Facts vs Feelings with Ryan Detrick & Sonu Varghese
This podcast takes a deep dive into the market-moving events to cut through the noise and help you identify what really matters. Facts vs Feelings is hosted by Chief Market Strategist, Ryan Detrick and VP, Global Macro Strategist, Sonu Varghese, and is a product of the Carson Investment Research Team.
The information included herein is for informational purposes and is intended for use by advisors only, and should not be copied, reproduced, or re-distributed without the consent of CWM, LLC. Carson Partners offers investment advisory services through CWM, LLC, an SEC Registered Investment Advisor. Carson Coaching and CWM, LLC are separate but affiliated companies and wholly-owned subsidiaries of Carson Group Holdings, LLC. Carson Coaching does not provide advisory services.
Facts vs Feelings with Ryan Detrick & Sonu Varghese
Reasons to Be Thankful (Ep. 111)
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Surprising economic growth, falling inflation, and financial wins—what’s not to be thankful for?
On this gratitude-filled episode of Facts vs. Feelings, Ryan Detrick, Chief Market Strategist at Carson Group, and Sonu Varghese, VP, Global Macro Strategist at Carson Group, reflect on the moments, milestones, and market trends that make this year one to celebrate. Guest Barry Gilbert, VP of Wealth Management, joins to spotlight the U.S. economy’s surprising resilience.
This release explores the drivers of today’s strong markets and their year-end outlook, from economic growth and moderating inflation to personal triumphs and professional gratitude. The hosts also share practical strategies for staying diversified and grounded in fundamentals while embracing gratitude as a mindset for success.
Key Highlights:
- Economic Resilience: GDP growth outpaces expectations at 2.8–2.9%, driven by productivity gains and entrepreneurship
- Inflation Trends: Thanksgiving dinner costs drop 5% year-over-year, reflecting gradual inflation moderation
- Stock Market Rally: The S&P 500 gains ~20% for the second year, with financials leading sector growth
- Year-End Momentum: December’s historical strength and profit margins show continued market optimism
- Investment Insights: Diversify portfolios and focus on earnings fundamentals to prepare for long-term growth
- And much more!
Resources:
- Any questions about the show? Send it to us! We’d love to hear from you! factsvsfeelings@carsongroup.com
Connect with Ryan Detrick:
Connect with Sonu Varghese:
Connect with Barry Gilbert:
Welcome to the Facts versus Feelings Podcast. I'm your host, Ryan Dietrich. And I'm joined by my co-host, Sonu Vargist. Cutting through the noise in 30 minutes each week with Ryan Dietrich, Chief Market Strategist, and Sonu Vargis, VP Global Macro Strategist. Taking out the board and helping investors focus on what really matters. A quick note before we start the show Investment Advisory Services offered through DWM LLC, an SEC registered investment advisor. Carson Partners, the division of DWM LLC, is a nationwide partnership of advisors. Hi everyone. Welcome to episode 111 of Carson's Facts versus Feelings. This is going to be a fun one. We're titling this one, Reasons to Be Thankful. Unfortunately, Sonu is enjoying some time away this week. So we're joined by, oh, what do I want? How do I want to introduce you? I didn't even think of this. Great all-around guy, portfolio manager, worked worked for a long time. Great friend Barry Gilbert. Now, Barry, I know my title is probably somewhere. Let's just make your just give us your title. And um, what do you do all day? What do you do all day at Carson?
SPEAKER_02Good morning, everyone. Uh VP and asset allocation strategist is my official title. And uh, what do I do all day? I'd say the number one thing I try to do all day is uh help investors and financial advisors and can do that in a lot of different ways. Help them with asset allocation, building portfolios, uh trying to write pieces that inform and educate and maybe entertain uh a little bit uh as well. That's my that's my entire focus.
SPEAKER_00No, well said there. Obviously, you know, I put it like this you uh you've managed a lot of money. You do currently manage a lot of money. You understand uh Sona and I think of the big picture things a lot of times, do some portfolio management as well. But obviously you're there, and I say you're there to kind of make sure we don't take too big of a risk, right? You're always thinking about where can we be right, maybe even more importantly, when you manage real money like our team does, where we could be wrong. Is that kind of a I don't know, an elevator pitch way of describing sort of what you do? You're like a big uh big eraser, you're like a sweeper in soccer, maybe a big tough sweeper in soccer, or an enforcer at go uh in in hockey. You know, you just clean up the mess, I guess. I don't know.
SPEAKER_02Yeah, I think uh we do a really good job at uh having forecasts, and your forecast is what you think is most likely to happen. But there are all other kinds of things that can happen. So uh I like to think of it a little bit like being a poker player. I think the really great poker players they don't put people on a particular hand, they put people on a distribution. Um and my job is to think about the distribution of all of the things that could happen and uh and work with the team to build the best portfolio that we can uh around that. I think everybody on the team kind of thinks of things that way, but uh I'm the I'm the last guy there to think about that particular issue.
