Today, I’m sharing 7 of my favorite investing & economic charts from the past month.

These charts cover topics such as:

• Market Valuations
• Inflation & Interest Rates
• Investor Sentiment...and More!

Before we dive in, did you catch this week's podcast?

5 Steps to Overcome Retirement Spending Challenges Learn why it’s so difficult to transition from saving to spending, what you can do to combat common spending challenges, and how to achieve "true wealth" in retirement. Listen Now →

7 Favorite Charts (November 2024)

#1 - All-Time Highs Lead to More All-Time Highs

2024 has been a year marked by all-time highs—over 50 as of the last count. Given that a calendar year has about 250 trading days, this indicates that at least 20% of this year’s trading days will have concluded at an all-time high!

Assuming we don’t experience any additional all-time highs, 2024 will be ranked #7 in terms of the quantity of new all-time highs.

It’s been a remarkable year, to say the least.

#2 - U.S. Stocks Are Expensive

With the S&P 500 currently trading at more than, it's safe to conclude U.S. stocks are expensive (historically speaking).

What you may find surprising, however, is that U.S. stocks were more expensive in September 2020 than they are today. Since then, stocks have produced a total return of more than 15% per year!

I share this not as a prediction that the market will repeat its previous performance (which is unlikely), but to demonstrate that high stock prices do not automatically indicate an impending decline.

#3 - Inflation and Interest Rates

While there are areas in our economy where inflation remains a significant issue, overall, inflation seems to have returned to normal levels.

On a year-over-year basis, inflation is hovering around 2%, and the shorter-term rate stands at 1.8% (although it is trending slightly upward).

As indicated by the chart title below—considering that interest rates are currently higher than inflation—there’s room for the Fed to continue its strategy of lowering rates.

#4 - Inflation Remains a Problem for Some Goods and Services

While the big picture noted above shows that broad inflation is largely back to the historical norm, some goods and services are still experiencing high rates of inflation.

Most notably, auto insurance premiums are increasing at an alarming rate.

In addition, discretionary spending categories such as airfare and eating out are also outpacing inflation.

The good news, however, is that earnings (wages) are rising at a higher rate than inflation as well. My fingers are crossed that this latter trend in rising wages continues.

#5 - Sentiment and Politics (Part 1 of 2)

It’s pretty evident that political affiliation greatly influences people’s views on the overall economy.

However, this party-specific pessimism is not at all predictive since GDP has grown every quarter since Trump’s 2016 election victory (understandably excluding the first two quarters of 2020.)

#6 - Sentiment and Politics (Part 2 of 2)

Despite the overwhelming evidence that the president’s party affiliation doesn’t matter much to the economy, this phenomenon remains alive and well.

Here's what’s happened to economic sentiment this past month (the trend looks familiar).

#7 - The Perils of Forecasting

We’re now entering the start of “forecasting season,” when every major investment house shares its crystal ball predictions for what will happen in the market next year.

Before considering their predictions, we should first review how they’ve done in the past.

(Spoiler: It’s not good.)

As you can see below, the market currently sits at a level that is about 23% higher than the average prediction issued late last year!

Remarkably, it’s 11% higher than the most optimistic of all the forecasters.

Given the evidence, I think the best thing we can do is ignore this forecasting charade entirely and just enjoy the ownership of the world's great companies.

History has shown this to be a wise decision.

Bottom Line

If there is a common theme amongst these charts, it’s that there is a lot of noise out there.

Thankfully though, through the study of market and economic history, we can probably conclude that it’s not valuations, inflation, the president, the FOMC, or anything else that will drive the long-term returns of our portfolios.

These things may impact the market’s near-term performance, but they are all likely to become mere footnotes over longer periods of time.

If this is the case, then I have to believe that it will be our own actions—or, most often, our refusal to react to these distractions—that will ultimately drive our portfolio’s returns over the decades ahead.

Thus, you won’t find it surprising that my recommendation is simply to ignore the noise and stay focused on your personal retirement plan.

Stay wealthy,

Taylor Schulte, CFP®