'd say that's a big difference is this jackal is married and has a baby. So that kind of interrupts the flow of work.

That humanizes people a bit. Anyway, I'm sure our listeners were not counting on movie and series reviews, but since you provide them, there you go. All right, let's move on to some questions. We have a question from Gary. You mentioned the debt before, and this question gets to that. He asks, how do you think about leverage in the system and does it concern you?

Well, you know, I definitely have to look at the credit system to understand what's going on in the economy and the credit system and also in the stock market. And so when we look at the credit side of the equation, we certainly see that spreads between junk bonds and treasuries are extremely narrow, historically narrow. There just doesn't seem to be a lot of concern about risk

in the credit markets. I would say that one of the reasons I thought that we would not have a recession is because I think that the credit system is much more resilient, has a lot more shock absorbers. For example, we've seen the expansion of funds that are looking for distressed assets.

that are looking to turn assets around. And there's lots of money available for that. And so when things go badly, when things blow up, even in commercial real estate, somebody gets a haircut on the rate of return because they have to take a loss in selling it. And then somebody else gets a really good bargain and turns it around. So the economy just has this amazing strength. And some of that's attributable to the

depth of our capital markets. Okay. What about the deficit? You had talked about that earlier. Yeah. Well, I can't put lipstick on that pig. Nobody can. But

I think before the election, the bond market, the bond vigilantes were very concerned that it wasn't an election issue whatsoever. Nobody was talking about it. Quite the opposite. Harris was talking about continuing spending. There was no discussion about cutting spending under a Harris administration. And at the same time, Trump was talking about cutting taxes.

And nobody really believed that either one of them would do much to reduce the deficit. Quite the opposite, that either one of them would increase the deficit. But again, as I mentioned before, Trump's come in and at least seems to be addressing the issue. We did see the bond yield come down 20 basis points for a day when Trump nominated Scott Besant.

to be Treasury Secretary because I guess the bond vigilantes figure he's one of us. He's somebody who knows the markets and certainly must be aware of the risks that are inherent in a potential debt crisis. And of course, Trump also appointed this Doge Committee

to try to cut costs. So I think the jury's right now out on whether we're going to, how serious the debt crisis issue is right up ahead here. Lauren, I've been doing this for over 40 years. For over 40 years, people have been worrying about debt and saying it could be bearish for the stock market. And my attitude has been, I'll worry about it when the bond market worries about it. And I think the bond market is a little bit concerned about it right now, and so am I. But I suspect

You know, the potential Treasury Secretary, Scott Besant, said that he intends to lower the deficit from 6% of GDP to 3% of GDP. Notice he didn't say he had any intentions or delusions about getting it balanced. But I think it's doable. Now, the next question is, he never mentioned over what period of time.

Good point. You know, he didn't say, you know, over the next four years. I think when we talk about budgets, we usually talk about a 10-year period. And so I think if we get on that path, if the legislative path can be marked up by the Congressional Budget Office to show that that's a realistic possibility, I think the bond market can live with it.

We'll find out soon when he takes office, so to speak. So we had a couple of questions about your views on crypto. I wonder if you could share those. Yeah.

Yeah, I'd be happy to. But you got to hear me out to the end, because the first thing I'm going to say is I think it's digital tulips, which the knee-jerk reaction is that I must think it's a big speculative bubble and you want to stay away from it. I should, by the way, acknowledge that I don't own a single Bitcoin, so I'm extremely jealous. I wish I'd gotten into it.

And, you know, so I admit that I missed it. Ed, I wrote about this for the first time in 2013, and I did not buy one. I know. It's insane. It's insane. Then we wouldn't be having this conversation. We'd own an island somewhere. But, yeah, so what do I mean by digital tulips? Well, I'm obviously harking back to the tulip bubble in Amsterdam many centuries ago.

But that Tula bubble occurred in just one little geographical area in Amsterdam, and presumably they only traded during the day. And at some point, they just ran out of suckers, out of buyers. And again, I'm not going to... So how does this get to Bitcoin? Well, Bitcoin...

That market's open 24 by 7, and anybody in the world can buy it. It's a worldwide market, so it can go anywhere. It could go a lot higher, I suppose.

And I guess, Ben, you and I, when it gets to a million, are going to say we had this conversation when it was 100,000. Yes. One of you might have bought it by then, but let's move on. By the way, I think one has to watch out for quantum computers. As we've seen, there's some articles saying that, you know,

You know, one of the downsides of artificial intelligence and quantum computing is it could really unlock all these security codes like in seconds. And then suddenly all this Bitcoin that you thought you had is just gone. Oh, it's an interesting article in the journal today about it. Yeah. So, all right. I don't know where Bitcoin is going to be, but I know what my next question is. And I'm going to ask it to Ben.

