← HerMoney with Jean Chatzky
HerMoney with Jean Chatzky
Stock Market Predictions for 2025
00:26:05
Karen Finerman joins us to share her 2024 lessons and 2025 predictions.
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- [00:01]
Jean Chatzky
You're listening to an Airwave Media podcast.
- [00:08]
Karen Feinerman
The market got super excited and then had cooled off. You know, the first couple of weeks of January weren't great, but I do think that we are in an environment that is more pro business that that sort of animal spirits that are released. I think that's sort of a real thing. And confidence begets confidence. So if people are feeling confident about the economy, they're more willing to spend, they're more willing to invest in growing their business, let's say. So I think that we still have some excitement left from that.
- [00:42]
Jean Chatzky
Hey, everybody, thanks for joining us today on HerMoney. I'm Jean Chatzky and we are here today to talk about the markets in 2025, to talk about investing in 2025, to give you all a little sneak peek into what's going on in our Women's only investing club, which, by the way, meets every other Monday night on Zoom. We've now got hundreds, hundreds of women, almost 500, by the way, learning with us. And I gotta say, 2024 was an amazing year, as Karen Feinerman, who is my co host and co founder at Investing Fix, will tell all of you. Now, Karen's no stranger, we know. If you don't know her from the hermoney community, you have no doubt seen her on CNBC where she is a fast money panelist. She is also the CEO of Metropolitan Capital Advisors. Always so good to see you.
- [01:44]
Karen Feinerman
Always good to see you, Jean.
- [01:46]
Jean Chatzky
And I got to see you in person this week.
- [01:48]
Karen Feinerman
I know. That was so nice. In the flesh. I love it.
- [01:52]
Jean Chatzky
And you made a fabulous cappuccino. Fabulous.
- [01:57]
Karen Feinerman
It is my only thing that I can cook that and a tuna melt and that is it. Nothing else.
- [02:02]
Jean Chatzky
I'm honored that I've been a recipient of one of your recipes. Last week in Investing Fix, you dug into this thread that you post every year on X or Twitter, whatever you want to call it, where you go over sort of what happened the year before. The winners and the losers that you've paid the most attention to that you bought. You talk about what you learned. Our members got a ton out of it. And we decided we would do a little bit of a recap to tell people what Investing Fix is like, but also to just revisit 2024 in the markets before we go on to 2025. So we're going to tee that up in just a second, but before we do it, we're going to take a quick break.
- [03:00]
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- [03:31]
Jean Chatzky
We're talking with Karen Feinerman. Karen, let me just say up front, I am not an investment advisor. This investment information and the information in our classes is largely educational. It may not apply to your special circumstances, but I believe so fully that learning how to evaluate a stock, how to evaluate a company, how to talk about these things is something that every woman should be able to do. So tell me a little bit about this thread on X. Why do you do it? Why did you start recapping?
- [04:14]
Karen Feinerman
So I think it's a good exercise to do to sort of look over what happened during the year, what worked, what didn't, and why. And it's also, it's an exercise in humility, for sure. I am always, what could I have done better? What did I get wrong? And what I try to do. What we try to teach in the class is let's have a methodology for making decisions. And if you have a strong methodology, then over time you should make good decisions. Sometimes they won't work out, and that's fine. And sometimes you have no methodology and you get lucky and you think you're smart. That happens. And sometimes you can have the best methodology and you just, you get unlucky and it's wrong. But I like to sort of think, all right, where did I go wrong and what can I learn for next time, right? If you can't learn off of your mistakes, then you're making another mistake. And the very best thing you can do is learn off of someone else's mistake. That's the best. But so I try to learn from my mistakes, and without fail, every year I come up with lots of opportunities for learning. But I also want to show what worked and why.
- [05:23]
Jean Chatzky
And what worked in 2024 was the Magnificent Seven, the Fang play, right? Microsoft, Amazon, Google or Alphabet, Netflix, Nvidia, Meta, Tesla. I mean, what went so right for these big tech stocks?