SPEAKER_00No, well said there. So again, Sasonu's out, but Barry Gilbert's gonna join us, and we're just gonna dive right into the latest facts versus feelings podcast. Um again, reasons to be thankful. So one before I get there, a little story time. So, you know, your daughter's in college, and we can talk about her in a little bit here. Yeah, she's coming home for Thanksgiving. We'll talk about her throughout the podcast, but I want to talk about my daughter for a second. So she's a junior in high school. Last night she's like, Dad, the printer's not working. So I go look at the printer. Of course, she's got a big project, too. This is the last day of school before Thanksgiving break, so go figure. And of course, yeah, I put these new ink cartridges in because the other ones are old, and I buy these cheap ink cartridges that are on online. It the thing said something I've never seen before. It said, these don't work pretty much with this HP printer. So now we're in panic mode, right? She's in panic mode, I'm a panic mode, bear. We can't print anything. She needs a printer. I go, it's 8.51 Eastern time. I see Walgreens closes at nine. I drive as fast as I can to Walgreens. They don't have the printer, the little ink cartridge I need. So I was like, you know what? I'm just gonna go to um, what's the place called? Target. Go to Target. They don't have the ink cartridges either. I'm like, you know what? We need a new printer anyway. I hate this current print. I'm just gonna buy a new printer, buy a new printer, bring it back. We have so much trouble setting it up, eventually get the setup, and it prints. When I say you print like a picture, she's trying to print pictures like treasure chests and stuff. Anyway, it took like 20 minutes to print these things. I don't know why. So, anyway, so I'm gonna take that printer back. Long story short, we got there eventually. That was my night last night. Do you remember those days with your daughter? I'm sure your daughter never waited until last minute to do a big project, did she?
SPEAKER_02Oh, the reality wasn't really it wasn't really Susanna's fault.
SPEAKER_00I mean, the printer issue started earlier, but still it just was stressful, you know?
SPEAKER_02Yeah, it's uh we've uh we've had plenty of that. Uh yeah, she's she was better than I was when I was a student at uh getting things in on time, but we certainly had our moments like that, uh suddenly going out and trying to get some poster board or markers, or we don't have the right color, or we don't have the right glue. So yeah, lots of excitement around that. But I I gotta tell you, I I I miss it now. So those uh those stressful Friday nights, uh enjoy them, treasurer. There we go.
SPEAKER_00We have a special guest, we've got some feedback, but I see his face there. Sonu, say something. He's coming from India. Hey Sonu, yeah, we I think so. I think we hear you, yeah.
SPEAKER_01Perfect. And so no, good to be with you guys. I'm 9,000 miles away in South India. 9,000 miles away. So new words for the wear, but after travel and all that, feels like I've been traveling every day. Yeah. So one city came into went up the hills, now going somewhere else tomorrow. It's just back.
SPEAKER_00Well, that's a reason to be thankful. So it's 10 30 in the morning eastern time. What time is it where you are, Sonu?
SPEAKER_01It is 9 o'clock at night, 9 p.m. Okay. Yeah, yeah. I wish I could show you the surroundings, but you know, I'm surrounded by hills and you know, so it's quite misty actually.
SPEAKER_00So well, Sonu, I mean, we want you just to join for a little bit. I mean, thanks for jumping on. Give us one or two reasons you're thankful, then we'll let you hop because I am getting some feedback here. So, you know, hopefully this comes in okay. But what are you thankful for this year in 2025?
SPEAKER_01Wow. So if I I I mean, I'll just stick with the you know, the professional stuff, obviously, and the markets and economy. I think the economy, I mean, I think it's surprised to the upside. I mean, if you told me the economic growth would be 2.8, 2.9%, I was like, oh, it seems a little far-fetched. I would have expected somewhere between two and a two and a half percent. A big reason for that is something you and I uh and Barry too, we continuously talk about it's productivity growth, right? Productivity growth is continuous to surprise to the upside. I mean, I we wrote about this in our 2024 outlook. I mean, this was like 12 months ago. We had talked about the productivity boom and why it could continue, right? And the tight labor market. I mean, you look at something like business formation, that's well above what we saw for the last decade. So, you know, entrepreneurship is rising, and I I think this this should continue unless we get a recession, and that's not a base case.
SPEAKER_00Um, so you're just using your phone, right? I mean, you're 9,000.
SPEAKER_01I tried using the phone. Oh so I had to. This is the first time I'm opening my computer since I, you know, left. So I had to restart and all of that. So here I am.
SPEAKER_00Did it do one of the automatic uh updates? Don't you love those? It always gets you at the worst time.
SPEAKER_01I mean, you know when that's gonna happen. It's gonna happen on the Monday, just before the Monday morning call. You guys, you you you and I do team.
SPEAKER_00Oh, yeah. Oh yeah. We'll do this Monday, give you a little bit of a break. But um, when do you come home? When do you come back? Let's talk about that.
SPEAKER_01Monday night. Okay. Yeah. Monday evening. If all goes well. All right. Well, well, my family's never.
SPEAKER_00Yeah, well, that's that's true. I'm sure, I'm sure they miss you. I know, I mean, you and I hung out. I met your family. We hung out in Chicago a couple weeks ago. It was great to finally meet them uh face to face and um had a lot of fun there. Um so so Barry, I mean, so do you want to hang out for a minute? I don't know. You want to what do you think?
SPEAKER_01I'll hang out for a minute, I'll mute myself, listen to you guys, and then you know, I was gonna take a train ride in India tomorrow, and I was like, you know what? The episode will come out and I'll I'll I'll listen to it. But you know, you can cheat and listen to it. I'll stay out for another couple of minutes or so.