Larry asks if you can spend some time on stocks of good companies that are out of favor and have trailed the market and where the consensus may be mispricing. What do you think, Ben?

Well, I have four and they're not mine. They're coming from a technical analyst over at Roth MCAM named JC O'Hara. He basically did a tech, took a technical approach to this question. He looked for things that were in his words, massively oversold and showing significant signs of significant downside capitulation. So like basically everyone was saying, I can't own these, I'm just dumping now. And then he was looking for them. He also wanted to make sure that they were quote, approaching a zone of sturdy support on which a base could be formed.

And he found a bunch, but most of them were not names that I was terribly familiar with. But there are four that I found very interesting. One was Boeing.

We all know the problems that Boeing has had. And it's, you know, I'm still not sure that a turnaround has actually begun there, but they do have a new CEO. They're starting to make the 737 MAX again. And maybe this is really the time to start looking at the stock and considering it seriously, because we know that once the planes start getting made and made well,

They have a big runway of sales ahead of them. They're one of only two jet makers. So that's one. Nike is another. Nike, I doubt, I think, a little more. I do believe that it has misjudged the market in a way that may be hard for it to come back from quickly. It's had a terrible year, was a barren stock pick. We tried bottom ticking it. We got it wrong.

And, you know, it has this competition from companies that weren't around before, like on and Hoka, things like that, that are just going to, I think, make it difficult for it to turn around. Ulta Beauty is another. That was a pick a couple of years ago, and it's had a tough time, but it's a pretty quality company. And then the last one I'll mention is Verisign. I believe that's actually something that.

Warren Buffett was buying recently. He's, I guess, owned it for a while, but hadn't bought it in a while, if I'm remembering Andrew correctly. And that could be an interesting one too.

All right. Well, that's four for one answer for one question. So that's a good one. Thanks for doing your homework on that. That was actually a question from last week, but we wanted to get to it this week. So we have time for maybe two more questions for you, Ed. One, TJ notes that the S&P Equal Weight Index has been shown to outperform the market cap weighted S&P over about 20 years. Why is it so poorly adopted and what is your outlook for the equal weight for 25?

Well, it certainly has been a challenge here to broaden out this market. It's been a bull market. It's certainly been led by the Magnificent Seven. As we mentioned before, they account for 30% of the market cap of the S&P 500. And that's probably going to continue to be the case. And every time the market seems to...

show some signs of broadening out, we get some setback on the market's expectations for what the Fed's going to do. If the Fed isn't going to lower interest rates as much as is widely anticipated, then that tends to favor the larger cap stocks as opposed to, say, the SMIT caps. But I still think the S&P 493 offer lots of opportunities.

you know, all the S&P 500 outside of the Magnificent Seven. When you look at your portfolio, whether it's large cap or small caps, my advice is think of them all as technology companies. Ask yourself, do they make technology or do they use technology? If they make technology, then obviously you can do your homework on which of these technologies are likely to

be the way to go in terms of investing in the digital revolution. If they use technology, take a look at the companies and try to assess how they're using it and whether they're using it successfully to increase their productivity. So from that point of view, you asked me before about sectors, I'd say kind of an overlay on a portfolio should be,

Every company should be a technology company. Either they make it or they use it. That makes sense. All right. Speaking of sectors, the last question here is from Kevin, who notes that REITs, real estate stocks, and utilities did well this year. What are your thoughts on those sectors for 2025? Well, the REITs, utilities, certainly...

have been sensitive to interest rates and the Fed started lowering the Fed funds rate on September 18th. So that clearly helped. But I think the other thing that helped the utilities is they suddenly became an AI play because AI requires a tremendous amount of energy. It seems to me that one of the solutions to this is going to be small nuclear power plants and the

That technology, I think, is available and will be used in order to get the power that's necessary. The REITs, I think, if you're buying REITs because you think rates are going to continue to go down, I'm not convinced that that's the case. But on the other hand, I think the economy is going to do fine. I think a lot of the

problems in the commercial real estate area are going to get worked out. I think all in all, they'll do fine, especially those that might be related to industrial facilities and data centers. All right. There you have it. He was bullish and he was right.

We'll see what next year brings. Ed, I want to thank you for joining us today. Thank you. And Ben, thank you as always. It's been a fun, fun call, fun year with you. And I want to thank our loyal listeners. As I mentioned, it's our last Barron's Live of 24, but we'll be back again on January 6th, ready to face what looks to be an exciting year. The Barron's Live team thanks you all for your support through the year, and we wish you a wonderful holiday and a happy, healthy, and prosperous new year.

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