The Markets
What moves financial markets? The short answer is: Lots of things!
Almost one hundred years ago, Benjamin Graham and David L. Dodd wrote, “the market is a voting machine, whereon countless individuals register choices which are the product partly of reason and partly of emotion.”1 Today, the same holds true. Stock prices are influenced by many factors. Here are three examples:
- Market trends. Last year, companies with strong momentum characteristics—meaning their prices were trending higher—generally did well. “The main rationale behind momentum investing is that once a trend is well-established, it is likely to continue,” reported the Corporate Finance Institute.2
The idea may seem contrary to the primary rule of investing, sell high and buy low, but the approach is backed by academic research. It “captures the tendency for market trends to persist for a while, whether it’s because more investors are jumping in or are late to absorb new information,” reported Justina Lee of Bloomberg. As one researcher told Lee, “Momentum investing is great until it’s not.”3
- Investor sentiment. Emotion plays a significant role in stock market volatility. For example, last week, we saw a relief rally. Asian stocks rose and the Standard & Poor’s (S&P) 500 Index hit a new high because the news was less bad than investors had expected.4 Isabelle Lee, Lu Wang, and Phil Serafino of Bloomberg explained:
“Despite the protectionist threats of the campaign trail, Trump held off on imposing levies on key trading partners this week, and just last night delivered his most mollifying message yet to China by saying that he would rather not have to use tariffs against the world’s second-biggest economy. Cue a relief rally across markets.”4
- Company fundamentals. Graham and Dodd recommended fundamental analysis to identify stocks with good value. Investors who rely on fundamental analysis study companies’ financial statements, and consider assets and liabilities, revenue and expenses, earnings and cash flow, and other factors. Then they do some math to evaluate the company’s value using various measures like the price-to-earnings ratio. In theory, a company with a low share price relative to its earnings is a good value.5
No one knows how markets will perform over the short term. That’s one reason it’s important to hold a diversified portfolio. Owning investments that perform differently in various market conditions helps manage investment risk and may smooth returns over time.
Last week, major U.S. stock indices rose.6 The S&P 500 moved higher over the week, the Dow Jones Industrial Average gained 2.2 percent, and the Nasdaq Composite rose 1.7 percent, reported Paul R. LaMonica of Barron’s.7 Yields on U.S. Treasuries were relatively steady.8
Data as of 1/24/25 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 1.7% | 3.7% | 25.3% | 11.4% | 13.1% | 11.5% |
| Dow Jones Global ex-U.S. Index | 2.6 | 2.9 | 8.1 | 0.4 | 2.2 | 2.7 |
| 10-year Treasury Note (yield only) | 4.6 | N/A | 4.2 | 1.7 | 1.7 | 1.8 |
| Gold (per ounce) | 2.3 | 6.4 | 37.2 | 14.9 | 12.2 | 8.0 |
| Bloomberg Commodity Index | -0.3 | 4.7 | 5.0 | -0.4 | 6.0 | 0.3 |
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
PLANNING FOR REQUIRED MINIMUM DISTRIBUTIONS. If you save for retirement in a qualified plan, such as a 401(k) plan or an IRA, the government currently requires you to take withdrawals from these accounts during retirement. The withdrawals, known as required minimum distributions or RMDs, are taxable so it’s a good idea to plan ahead and avoid unexpected tax consequences.
Here is some basic information about RMDs. It is offered with the caveat that RMDs have complex rules. It’s important to talk with your financial or tax professional before taking action.
If your 73rd birthday is in 2025, your first RMD must be taken by April 1, 2026. Your second RMD by December 31, 2026, your third RMD by December 31, 2027, and so on.9
If you delay your first distribution until April 1, 2026, then you will need to take two RMDs in the same year.9
If you have multiple 401(k) plan and IRA accounts, you typically must calculate the RMD for each one of them. You can, however, withdraw the entire amount from a single account.10
If you’re still working at age 73, you don’t have to take an RMD from your workplace retirement plan account (as long as the plan allows it). This exception does not apply to traditional IRAs. You must take RMDs from traditional IRAs, even if you’re still working.10
If you inherit an IRA from a spouse (after 2019)who already reached age 73, you will normally need to take an RMD for the year of death, if your spouse did not already take one. If your spouse dies before age 73, you may be able to keep the inherited account, roll it over into your IRA, or withdraw the money in a lump sum or over a period of time.11
If you inherit an IRA from someone other than your spouse (after 2019), usually the funds must be completely withdrawn from the account within 10 years. RMDs may be required if the person from whom you inherited the account was already taking RMDs.12 There are some exceptions.