SPEAKER_00All right, okay. Well, that sounds good. Uh Barry, you know, obviously a lot of reasons to be thankful. I'll jump in and then you can chime in. I mean, listen, it is what it is. Stock market's looking at 20% gains two years in a row. We're hitting all-time highs. We've hit uh 51 or 52, 52 all-time highs, I believe it is, or maybe 51. Maybe by the time you listen to this, it'll be somewhere around there, uh close enough for government work. Um, the small caps are like just a point or two away, the Wrestle II from new all-time highs. I mean, this has been a great bull market. We'll get into the weeds of that. So we've got the economy strong, the stock market strong, productivity strong. What else are we thankful for? From more on an investments point of view, and then we'll get personal also. But Barry, I kind of took the easy ones. What else is there, I guess?
SPEAKER_02Yeah, uh Fed's starting to cut rates, uh, you know, 50 basis points from the first hike. They've uh they've they've cut again. Um Sunday did uh a great, a lot of great analysis on uh on inflation and and reasons to expect inflation to come down, even earlier in the year, right? When that inflation was a little bit stubborn. And uh maybe we're just a little bit behind the curve, and that's why it made sense to do the the 50 basis point cut. But um housing has struggled, it's made it harder for small businesses with interest rates highs. So we're starting to normalize, and that's not about just about being uh thankful about what we've seen in the last year, that's about being thankful for what we might see in the next year as well.
SPEAKER_00No, well said. Sony, I don't want to ask you because we haven't talked about this. Um is it the what what is basent? Is he the treasury secretary? I should know the treasury. Called the new Janet Yellen. What are your thoughts on him? What are your thoughts on Bassent here?
SPEAKER_01You know, I it it it seems weird to say this. I think Barry and I talked about this a few days back. I won't complain of Wall Street guys, I know Wall Street gets bad rap, but Wall Street tends to be practical about these things, and a Wall Street guy tends to be, you know, practical about whether it's you know tariffs and fiscal policy and how fiscal interacts with the Fed, monetary policy, how the White House interacts with the Fed. And they tend to be practical. I mean, we saw that with the prior you know, Trump administration, whether you know, like it or not, right? Steve Minoshin, I thought he was a very practical Treasury Secretary. Remember what happened during the COVID? I mean, you know, did what it takes. I mean, you know, between him and Nancy Pelosi, I mean we you know got the CARES Act and all of that, right? I mean, again, irrespective of what you think about all of it, you know, stuff got done. And I think that's ultimately what I like when I see a Wall Street guy. They like stuff to get done. I think, you know, from that perspective, it's very positive.
SPEAKER_00No, I mean, you know, Barry, I saw that he worked for George Soros, he worked for I think Shanos, and there was a third one.
SPEAKER_01Um I believe it was Drunkenmiller also, right?
SPEAKER_00Are you kidding me? Like, I mean, that is that's some real world stuff that people hear Soros and sometimes have an opinion, whatever. But he clearly has worked a lot of different places, and I think that's awesome. Now, Barry, my question to you he's known for this 333. Cut the budget deficit by uh 3% of GDP by 2028, 3% GDP thanks to unlocking or deregulation, and then produce an additional 3 million barrels a day. That's the 333. What's the one out of those three that's gonna be hardest to get and what's the easiest to get, you think, Barry?
SPEAKER_02Uh I think the hardest will probably be the deficit. Um just because uh there are challenges on both sides of that. Uh yeah, you can't have a lot of tax debts if you're gonna close down the deficit and you need to do some cutting on spending, so that one's gonna be tough. Uh energy, that's probably the uh the easier one if they want to produce at that rate. Not that uh 3% is out of the range of possibility when it comes to GDP growth.
SPEAKER_01But uh, it's like we already now GDP grow, right?
SPEAKER_02Yeah, we're close. We're we're we're right in there. I will say with Bess, and one of the things that surprised me already is I I've never seen the market respond to a cabinet yet.
SPEAKER_00There's Sona, maybe go on mute. I'm getting a lot of feedback. I don't know what it is. Okay, here we go. Oh, yeah, this is definitely better. So, Sona, you go off mute when you talk, but on mute in the middle time. There we go. Perfect. Go ahead, Barry. Sorry.
SPEAKER_02I've never seen the market respond to a cabinet. A cabinet pick. You know, that's yeah, good point. That's not the highest level when it comes to uh policy. They're important, but uh the the market pretty resoundingly responded to the the selection, and I attended a way that was uh that was very positive. Um brings some discipline to the position, uh maybe offset uh some areas where there were worries that the uh the administration would go too far in the in the other direction. So it it really brings balance. Uh, and I think that that's very intentional, uh, in particular when it comes to these positions that are uh important for markets. Uh I think that you've seen with the prior Trump administration, the picks are more careful. I would include Powell uh for Fed share uh in that, given the other possibilities that we had on the times at the time. So you think about this, you think about uh Lutnik at Commerce, um, you know, these are pro-growth balancing picks, uh, and uh I think they're they're prudent picks.
