At this time of the year, clients and friends love asking the question, “What do you think of the markets?” Long ago, I learned not to answer with what I believe the markets will do – because no one knows for certain what the markets will do – but rather to respond with a handful of “data points” about what events are taking place currently and what near-future events truly figure in to investor expectations.
So far this year, markets are UP. To be exact, in the first 11 trading days of 2025 the markets have been up, down and then up. On balance markets are UP 1% to 1.5% year-to-date with small companies marginally leading the way. Small companies tend to be more volatile and react positively when there is perceived value in stock prices.
Even more important are positive events currently taking place and data points that have been achieved recently… with expectations for the US Federal Reserve to be in “watch and see mode” with respect to interest rate policy in order not to stoke inflation while maintaining and acknowledging an already strong job market.
Here are two random, meaningful data points:
- Data Point #1 – Tickets for the College Football Playoff National Championship between Notre Dame and Ohio State are changing hands on the low end at $1,350 to $1,750, with prices being paid (including fees) at over $2,300 to $3,000+. (Stadium capacity is 71,000.)
- This means that, at the low end, a Dad and/or Mom taking themselves and/or their one or two kids or friends to the game are gladly shelling out at least $2,700 to $5,400 for game tickets… and that is before airfare, hotel and everything else that goes along with the big event – a college football game.
- Seems like, at the moment, Mom, Dad and friends feel good about the markets.
- Data Point #2 – A friend who is retired from a high-level, global retailing job is working part-time (for fun) at something called the Atlanta Winter Market at AmericasMart in Atlanta. Wholesale and retail buyers and sellers from around the world come together annually to showcase and agree whether or not to purchase massive amounts of home furnishings and apparel merchandise.
- Word is that orders being placed this week are in large (possibly record) amounts.
- Retailers do not “willy nilly” agree to purchase massive amounts of merchandise if they are not of the belief that consumer spending is and will remain healthy for the time being.
Most of the answer to the question, “What do you think of the markets?” is anecdotal and guess work. But for the time being, markets are UP and the pieces are in place for at least, on balance, a strong start to 2025.
P.S. Go Irish!!
This material has been prepared for informational purposes only and is not intended to provide, and should not be relied upon for, tax, legal or accounting advice.