If you miss an RMD deadline or you don’t withdraw the full amount, penalties are steep. The penalty tax is 25 percent of the amount you failed to withdraw. If you correct the issue within two years, the penalty tax is lower.10
If you own a Roth IRA or Designated Roth account in workplace plan, you do not have to take RMDs—unless you inherited the account. In that case, RMD rules usually apply.10
Again, the rules governing RMDs are complex, and calculating RMDs is not always straightforward. If you would like help, or you have questions, please get in touch.
Weekly Focus – Think About It
“Never wear anything that panics the cat.”13—P.J. O’Rourke, comedian
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
Sources:
[1] https://www.amazon.com/Security-Analysis-Classic-Benjamin-Graham/dp/0070244960 [Page 23] (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/01-27-25_Security%20Analysis%20Cover_1.pdf)
3 https://www.bloomberg.com/news/articles/2024-12-27/record-year-for-momentum-trade-is-ending-with-widening-cracks (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/01-27-25_Bloomberg_Record%20Year%20for%20Momentum%20Trade%20is%20Ending_3.pdf)
4 https://www.bloomberg.com/news/newsletters/2025-01-24/s-p-500-set-for-best-first-week-for-any-president-since-reagan?srnd=phx-economics-v2 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/01-27-25_Bloomberg_S&P%20500%20Set%20for%20Best%20First%20Week_4.pdf)
5 https://www.schwab.com/learn/story/investing-basics-fundamental-analysis [transcript]
6 https://www.barrons.com/market-data (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/01-27-25_Barrons_Data_6.pdf)
7 https://www.barrons.com/articles/stock-market-big-tech-federal-reserve-13376c0b?refsec=the-trader&mod=topics_the-trader (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/01-27-25_Barrons_The%20Stock%20Market%20is%20At%20Mercy%20of%20Tech%20and%20Fed_7.pdf)
10 https://www.irs.gov/retirement-plans/rmd-comparison-chart-iras-vs-defined-contribution-plans
11 https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary
12 https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary [1]3https://www.brainyquote.com/profession/quotes-by-comedians
The Markets
As the markets turn.
Last week, investors breathed a sigh of relief when the latest price data showed core inflation, which excludes volatile food and energy prices, moved lower in December.1
Investors has been worried because economists forecasted inflation would be stickier in December, reported Frank Lee of Morningstar.2 If that proved out, the Fed might have stopped lowering the federal funds rate, which would have had adverse implications for company performance and stock prices. So when core inflation dropped to 3.2 percent year over year, investors celebrated.1
Some think the celebration might be premature.
Jacob Sonenshine of Barron’s reported, “Stocks jumped after this week’s inflation data. The problem is that there’s not a lot to love in the numbers. The reality is that inflation remains well above the Federal Reserve’s 2 [percent] goal. The average headline [Consumer Price Index] has been 2.7 [percent] in the past three months, above the 2.6 [percent] average for the three months that ended in September. So the trend of inflation, when considering a larger sample size of results, is inching higher, not lower…The result is that the Fed is unlikely to reduce interest rates aggressively. The federal-funds futures market now expects just one interest-rate cut this year…”3
Inflation wasn’t the only reason investor optimism surged last week, though. Fourth quarter earnings season—the time when management lets investors know how the companies performed in the prior quarter—got off to a strong start. “Big Banks set a positive note earlier this week, while [a large semiconductor company] sparked further enthusiasm among chip stocks. Things will only heat up in the weeks ahead, as Wall Street sizes up results from the market’s heaviest hitters,” reported Connor Smith of Barron’s.4
We should all be prepared for markets to be volatile this year.