- [05:43]
Karen Feinerman
So what's amazing, though, what went so right is that what had gone so right happened the year before as well. So they all put up really big earnings and they all trade at various multiples. So for the Magnificent Seven, there were some overlapping themes that worked. And AI were certainly one of them last year and will continue to be one this year. So the ones that really benefited from AI were Alphabet, which is Google, and Amazon has a giant cloud business, so that's AI Reliant as well. Microsoft also and Meta of all of them. Meta had been able to show we're seeing real return for the gigantic dollars that we're spending at Nvidia. So also Nvidia had a good year, but Meta's showing that advertisers are really happy with the product that we can give them the targeted audience that we can help them reach and they're willing to pay more for it. So Meta really had a big year. Microsoft had the promise of copilot and $30 every month on every Windows user. That would be an extraordinary amount of money that's actually been a little slower to materialize. So I don't, I don't have a big position at all in Microsoft. Some of the other ones, Netflix, a lot of things went right at Netflix and talk about that, how the ad subscriber tier growth was great, but also they get the revenue from that and then they also can sell the ads. And now they have more advertisers than advertising space to, to advertise. So it's, it's really an extraordinary business. And then Netflix can raise price. That goes right to the bottom line. So each of them had something really specific and strong, some related. But the other thing about them all, they all generate an extraordinary amount of cash. So rising interest rates, lower interest rates, they don't really care. They don't need to, they don't need to tap the debt markets. They're just tremendously powerful businesses. So that whole MAGA trade worked. And then Tesla, which I don't own, of course went berserk after the election. And I mean it was up, I don't know, 60% or so. So we look at that. Why did that work and will it continue to work? I also have to look at, well, what didn't work, what really didn't work and why. And that brings me to Louis Vuitton. You know, the women in the class, we had Louis Vuitton and then we put it up again for consideration and they very wisely voted it out. Very wisely. I was not as wise. The collective wisdom was clearly stronger than my individual wisdom. I still noted a lot went wrong and if I think about dissecting it, what really happened? A few things. So one, I didn't fully appreciate how much of their business in 21 or 22 was really people in the pandemic still home, some of them, but still have a lot of savings and wanting to shop. And that eventually would have. I thought it receded already. There was a lot more to recede and I did not appreciate that. Also, China was surprisingly weak and we know about the giant real estate collapse there and the economic pressures there. So people pulled back spending. And I think there was also the idea of you don't want to be seen as spending what used to be good to be flashy. Now modesty was more in vogue. So they pulled back there. And then the Louis Vuitton's of the world had been raising prices so much during the pandemic because of the extraordinary demand, that when the demand receded a little, so many potential customers were priced out of the market. So I kind of missed that at every turn.
- [09:28]
Jean Chatzky
You know, I think you're being a little hard on yourself, right. It's hard to catch all of these things. But I want to just take a step back. And for people who don't know how we run this class, we put up potential investments, four of them over the course of a month. And the members vote on which of these investments to add to the portfolio. Sometimes if you vote something else in, something else has to leave the island. Right. Because there's only so much money to go around. And so the members are really deciding what gets to stay in the portfolio over time. We are not pooling money with our members. It's a model portfolio that they are building over time. But a lot of them are buying these stocks for their own accounts and doing well because of it. This portfolio, our portfolio actually beat the market in a year in which the market did tremendously well. And that was exciting.
- [10:32]
Karen Feinerman
I was excited by it. I mean, it is hard to beat the market. And they really put together a portfolio that was able to do that. And I hope they learned that not only can we demystify literally what are the words, what are the acronyms that people focus on and that they can choose stocks. And we also talk about how to build a portfolio, how to think about not just the individual name, but how to think of it overall. And do we want to have a lot of exposure in this industry or that industry? And so I don't know, I was very proud of them. So hopefully as they're learning just the words and what to know, what do you need to look for? What makes a good company, what makes a good stock? The also there's the other added element of how do you Build a portfolio. And they did a masterful job. We did not pick any of them. We offered them picks, they chose them all.
- [11:32]
Jean Chatzky
I want to talk a little bit about next year. So as you look into 2025, given that nobody has a crystal ball, what do you think happens going forward? And let's start with the same tech stocks, the magnificent seven that we started with. I mean, they've had a rough some of them couple of months coming out of 2024 into 2025. Where do you think we are?