SPEAKER_00Yeah, like we said, on Monday when that came out, the market did just fine. So no, don't go off mute. Yeah, I want to ask you the question, then go off mute here. Our buddy Tom Lee at Funstrat looked at those three things. The first one, cut the budget deficit, three percent of GDP. He said that'll keep yields lower. The second one, three percent GDP growth through deregulation. Tom said that'll help grow us out of debt. The third thing, again, three more uh we do what, 11 or 12 million barrels a day, another three million barrels a day. Tom said that will uh increase drilling will likely help inflation stay lower. All right, so now go ahead and go off mute. What do you think of those three things Tom had to say?
SPEAKER_01I think well, I think the hardest one, I see I'll take a different fact from Barry. I think three million more barrels. We're talking about three million more barrels, right? So I was looking at the data for this in the from 2017 to 2020, prior to the Trump administration, we increased production by two million in the Biden administration. We increased the the number of ballots by 2.3 million, right? So I think there's you know, I I actually think that would be the hardest. I mean it'd be great for inflation, don't be wrong, right? But remember, let's say oil like let's let's show this in. Let's say oil goes down to sixty five dollars a day. Shale, I don't think, would be stepping up production then. Because they need to make money too. That's the other side of it, right? Like, wait a minute, like if you don't make enough so you kind of need a floor under oil price for shale to come in and say, you know what, we have to use it, because yeah, they're all you know, it's not like open, right? I mean, it they want to make profit. So I I think getting to $50 a barrel, I mean, unless we have a recession, is going to be hard. And in fact, if we go down to $50 a barrel, I don't think we'll see a lot of production because you know well, what are we seeing over the last four years? Especially Shales had three bucks, right? I I mean 2016, 2020, you know, and and even in 2012 for that matter. So they've lost a lot of money, and then over the last four years they focused on returning cash to Cheryl, right? As opposed to just going out and drilling like crazy, and they've become much more efficient as a result. I do think, you know, the three million dollars, three million extra barrels will be the hardest. But you know, to Tom Lee's point, I think I'll be great for inflation, but I don't think you'll see that supply ramp up if oil falls to let's say $50 a barrel.
SPEAKER_00Yeah, interesting take there. So let's go on inflation Barry for a second here. I think this is fun. This has been all social media. The American Farm Bureau Federation, kind of a mouthful, they take a look at the average price of dinner for a family of 10 for Thanksgiving dinner. According to them, their data, down 5% year over year. Now we are fully aware prices are still higher than they were in the past. This is a great way to show it. Your average Thanksgiving dinner is still 19% on average the past five years. But year over year, Barry, down 5%. Here's the fun part turkey and pie crust was lower, but oh man, rolls and stuffing, the good stuff, those were higher. Um, that's a playful way of showing, but I think was what Sonna and I have talked a lot about that listen, we get it. Prices from four, five, three years ago, two years ago, they're higher across the board. That's why people are unhappy. But when you look more at the last year, the last couple of months, there are there continues to be improvement, um, other than in stuffing and in dinner rolls. But listen, I jack up dinner rolls too at Thanksgiving time because everybody's gonna buy them no matter what. You love your that's all my kids eat dinner rolls. Um I'm I'm gonna go after this. I'm gonna go buy like 48 of them. So I know, I don't care what the price is, I'm paying for them. Anyway, Barry, what do you think of inflation here?
SPEAKER_02Inflation is stabilized. Uh, we think it's gonna continue to stabilize. One of the major themes that we've had out there is the distortions when it comes to shelter, uh, in particular, that uh that that response is just very, very delayed. Um, and we've seen it starting to catch up, and that's just gonna continue to happen. Whatever else goes on, that's going to continue to happen. Uh, we're actually we're in a pretty good place in inflation. We're not down to the Fed's 2% target, but if you look at PCE, which is what they follow, um, that's lower than CPI, which gets all of the headlines. Uh, and that's uh that's getting pretty close. So it's those prices are high. Uh, we saw that impact on the election. We know that people are still feeling that, but uh it's really normalized at this point.
SPEAKER_00Uh that's definitely a reason to be thankful. Sonny, I want to bring you in because you sent the charts to us. Barry and I did our morning call on Monday with our um, you know, almost 500 uh partners all around the uh United States with Carson Group. Uh, you pointed out, I didn't quite realize it, that there's 11 sectors in the SP. I did realize that. I knew that part. But 10 of them outperformed the SP last week. Small caps came soaring back on the year. All 11 sectors are higher. 10 out of 11 sectors up double digits. Yes, some groups like financials are up a lot more than healthcare. Okay, listen, and people sometimes complain just to complain. But the truth, Sonu, is this broadening out theme, the different groups taking the baton, or a lot of groups take a baton actually from tech and communications, communication is still pretty darn strong. Um, something we wanted to see this year, we're thankful for. You want to build on the broadening out theme, Sonu, as we move forward here.
SPEAKER_01I think it goes back to our expectation for no recession, strong economic growth. It's been a while coming, right? It's been a frustrating period, too. I mean, we've been, you know, we've been positive on small caps, mid-caps. You think about uh the economy doing well. Look, if you have three percent growth, everything should be doing well for the most part. It shouldn't be a very concentrated market, the market writing up on just seven names, right? And no, we've seen more. We've we're seeing that, right? Look, look at the best, what's the best performing sector off the top of my head? Is it financials, Barry? Yeah, yeah, financials.