While last week delivered attractive gains overall, the week before stock and bond markets moved in the opposite direction. Jurrien Timmer of Fidelity explained why we may see significant volatility this year:
“While I continue to believe we are in a bull market—with rising earnings poised to pull the weight of the market still higher—this recent volatility could be a sign of things to come. Later stages of a bull market tend to be more volatile. And it doesn’t take as much to disrupt the market’s mojo when valuations like price-earnings (PE) ratios are high, as they have been. But moreover, I believe the interest-rate angst that’s been weighing on the market isn’t likely to go away anytime soon, and could be a recurring feature of the year ahead.”5
Last week, major U.S. stock indices rose sharply,6 and yields on longer maturities ofU.S. Treasuries fell.7
Data as of 1/17/25 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 2.9% | 2.0% | 26.5% | 9.4% | 12.5% | 11.5% |
| Dow Jones Global ex-U.S. Index | 1.7 | 0.3 | 7.8 | -1.6 | 1.5 | 2.6 |
| 10-year Treasury Note (yield only) | 4.6 | N/A | 4.1 | 1.9 | 1.8 | 1.8 |
| Gold (per ounce) | 1.0 | 4.0 | 35.0 | 14.3 | 11.8 | 7.9 |
| Bloomberg Commodity Index | 1.2 | 5.0 | 7.3 | -0.1 | 5.4 | 0.2 |
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
THE COSTLIEST NATURAL DISASTERS IN U.S. HISTORY. The Los Angeles wildfires were still burning when this was written, and it’s not yet possible to understand the full economic impact of the event. Last week, AccuWeather “increased its preliminary estimate of the total damage and economic loss to between $250 billion and $275 billion,” reported Monica Danielle.8 A week earlier, the estimate had been $52 billion to $57 billion.9
If the new forecast holds up, it puts the wildfires at or near the top of the list of costliest natural disasters in the United States. Not including the wildfires, six of the top 10 events have happened over the past decade. Here are the top 10, as listed in AARP.org using data from the National Oceanic and Atmospheric Administration (NOAA). (All dollar figures were adjusted for inflation.)10
- Hurricane Katrina, 2005, Louisiana, Mississippi, and Alabama: $201.3 billion
- Hurricane Harvey, 2017, Texas: $160.0 billion
- Hurricane Ian, 2022, Florida: $160.0 billion
- Hurricane Maria, 2017, Puerto Rico, St. Croix, and U.S. Virgin Islands: $115.2 billion
- Superstorm Sandy, 2012, New Jersey, New York, and other states: $ 88.5 billion
- Hurricane Ida, 2021, Louisiana and other states: $ 84.6 billion
- Hurricane Helene, 2024, Florida, western North Carolina: $ 78.7 billion
- Hurricane Irma, 2017, Florida, South Carolina, and U.S. Virgin Islands: $ 64.0 billion
- Hurricane Andrew, 1992, Florida: $ 60.5 billion
- United States drought/heat waves, 1988-1990, 11 U.S. states: $ 54.6 billion
In 2024, there were 27 weather and climate events that inflicted damage of $1 billion or more. Since 1980, there have been 403 events of that magnitude, with a total price tag of more than $2.9 trillion, reported NOAA.11
Weekly Focus – Think About It
“[Jimmy Carter] had the courage and strength to stick to his principles even when they were politically unpopular…Fifty years ago, he was a climate warrior who pushed for a world where we conserved energy, limited emissions, and traded our reliance on fossil fuels for expanded renewable sources. By the way, he cut the deficit, wanted to decriminalize marijuana, deregulated so many industries that he gave us cheap flights and, as you heard, craft beer. Basically, all of those years ago, he was the first millennial. And he could make great playlists…”12
—Jason Carter, grandson of former U.S. President Jimmy Carter
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
Sources:
[1] https://www.bls.gov/news.release/pdf/cpi.pdf
2 https://www.morningstar.com/economy/december-cpi-forecasts-predict-stalled-progress-inflation
3 https://www.barrons.com/articles/stock-market-inflation-rally-5a458448?refsec=the-trader&mod=topics_the-trader (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/01-20-25_Barrons_Why%20the%20Stock%20Market%20is%20Getting%20Ahead%20of%20Itself_3.pdf)
4 https://www.barrons.com/livecoverage/stock-market-today-011725?mod=hp_LEDE_C_1 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/01-20-25_Barrons_Dow%20S&P%20Mark%20Best%20Weeks%20Since%20Nov_4.pdf)
5 https://www.fidelity.com/learning-center/trading-investing/rocky-start
6 https://www.barrons.com/market-data?mod=BOL_TOPNAV (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/01-20-25_Barrons_Data_6.pdf)
[1]0 https://www.aarp.org/politics-society/history/info-2021/costliest-natural-disasters.html
[1]1 https://www.ncei.noaa.gov/access/billions/
[1]2 https://www.pbs.org/newshour/politics/notable-quotes-from-jimmy-carters-funeral
The Markets
Bond yields are rising—and they have investors’ attention.