- [12:01]
Karen Feinerman
So normally I would say just because the calendar changes, the portfolio doesn't change. But the difference between 24 and 25 is we have a very different administration and that does change things. And so we saw this sort of big run up in the market after the election. Not only were we out of the uncertainty of will we even know who the president will be? We certainly did. That was put to bed right away. But there was that response to an environment that's considered to be far more business friendly. So the market got super excited and then had cooled off. You know, the first couple of weeks of January weren't great. But I do think that we are in an environment that is more pro business that that sort of animal spirits that are released. I think that's sort of a real thing. And confidence begets confidence. So if people are feeling confident about the economy, they're more willing to spend, they're more willing to invest in growing their business, let's say. And so I think that we still have some excitement left from that. On the flip side, who knows what the tariff situation will be and that, you know, as I said, markets hate uncertainty. We'd rather just know what it is, whatever it is, just tell us and then we can sort of work around it. I always think of like when something drops on the ground and there's a bunch of ants, they're in a frenzy and then they figure out, all right, we're going around, they make lines and they go around and that's it. And then they've dealt with it. It was the uncertainty they couldn't deal with. So we're in a little bit of uncertainty about. About what his policies will be, certainly as it relates to tariffs. And that has all kinds of sort of effects of, particularly for retail importing. Are we going to be able to import from China? Do companies need to find somewhere else to manufacture? That's already. We got a scare of that before. So that has started to happen. But it's still. For a company like Apple, this is going to be really important. And we're starting to see retailers almost, I don't know if hoarding, but ordering early to try to beat any tariffs. So that creates uncertainty. And the other thing that for me creates a lot of uncertainty is I do think that this very pro business environment will also be very inflationary. And as most of us probably know, we have an enormous debt problem in the United States. I'm talking about the United States itself. They're going to need to fund this debt. The higher rates go, the more it costs to fund this debt. So that's not a great cycle to be in. So that's sort of my big worry for this year. But I'm optimistic about a lot of businesses because particularly banks. Banks have been really hamstrung by a lot of regulations and I think that will ease. And if they're lending more, they that helps sort of grease the wheels of the economy. And then for a big money center bank and of course, everything always leads back to JP Morgan and Jamie Dimon for me, of course, of course for their business that has they lend, but they also have a big asset wealth management business that's doing really well right now and they think they can grow it a lot. And they also have a very big investment banking business, capital markets business. They do debt issuance, they do equity issuance, they investment banking business. They advise on takeovers. So you could see all parts of that business humming and we saw that, got a sense of that yesterday with the really good earnings. And other banks are also going to have really good earnings as well. And that helps.
- [15:47]
Jean Chatzky
It definitely helps. But there is a wild card in the mix when it comes to JP Morgan and that's who's going to run the place when Jamie Dimon is no longer there. We're going to take a very quick break and we'll be right back.
- [16:02]
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- [16:32]
Jean Chatzky
We are talking with Karen Feinerman. Karen is of course on cnbc. She also is the co host and co founder of our Women's Only investing club. We call it Investing Fix. So no secret, your love for Jamie Dimon. No secret. The fact that you've been a Longtime fan of JPMorgan Chase, it's been in our portfolio in the club. It's done incredibly well. But just in the last week there's been some news about succession at JPMorgan Chase and it's not looking as if we have any clear answers.
- [17:13]
Karen Feinerman
Right. So on the call yesterday, he sort of alluded to I got a few more years here and a few, I'm not sure how much a few is. There's a lot of people trying to figure out what a few is, but I'm sort of thinking a few is three.
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Jean Chatzky
I don't, I always thought a few as three. Right? Several. Several might be more than three, but a few is couple. Few, several.
- [17:33]
Karen Feinerman
A couple's two.
- [17:34]
Jean Chatzky
Couple is two. Pew is three. Several four.
- [17:37]
Karen Feinerman
Okay, there we go. Mystery solved. A few years left. But one thing did I did read yesterday and that surprised me and honestly saddened me a little bit. Jen Peepsack, who I really thought was going to be the, the next CEO of JP Morgan, a super talented executive. She is going to be taking over the chief Operating officer role, a really important role. And also she said she did not want to be the CEO. And I was sad about that because I thought she'd be a great CEO. But also I would love to see a woman run JP Morgan. So we do have one of the major banks, which is Citibank, who is run by Jane Fraser. Other than that, there are no major financial, major financial institutions run by a woman. So there's a lot of great candidates there, but it won't be her coming.