SPEAKER_00It was as of Friday. I I believe it still is, but yeah, it yeah.
SPEAKER_01So financials, right? And you think, look, if the economy is doing well, that's the sector that is disintermediating loans, everything, money across the economy, they should be doing well, and that's what we're seeing, and that's part of that broadening out.
SPEAKER_00Uh well said. I mean, Mary, you want to add anything? Oh, good.
SPEAKER_01Okay, I will let you top, and I am looking forward to listening to you guys tomorrow morning when I'm on my train ride.
SPEAKER_00And where are you going tomorrow? One more time, we'll let you go. Where are you going tomorrow? What are you doing?
SPEAKER_01I'm going to this uh place down south in South India called Cochin. That's where my parents are. So I was like, your parents are south.
SPEAKER_00Awesome.
SPEAKER_01Yeah, all right.
SPEAKER_00And mom's gonna mom's making food, right? Mom's making food.
SPEAKER_01That's a part of the reason. Nothing really.
SPEAKER_00All right, same travel. We'll talk to you guys. Take care.
SPEAKER_02Enjoy. Bye-bye. Good seeing you all. Yep. Great seeing you.
SPEAKER_00Yeah, pretty cool. So listen, I mean, that wasn't really playing. Sonu had the link. He just joined us. I told him we were doing it. And there, and I know there was a it was weird. There were I had feedback when I spoke, but when Sonu was not on mute. I don't know if you heard that, Barry. So hopefully maybe we can try to work on that. But if not, sorry for a little hey, it's the price we had to pay to talk to Sonu from 9,000 miles away. So that's a reason to be thankful, right there. That's pretty cool to uh touch base with our buddy Sonu. So, Barry, one thing that caught my attention that maybe I'm a little worried about, again, we're bullish, yes, let's be clear. But um, oh, make sure I read this right. Uh, where'd it go? Where'd it go? Where'd it go? Yale. Okay, so Yale University has something called the Crash Confidence Survey. People are the least worried about a market crash since June of 2006, according to this one particular um survey. Also, the consumer, uh, I'm sorry, the conference board. The conference board looks at people and gives a survey. Um, the outlook on the stock market is the highest on record. Honest to goodness, I'm not sure how far back it goes. Those are just two data points. But listen, we've had a heck of a run. That contrarian to me wonders, and everybody gets too bullish. Although I don't think we're there, I want to be clear. But I did see those two. They caught my attention. I mean, what as a portfolio manager? We've been overweight since December of 22. We're still overweight. Sono and I talked on this podcast why the Friday before the election, we added a little bit of equity risk and expected a rally, and my goodness gracious, SP's up 5% for the month of November, the time we're recording it. So that's happened. But when do you start kind of taking off uh some of the chips, so to say, um, from a portfolio point of view here, Barry?
SPEAKER_02Yeah, that's uh that's a great question.
SPEAKER_00It's the it's the ultimate question, isn't it? It's the ultimate question. It's the ultimate question. Yeah.
SPEAKER_02I'll tell you when you probably don't do it. You probably don't do it when uh you have uh the Fed cutting rates, you're at an near an all-time high, and you have an administration focused on stimulus. Uh they say don't fight the Fed, that's a good idea. Don't fight the Fed and Congress on top of it, that seems like even a better idea. So um, I think that the uh the market's gonna run a little bit with this. There there are things that uh that we do watch for. We're watching employment loss. Levels very closely. We're watching credit spreads in particular because uh say that uh credit markets tend to be smarter than the stock market, so watching for changes there. Haven't really seen that. There are definitely warning signals there. Um we also watch for all the uh the institutional bears to turn bullish. Um little bit of that, but uh still way to go. You you wrote a piece recently where uh a there was a uh a CIO of a well-known firm that uh that called us permables. That's a good sign for bullishness. Uh when uh there are folks out there you know still so resentful that uh you made the right call on on being bullish that they want to call you a permable.
SPEAKER_00When that stops happening, uh then I'll be worried. Uh well said there. Um yeah, I mean, listen, we've been bullish, people listen to this podcast for 111 times now, um, know that, and we're still in that camp. And you know, we have some gold in some of our more tactical models. We have some longer-term treasuries. Are we overweight stocks relative to the gold? Yes, we say diversify your diversifiers. We're not just all in, you know, Mag 7, and we never have been, we never would be. Um, but you know, I think it's important to say when you're managing money, because people see me on TV, and I yes, I give usually a pretty bullish outlook, and it's like that's 90 seconds of talking. There's a lot more that goes into it um than just a little tidbit on TV. But but the reality, again, is we manage a lot of money and we we absolutely um are still overweight, but we see things. When we say, you know, I just say that so freely. Diversify your diversifiers. What does that mean, Barry, to the average person? Because that is a tad confusing.
SPEAKER_02Yeah, uh it just means uh be prepared around the edges for a lot of different things that could could happen. And there are different kinds of investments that uh do well in different kinds of environments, so the situations under which gold would do well. It's not necessarily the situation under which fixed income would do well. We have uh exposure to lower volatility stocks. There are different situations in which those will do well. So you're really trying to think of all the possibilities and uh and trying to have things in there uh that will help you out overall and preparing for for all of them.