Last year, the United States Federal Reserve (Fed) lowered the federal funds rate by one percent.1 (The federal funds rate is the interest rate the Fed charges banks. It influences other interest rates.) This shift in Fed policy made a lot of people happy.
- Companies, business owners, and consumers cheered because Fed rate cuts typically lower borrowing costs. As a result, rates on business loans, home equity loans, auto loans and credit cards tend to move lower.2
- Stock investors were enthusiastic because lower borrowing costs can reduce companies’ expenses and increase profits, and that can lift stock prices higher. Since the stock market moves in anticipation of future events, rate cut expectations are already reflected in many companies’ stock prices.2
- Prospective homebuyers were optimistic. Fixed mortgage rates are linked to the yield of the 10-year U.S. Treasury note,3 and they hoped it might also move lower.
Bondholders were more skeptical. Even as the Fed was cutting the federal funds rate, yields on longer maturities of U.S. government bonds were moving higher—not lower.4 One reason is that economic data—including last week’s strong jobs report5—continue to confirm that economic growth and inflation are exceeding expectations. As a result, the Fed may be inclined toward fewer rate cuts in 2025.
“For stocks, higher bond yields imply no increase in price/earnings ratios and possibly some contraction from current levels,” reported Randall W. Forsyth of Barron’s. Changing expectations for Fed actions and company performance is likely to shift analysts’ outlook for stock market performance.6
There is a second reason for the divergence in Fed actions and government bond yields, according to economist Mohamed El-Erian, a columnist for Bloomberg. He explained that key government bond yields in advanced economies “are widely regarded as the most accurate gauge of the economic outlook, including growth, inflation and central bank policies.” In his opinion, “Yield increases show that investors are closely watching whether advanced economies have the ability to deal with high debt and rising borrowing costs.”7
Last week, major U.S. stock indices moved lower,8 and yields on longer maturities ofU.S. Treasuries continued to rise.4
Data as of 1/10/25 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | -1.9% | 0.9% | 21.8% | 7.7% | 12.3% | 11.1% |
| Dow Jones Global ex-U.S. Index | -1.1 | -1.3 | 3.5 | -2.0 | 1.3 | 2.5 |
| 10-year Treasury Note (yield only) | 4.8 | N/A | 4.0 | 1.8 | 1.8 | 1.9 |
| Gold (per ounce) | 1.5 | 2.9 | 32.4 | 14.4 | 11.6 | 8.2 |
| Bloomberg Commodity Index | 4.1 | 3.8 | 5.1 | 0.5 | 4.9 | 0.1 |
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
HOW MUCH DO YOU KNOW? Last year, Pew Research asked adults across the United States how much they knew about personal finance, a topic that includes “managing your money as well as saving and investing. It encompasses budgeting, banking, insurance, mortgages, investments, and retirement, tax, and estate planning,” reported Will Kenton of Investopedia.9
More than half (54 percent) of those who participated in the survey said they knew a great deal or a fair amount about personal finance. However, the results varied widely depending on the demographic attributes considered. For example, knowledge about money appears to increase with age, reported Khadijah Edwards of Pew Research Center.10 For example:
Ages 18 to 29: 41 percent know at least a fair amount
Ages 30 to 49: 47 percent know at least a fair amount
Ages 50 to 64: 60 percent know at least a fair amount
Ages 65 and older: 67 percent know at least a fair amount
Extrapolating that result suggests that about two-thirds of Americans may know a fair amount about personal finance as they approach retirement. Many survey participants learned what they knew about money from family and friends. Others said they relied on:10
- The internet,
- A college or university course,
- Media (news, documentaries, and books), and
- Elementary or high school classes.
When asked about various issues related to finances, respondents were more confident in their ability to accomplish some tasks than others. For example, participants were confident they could:
- Find their credit report 75 percent
- Make a monthly budget 59 percent
- Develop a plan to pay off debt 57 percent
- Create a plan to save money 56 percent
- Build an investment plan to grow wealth 27 percent
If you have friends or family members who would benefit from knowing more about how to manage, save, and invest money, gifting a subscription to a personal finance publication could make a difference. You’re also welcome to share our contact information. We help people pursue their financial goals.
