It Was a Very Good Year (EP.373)
Animal Spirits Podcast
Deep Dive
What is the significance of the S&P 500's performance in 2024?
The S&P 500 was up approximately 26% in 2024, marking a strong year for the stock market despite falling short of a 30% gain. This performance reflects robust market conditions and investor optimism.
Why does Ben Carlson think 2025 could be a disappointing year for stocks?
Ben Carlson believes expectations for 2025 are too high, which could lead to disappointment. He compares the current market sentiment to late 2020 and early 2021, suggesting that the market may not meet the elevated expectations of investors.
What is the new normal for mortgage rates according to Bill McBride?
Bill McBride argues that 6% to 7% is the new normal for mortgage rates, driven by a higher neutral rate, inflation, and the structure of the yield curve. This shift reflects a long-term change in the housing market and borrowing costs.
What is the psychological challenge for retirees when it comes to spending their savings?
Retirees often struggle to shift from a mindset of saving to spending, even when they have ample resources. Studies show that many retirees withdraw less than the recommended 4% annually, with wealthier individuals being even more conservative. This reluctance to spend can reduce their satisfaction in retirement.
Why did car sales remain strong despite rising auto loan rates?
Car sales stayed robust due to strong income growth, low unemployment, and excess savings accumulated during the pandemic. These factors offset the impact of higher auto loan rates, which reached 9-10% in some cases.
What is the significance of the record ETF flows in 2024?
ETF flows reached $1 trillion in 2024, shattering previous records and bringing total ETF assets to nearly $11 trillion. This trend reflects the growing popularity of ETFs as a preferred investment vehicle, signaling a shift away from traditional actively managed funds.
What is the impact of the pandemic on financial behavior?
The pandemic sparked a surge in speculation, business formation, and trading, contrary to predictions of a financial depression. This period saw increased options trading, more active investing, and a general willingness to take on risk, marking a significant shift in financial behavior.
What is the role of financial advisors in encouraging clients to spend money?
Financial advisors often need to help clients overcome psychological barriers to spending, especially in retirement. Many clients have spent their lives saving and investing, and transitioning to spending can be challenging. Advisors play a key role in giving clients permission to spend on meaningful experiences and purchases.
What is the significance of natural gas prices in 2024?
Natural gas prices remained extremely low in 2024, comparable to prices from 25 years ago. This deflationary trend contrasts with the usual focus on rising prices and highlights the stability of natural gas costs over the long term.
What is the new normal for speculation in the stock market?
Speculation has become a permanent feature of the stock market, with options trading reaching record levels. This trend, which began during the pandemic, reflects a structural shift in investor behavior, with more individuals engaging in active trading and using tools like options and inverse ETFs.
- YCharts acts as an AI assistant for financial advisors.
- It helps save time, grow AUM, and improve client communication.
- It offers templates and thousands of charts for easier proposal creation and portfolio analysis.
Shownotes Transcript