SPEAKER_00Well said there. Um if you want to hear the latest from us, don't forget to subscribe to our podcast. You can leave a review. We'd love your feedback, and it does help us a lot with the algorithm. So thank you in advance for that. Uh Barry, let's see here. So we're looking at two years in a row in all likelihood of the SP up 20%, two years in a row. Now I took a look, and there's not that many, it's not that many sample sizes. So then I looked at total return using data from NYU. Total return, SP up back to back 20% years. Again, looking at like it's going to happen this time. I found eight times, this is since 1950, eight times since 1950. The next year was higher, six out of eight, so 75%, about your average year being higher, and up about 12% on average total return. So a tad better than your average year on a total return basis. I guess the key thing is I've heard a lot of people say, oh my goodness, we're up 20% two years in a row. That has to be bearish. When we look at it, I guess not so fast, my friends, to quote Lee Corso, although Lee was wrong. He did pick Indiana to beat my Buckeyes, but that's okay. He was the coach in Indiana. I understand how Corso has to do that. But here's my question to you, Barry. Then you play with the numbers. I didn't play with the numbers. These are the facts. The facts are the facts, my sir. Um, five years in a row, the SP on a total return basis gained 20%. Okay. Five years in a row, 95, 96, 97, 98, 99. Like how I did that. Um, we're in year two. We're not saying this is like the mid to late 90s, but Sonu has been on record saying there are some similarities with, you know, productivity the highest it's been since then, with a Fed that is starting to cut, with an economy that wobbled but didn't fall into recession. Uh, you've got some high valuations, yes, but you've got this incredible new technology. It's internet back then, it's AI now. Um, you know, uh Ed Yardini, big fan of him. He's talking about the roaring uh roaring twenties, you know, again, meaning there's gonna be years left of this thing. Of course, we're not gonna complain if there's years left and many more 20% gains. Um, I don't even know my question very. I guess it's more are we in a roaring 20s and can we have a string of 20% gains? I guess is my question. You can't really answer that, I know, but what do you think? I mean, what are the odds of that?
SPEAKER_02See, uh, first of all, uh the baseline there is there's no reason to be bearish just because you're up 20% years in a row. And I think that that's part of what the numbers tell you. It doesn't necessarily tell you you should be hugely enthusiastic, um, but there is no information, there's nothing in there that tells you that you should be bearish or you should be worried uh just because of that. If anything, it leans a little bit to the other side. You should be uh you should be optimistic. Um when it comes to the possibility that we're in something like the roaring twenties, we live in an interesting time. Uh the the pace of technology is uh it's just crazy. Uh you know, really no one else in uh human history, no other generation in human history has seen the pace of technological change that uh that we're seeing right now. And it's having a positive impact on businesses, it's having a positive impact on the way that we work. Now, it takes a lot of time sometimes for that to actually flow through. Sometimes there are investing mistakes, overinvestment. Um, but there's also a lot of possibilities in there. So, you know, could we be in something like the roaring 20s? Could we be something in like the the mid-90s rather than the mate uh the late 90s? Um, probably not my base case, but sure possibility.
SPEAKER_00Yeah. I mean, the idea of a secular bull market, meaning it for a very long period of time, 1950 to 1968 and 1982 to 2000. The market uh you know broke out to new highs in 1950 and 1982, and they went higher for about 18 years, give or take, both those times. This time we broke out in 2013. My math is right, we're 11 years in. I mean, who knows? You know, this is a theme I've talked about for many, many years, a couple many, many different jobs since 2013 that we're in a secular bull market that could last two decades, maybe. I don't know. You know, here we are, halfway potentially halfway into it, and there could be some more. But again, I think the key thing, it doesn't mean every year is going to be 20%, but it means you could have continued gains probably for a little bit longer than a lot of people expect. And one other thing, I've shared this a ton and I shared it on Twitter, and it was popular X yesterday is popular. Uh the last 74 years, okay, this will be the 75th year since 1950. Um, only four times did the SP close between eight and ten percent. It averages nine point three. So if about nine percent is average, you think about eight to ten would happen at least a handful of times. Barry, it's only happened four times. What does that tell us? It tells us bigger moves are more normal. Average isn't so average. Um, I forget off the top of my head, but the average up year is up close to 20%, whereas your average down year is down like 13 or 14%. So these bigger swings are much more are more normal. And a 20% up year, even though it feels abnormal, happens way more than you probably would expect. You want to add anything to that?
SPEAKER_02Yeah, folks, for those who remember, we had two bear markets practically right on top of each other. That's that's pretty rare. Uh that's a good springboard to jump off of 2020, 2022, just two years apart, bear markets. Going back further, this is longer history, but uh going back to 2000, uh, we had a lost decade for investors. We had an entire decade where uh stock returns were basically flat. They weren't really giving you anything. Um bigger picture, that's not all that long ago. That provides a springboard as uh as well. So if you're gonna focus on 20% two years in a row, don't forget those two bear markets, don't forget that lost decade that we have because we're coming off of both of those things, uh, and that can still be a positive.