Weekly Focus – Think About It
“Real knowledge is to know the extent of one’s ignorance.”11
—Confucius, philosopher
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
Sources:
[1] https://www.newyorkfed.org/markets/reference-rates/effr
2 https://www.investopedia.com/terms/f/federalfundsrate.asp
3 https://www.bankrate.com/mortgages/federal-reserve-and-mortgage-rates/
5 https://www.bls.gov/news.release/empsit.nr0.htm
6 https://www.barrons.com/articles/bond-yields-stocks-markets-c547ed93?mod=hp_LEDE_C_1 (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/01-13-25_Barrons_Bond%20Yields%20Rising%20A%20Problem%20For%20Stocks_6.pdf)
7 https://www.bloomberg.com/opinion/articles/2024-12-30/bond-vigilantes-are-putting-governments-on-notice (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/01-13-25_Bloomberg_Bond%20Vigilantes%20Putting%20Govs%20on%20Notice_7.pdf)
8 https://www.barrons.com/market-data?mod=BOL_TOPNAV (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/01-13-25_Barrons_Data_8.pdf)
9 https://www.investopedia.com/terms/p/personalfinance.asp
[1]1 https://www.goodreads.com/quotes/63437-real-knowledge-is-to-know-the-extent-of-one-s-ignorance
The Markets
Hello, 2025!
As we head into a new year, it can be helpful to look back at the previous year—and 2024 was a doozy. Stocks in the United States delivered a double-double—posting double-digit gains for a second year in a row. That kind of performance is a relative rarity and has only occurred nine times over the last 96 years, according to Tony DeSpirito of BlackRock.1
So, how well did U.S. stocks perform? Here are annual returns for major U.S. stock indexes over the past two years—plus the return for 2022 as a reminder that stocks don’t always move higher.
| 2024 | 2023 | 2022 | |
| Standard & Poor’s (S&P) 500 Index:2 | 23.3% | 24.2% | -19.4% |
| Nasdaq Composite Index:3 | 28.6% | 43.4% | -33.1% |
| Dow Jones Industrial Average:4 | 12.9% | 13.7% | – 8.8% |
Throughout 2024, share price gains were supported by several factors, including:
- Enthusiasm for Artificial Intelligence (AI). Magnificent Seven stocks had another big year. “The group…averaged a gain of 65 [percent] this year, compared with an average of 111 [percent] last year, according to Dow Jones Market Data,” reported Emily Dattilo of Barron’s in December 2024. “The Mag 7 has made up 57 [percent] of the S&P 500’s…market [capitalization] gain this year versus 65 [percent] last year.”5
- Strong corporate revenue and earnings growth. Many publicly traded companies have been making more money and growing profits. For the full year 2024, analysts expect companies in the S&P 500 to report year over year earnings growth of 9.4 percent and revenue growth of 5.1 percent. In 2025, expectations are even higher. Earnings growth was forecast to be 14.8 percent and revenue growth 5.8 percent for the year, reported John Butters of FactSet.6
- A solid U.S. economy. “Over the last few years, the U.S. economy has consistently defied expectations for a slowdown, and 2024 was no different. Despite uncertainty around a presidential election, elevated interest rates and a cooling labor market, economic growth remained solid this year,” reported Augusta Saraiva of Bloomberg.7
- Steady consumer spending. A key driver for the economy was robust consumer spending. “Even as hiring slowed, wage growth continued to outpace inflation and household wealth reached new records, supporting an ongoing expansion in household spending,” wrote Saraiva.7
- Anticipation of Federal Reserve rate cuts. For much of the year, investors eagerly anticipated Federal Reserve (Fed) rates. In general, when the Fed lowers the federal funds rate, borrowing becomes less expensive which can boost corporate earnings and share prices, explained Mary Hall of Investopedia.8
These factors helped U.S. stocks repeatedly set new record highs during the final quarter of the year. However, the stock rally stalled in December after the Fed expressed concerns about inflation and modified its forecast for 2025 rate cuts “amid slower progress on inflation and an uncertain policy outlook,” reported Sarah Hansen and Bella Albrecht of Morningstar.9