- [18:29]
Jean Chatzky
Back to the markets for this coming year. We had an unemployment report that was a little hotter than expected, followed by an inflation report that came in a little cooler than expected, balance each other out a little bit. I think there is a feeling that the economy is in good shape, but there's not a lot of certainty about whether the Federal Reserve will continue to reduce interest rates in the coming year. And if they do, how many times and when, how do you think that is going to impact the markets?
- [19:11]
Karen Feinerman
They may not lower very many times. They may not lower at all. I am concerned about inflation. So we have one trade on that is really a bet on the CPI going up. That's what I think is going to happen. That isn't necessarily bad for markets. If the economy is improving and with that you have some inflation that's not necessarily terrible. But if your model for having a stock move higher really needs to have rates come down, for example, if you are a company with a lot of debt that you hope you can roll over lower and therefore have lower interest rates. I would not be optimistic on getting a lot of relief with lower interest rates. So it depends on the business.
- [19:59]
Jean Chatzky
What else are you feeling particularly good or bad about this year? When you look at health care, when you look at housing, when you look at other sectors that I know you follow retail in general, I think the.
- [20:14]
Karen Feinerman
Consumer is in not bad shape. I think they've been getting wage increases and so while yes we have inflation but also they're making more still housing is not affordable. I don't know the way around that. I do think that we could see looser restrictions on zoning and housing. Maybe that could happen. It's interesting sometimes in a stock or a company or an idea, the stock peaks even before the earnings peak. So something like Nvidia it has proven again and again how extraordinary the demand is. But at some point the market keeps ratcheting up the expectations. And so at some point is there a quarter that Nvidia could announce that's good enough to appease the market? I don't know. We could see that sort of stall out. Even if the underlying business is doing well, that could happen. And I think there's another similar thing going on in the GLP1s Ozempic WeGovy that the market has put in too much hype and almost no matter what they report. So Lilly reported what were disappointing earnings and the stock was down a lot. Even though this is the holy grail, I'm long both Nvidia and Lilly and that worries me a little bit. But I try not to get too over focused on any one quarter.
- [21:45]
Jean Chatzky
Well, what I love about the way that you look at stocks and the way that we look at them in class is we answer four fundamental questions. What is this company do? What do we like about them? What don't we like about them and would we buy them at this price? The valuation question. And by the time you get through those answers, people have a really good sense of where the fundamentals for this company are at this point and that whether you buy the stock or not, that enables you to have an intelligent conversation about what's going on in the markets and the world and, and that's exciting particularly for people who haven't felt able to participate in that conversation before.
- [22:34]
Karen Feinerman
One other thing I just want to add is also beyond teaching what those things are. Why do they like it? What's the business model? How do they make money? What's their edge? That kind of thing. I think it's good to expose them to the idea of, okay, why does it happen that a company will report really good earnings and the stock goes down? And it's all about expectations. So you need to understand what are the expectations. That's half the battle, at least. So this data doesn't come out in isolation. It's relative to what the market was thinking or expecting. So hopefully they get a feel of all. Right. Beside all the ins and outs of what this company does and how they make money, what their edge is, what are people thinking about it?
- [23:18]
Jean Chatzky
Absolutely. Well, we will keep looking at more companies and more investments and more exchange traded funds, maybe even a bond or two as the year goes on. Thanks for doing this update with me. Taking a look at the markets and the forces that are going to shape the markets this year. It's going to be a ride.
- [23:37]
Karen Feinerman
It always is a ride. We just don't know which way. But always fun to be with.
- [23:41]
Jean Chatzky
Eugene, thank you. And if you want to learn more about investing, Karen and I would love to see see you at our next Investing Fix session. It's an incredible community of women that we've built. They're having a good time. Your first month is always free. So check us out at investing fix.com thanks, Karen. See you soon.
- [24:01]
Karen Feinerman
All right. Thanks Jean.
- [24:04]
Jean Chatzky
Thanks so much for joining me today on Hermoney. If you love this episode, please give us a five star review on Apple Podcasts. We always value your feedback and if you want to keep the financial conversations going, join me for a deeper dive. HerMoney has two incredible programs, finance Fix, which is designed to give you the ultimate money makeover, and Investing Fix, which is our investing club for women that meets bi weekly on Zoom. With both programs we are leveling the playing field for women's financial confidence and power. I would love to see you there. Her Money is produced by Haley Pascalides. Our music is provided by Video Helper and our show comes to you through Megaphone. Thanks for joining us and we'll talk soon.