SPEAKER_00Ah, well, great point there. I know I I started with Carson in July of 22, and it felt like the market went down every single day for three months. I know it didn't, but I'm just saying it felt that way. And you know, Sona and I, you weren't here yet. Sona and I came out in late 22 saying why the the low was in, why there's no recession. I know a lot of our partners looked at us like we were a little crazy. A lot of people out there looked at us like we're a little crazy, but here we are, and unfortunately we think there's still time to go, which time to go. We've got maybe five minutes or so, Barry. Um, let's talk uh you know this week. So your daughter's in college, she's home soon. Um, how is it fun to see her? Are they still lazy slobs when they get home? No, not that yours is, not that you I'm just saying mine can turn that way. Do they revert back to kind of being that way? How's it work when they get home from college?
SPEAKER_02Yeah, a little bit. And you know, I'm okay with it. She comes home. It's it's the comforts of home that she's uh that she's really enjoying, and uh that she's been working hard, so she deserves that break. And uh it's just it's great to see her. It's uh hey, if I see a dirty sock or two, it's it's good to see the dirty socks because uh haven't seen them in a little little while. So it's it's it's fun.
SPEAKER_00That's good. Now, how does it work? Does she go back like next week or is she done until January?
SPEAKER_02No, she goes back at the end of the week and got one more week of classes, and then she's got finals, and then she comes home, and uh then she has ACL surgery because she tore her ACL. So a lot going on. But uh yeah, it's great to have her home. You'll you'll find out about it soon enough, right? Oh, yeah.
SPEAKER_00My daughter's a a Jew, assuming she passes uh the thing we made last night. I'm teasing that she's a junior, and um, yeah, we're not too far. I'm gonna ask you for tips on how this stuff works. We're we're about you know we're another six months or so away from really getting hardcore thinking about you know where to go to school and stuff. But um we are we are getting there. All right, so let's see here. What else? I had a couple other things we want to talk about. Maybe here just some uh some things to think about for everybody out there. December. December is right around the corner. Uh we'll be if you remember a month ago, Sona and I talked about November likely being a strong month. We listed all the reasons, higher 11 the last 12 years, the best month in election year, the best month the last 20 years, or best month the last 10 years, second best last 20 years. Bottom line, we expected a rally. SP's up like 5% in November here on the 26th, the time we're recording this. Been pretty strong month. But here you go, Barry. Uh December's usually pretty strong too. December is the second best month of an election year, up about 1.3%. All December's on average are up 1.5%. December is the most likely month to be close higher anytime, any year since 1950, and in an election year. Election year is higher about 83% of the time. No month is more likely to be higher. Um, when you're up 20%, I've got it here somewhere. Yeah, when you're up 20% for the year going into the last month, can you get an end of your chase? That's the question. Remember, Sona and I talked before about why we expected an end of your chase uh to start in November. The short answer is yes. If you go back the last 10 times, back to the mid-80s, when you're up 20% for the year going into the normally bullish month of December, higher nine out of 10 times, up 2.4% on average. So more likely to be higher and even a higher um um um average return. So, Barry, my question to you as a portfolio manager, we hear this all the time cash on the sidelines, this now. It seems to almost be true. When you have a good year, there is a chase. You want to build on that?
SPEAKER_02Yeah, you you talked about uh all the confidence that's that's in there. Uh, but we know now with the with rates higher, we had a lot of money going to short-term treasuries. Uh, some of that is still sitting there. There's certainly uh people who are still looking to be opportunistic. Um, there are people who are reacting to the election, and uh you get often lower volume in in December. Doesn't take that much money flowing in to uh to get the markets to move. That's often why you have those those little melt-ups if things are quiet. Not big moves, uh, but steady little moves. I I wouldn't be at all surprised to see that right now. Uh Brian, you asked a question about my family. Uh, you you told me that your family, you're hosting Thanksgiving for the first time ever. Is that right?
SPEAKER_00Yeah, I didn't want to talk about it, Barry. Um, yeah. No, we we we are having rolls. Yeah, well, I gotta go buy them as soon as this is done. Um I've got to sign it off here. I we've got to get ready for this party. We're having like 18 people, so I'm aware that's not, you know, a lot of people have bigger, bigger ones. But um, my wife really wanted to host Thanksgiving for her family, so um, we're doing that. It's the plan with or the the deal was we would provide the house and a lot of the things, but not so much the cooking and food, which is good. But even then, just getting your house ready, it's just I don't know. It's it's it's been a lot. I'll be glad when it's over. Um, I'll put it that way. I'm sure it'll be fun when we're there. But yeah, we're hosting everyone on Thursday, and it should be um should be fun. But I I have some errands to run uh this afternoon, running around getting stuff uh for for my wife. So hopefully we survive. And you guys go to your sister, right? You've got a couple sisters, but you go to your sister's house for yours.
SPEAKER_02Going to my my sister's on on one side, my in-laws on the uh on the other side. Um you know when Celia was uh small, my daughter, we uh we only did one family, we alternated, but uh now families both families are in the area. We're we're lucky and we can do we can do both. Uh dinner at one, dessert at the other. Ooh, I like that.
SPEAKER_00I uh you know, Barry, I think you should do dinner and dessert at one, dessert at the other. That's just me. That's just that's just me.
SPEAKER_02That's uh they're gonna be a lot of good pies, so I think that that's might happen.