In the bond market, many sectors delivered positive returns over the full year 2024. However, quite a few gave back some gains in the last months of the year. “Bond markets saw a major selloff in the fourth quarter, sparked by the outcome of the U.S. presidential election and the potential for stronger economic growth, inflationary policies, and more deficit spending in the years ahead,” reported Hansen and Albrecht.9 The yield on the benchmark 10-year U.S. Treasury note started the year at 3.95 percent and finished the year at 4.58 percent.10
Last week, which was shorter than usual due to the New Year’s holiday, major U.S. stock indices finished lower.11 The yield curve continued to steepen as yields on shorter maturities of U.S. Treasuries fell, while yields on longer maturities rose.10
Data as of 1/3/25 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | -0.5% | 1.0% | 26.3% | 7.4% | 12.9% | 11.4% |
| Dow Jones Global ex-U.S. Index | -0.8 | -0.2 | 5.0 | -1.9 | 1.6 | 2.7 |
| 10-year Treasury Note (yield only) | 4.6 | N/A | 3.9 | 1.6 | 1.8 | 2.0 |
| Gold (per ounce) | 1.2 | 1.4 | 29.6 | 13.5 | 11.3 | 8.2 |
| Bloomberg Commodity Index | 0.3 | -0.3 | 0.2 | -0.3 | 3.9 | -0.5 |
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury; London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
A BRRR-Y COLD NEW YEAR’S TRADITION. People around the world like to welcome the new year by putting on a bathing or wet suit and immersing themselves in cold water. The name of the event—Polar Bear Plunge, Christmas Swim, or New Year’s Dive—varies by location.12 Of course, water and air temperature vary greatly, too, depending on where the plunge takes place. Here are a few examples from the United States on January 1, 2025.13,14
Coney Island, New York/Atlantic Ocean
Air temperature: 50.0 degrees Fahrenheit
Water temperature: 40.5 degrees Fahrenheit
Myrtle Beach, South Carolina/Atlantic Ocean
Air temperature: 60.0 degrees Fahrenheit
Water temperature: 58.4 degrees Fahrenheit
Milwaukee, Wisconsin/Lake Michigan
Air temperature: 30.0 degrees Fahrenheit
Water temperature: 39.7 degrees Fahrenheit
San Diego, California/Pacific Ocean
Air temperature: 60.0 degrees Fahrenheit
Water temperature: 57.1 degrees Fahrenheit
According to Cleveland Clinic Health Essentials, submerging yourself in cold water for short periods may have health benefits. For people who are in good health, cold-water baths may ease sore muscles, reduce inflammation, improve circulation, and promote better sleep. (It remains unclear whether New Year’s Day plunges confer any of these benefits.)15
How did you celebrate the start of the new year?
Weekly Focus – Think About It
“Write it on your heart that every day is the best day in the year.”16
—Ralph Waldo Emerson, philosopher
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
Sources:
1 https://www.blackrock.com/us/individual/insights/taking-stock-quarterly-outlook
2 https://www.macrotrends.net/2324/sp-500-historical-chart-data
3 https://www.macrotrends.net/1320/nasdaq-historical-chart
4 https://www.macrotrends.net/1358/dow-jones-industrial-average-last-10-years (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/01-06-25_Barrons_1%20Way%20the%20Mag%207%20Disappointed%20in%2024_5.pdf)
5 https://www.barrons.com/articles/magnificent-7-stocks-nvidia-apple-tela-c481ed78
6https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_122024A.pdf [Page 13] (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/01-06-25_Bloomberg_US%20Economy%20Surprised%20Again%20in%2024_6.pdf)
8 https://www.investopedia.com/investing/how-interest-rates-affect-stock-market/
9 https://www.morningstar.com/markets/13-charts-q4s-big-post-election-rallyand-late-stumble
[1]1 https://www.barrons.com/market-data?mod=BOL_TOPNAV (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/01-06-25_Barrons_Data_11.pdf)
12 https://en.wikipedia.org/wiki/Polar_bear_plunge
[1]3 https://www.accuweather.com (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/01-06-24_AccuWeather_Data_13.pdf)
[1]4 https://www.seatemperature.org (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2025/01-06-25_SeaTemperature_San%20Diego%20Temp_14.pdf)
[1]5 https://health.clevelandclinic.org/what-to-know-about-cold-plunges [1]6https://parade.com/948122/marynliles/best-new-years-quotes/