SPEAKER_00That's good. Um let's finish this up with the economy again. Uh think reasons to be thankful. You know, we've talked before about this, but SP 500 earnings are hitting all-time high this year. Forward 12-month expected earnings, expected at all-time high in 12 months. Profit margins during this cycle are hitting the highest levels they've been. They're not the highest they've ever been, but this cycle, they're high. You know, Barry, we've called that kind of the dual tailwind for reasons to think you're in a bull market and think you're in a strong economy. For two years now, I've been sharing those two charts in our outlooks and our mid-year outlooks when you and I are putting the finishing touches on our outlook that'll come out sometime in January. But I'm gonna use those two charts again because they keep working. Talk to me about why profit margins and higher profits do matter.
SPEAKER_02Yeah, it's uh ultimately that's what drives stock returns. Uh, and then in the short term, sentiment's gonna lead to things moving around. But in the long term, you can look at a chart, it's all about earnings. That's a fundamental driver. Uh, we looked at the last five years. Um, a lot of people talking about, hey, we're we're we're in a bubble. But the last five years, you look at the contribution of earnings and the contribution of dividends to SP 500 returns, about 75% of those returns uh come from those two fundamentals. Uh easy number to work with because we're up about a hundred percent in the last five years. And 75% of the total means uh 75%. I can do that, math. And uh that means that uh the fundamentals are are still important. Sure, there is some expansion based on sentiment, but really the main driver is what the main driver always is in the long term, and that means watch earnings, watch margins, those are what them good should be in pretty good shape.
SPEAKER_00No, that's a great way maybe to end it. Again, a lot of reasons to be thankful. The last five years, since the end of 2019, the SP 500 has doubled. Okay, and that's total returns, that's including dividends, but doubled. We've had two vicious bear markets. We had a hundred-year pandemic, we shut the economy down. We had a terrible bear market in 2022, along with one of the worst years for um uh bonds ever. So it was a terrible year for a diversified portfolio in 22. And yet here we are. Uh, when we look at things, you know, 6040 portfolios are hitting all-time highs. Bonds, yeah, they still struggle, they've done a little bit better, uh, but stocks have done very well. Um, housing prices have continued to soar. Your overall net wealth in the United States is the highest it's ever been. We've talked a lot. Yes, we have a lot of debt. Another reason to be thankful, we have a lot of equity. If you look at debt to equity ratios, a lot of different places, from the households to the consumers to corporate America, they're actually in a lot better shape than um the TV uh might let you know. So there's some other reasons to be thankful. Uh, Barry, let's finish it up. One more reason to be thankful, and it doesn't have to be work, it can be maybe personal. What else are you thankful for?
SPEAKER_02Uh you know, great colleagues, great friends. Times spending time with family. That's that's really what it's all about. And every now and then. Uh even with all the fun that we have in work, it's it's great to turn and and and think about those things. So family, friends, colleagues, uh makes me a pretty happy guy.
SPEAKER_00Yeah, no, love it. Um, yeah, I'm glad you can join and jump on. I'm glad Sonu, thankful that Sonu could uh jump on as well. I mean, I I second all those. I mean, I totally get that up. Thankful for this podcast. You know, Sonu and I have a lot of fun doing this podcast every single week. We've had a lot of downloads, a lot of listens after doing 111 of them. Um, and we appreciate it. And we're gonna continue to do these weekly as long as everybody out there keeps listening. So that's one other thing that I'm thankful for in 2024. So with all of that, everyone, um, have a great turkey day. By the time you listen to this, maybe you've already had Thanksgiving, eaten a lot of turkey, enjoy yourselves, um, eat the stuffing, eat the rolls. Those those prices are higher, like we said. That's the stuff people like. But um, with all that, enjoy the holiday. Enjoy the coming end of the year. Hopefully, it's a little feels like it's busy right now for a lot of people, but hopefully it's just that last rush. Maybe have a little break here. Kind of near the end of the year, things slow down a little bit. I don't know if that's possible, but maybe it can. Um, and I guess, Barry, you're probably thankful your Steelers look pretty good too, right? I mean, I guess that's what else.
SPEAKER_02They have looked good. I know you don't feel the same way about the Bengals, but uh, you're a big Ohio State fan too, right?
SPEAKER_00So uh they look good. Yeah, you can look over there. We'll see. But yeah, the Bengals just heartbreaking every single week. It's just I said, you know what they're gonna do? They're gonna win five games in a row now just to get you to think they're gonna do it and they're gonna lose their last game. They need to win all six games in a row to make the playoffs or at least have a shot. And they probably get close. Just to rip your heart out, they'll lose the last game just to do it. I'm calling that one right now. So take that to the bank, as they say. Uh anyway. It's building a lot of characters for you. There you go. There you go. All right, everybody. Thanks for listening, Barry. Thanks for joining. We'll see everybody next week. Take care. Thank you. Information provided on facts versus feelings with Sunovar Geese and Ryan Dietrich are for general information only and are not intended to provide specific advice or recommendations for any individual. The statements and opinions of show guests may not be reflective of CWM LLC or its affiliates. Past performance is no guarantee of future results. All indices are unmanaged and may not be invested in directly. Investing involves risk, including possible loss of principal. No strategy assures success or protects against loss. To determine what may be appropriate for you, consult with your attorney, accountant, financial, or tax advisor prior to investing. Guests on facts versus feelings are not affiliated with CWMLLC.
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