The Markets

Consumers were more optimistic. Investors were less so.

As we neared the end of 2024, U.S. consumers were feeling optimistic. Every month the University of Michigan Survey of Consumers conducts about 600 interviews with American households, asking interviewees about their personal finances, business conditions, and buying conditions.

In December 2024, the Index of Consumer Sentiment was up 3.1 percent month to month, and 6.2 percent year to year. Consumer sentiment rose “for the fifth consecutive month… reaching its highest value since April 2024. Buying conditions exhibited a particularly strong 32 [percent] improvement, primarily due to a surge in consumers expecting future price increases for large purchases… Broadly speaking, consumers believe that the economy has improved considerably as inflation has slowed, but they do not feel that they are thriving; sentiment is currently about midway between the all-time low reached in June 2022 and pre-pandemic readings,” reported survey director Joanne Hsu.

Individual investors, on the other hand, were feeling less bullish than they did earlier in the month. The AAII Investor Sentiment Survey found that investors’ outlook shifted in December. Investors became more uncertain, and a higher percentage reported feeling bearish.


  Week of
Dec 4		 Week of
Dec 25		 Historical average Highest
in 2024
Bullish 48.3% 37.8% 37.5% 52.7%
(July 17)
Neutral 21.0% 28.0% 31.5% 35.9%
(May 15)
Bearish 30.7% 34.1% 31.0% 38.6%
(Nov 27)

Source: AAII Investor Sentiment Survey

Investor sentiment is often considered to be a contrarian indicator. The AAII website explained:

“Although investors would like to imagine that their decisions are rational, most have bought at near-highs due to fear of losing out on gains and sold at near-lows due to fear of further losses. This herd behavior is called market sentiment; when market sentiment is low, the majority believes the market will fall, while high market sentiment means that the majority feels the market will rise in value. However, more often than not, the market will move against the sentiment of the majority. Therefore, many professional money managers use market sentiment as a contrarian indicator, buying when sentiment is pessimistic and selling when sentiment is optimistic.”

Last week, major U.S. stock indices finished higher, and yields on longer maturities of U.S. Treasuries rose. The benchmark 10-year U.S. Treasury yielded 4.62 percent at the end of the day on Friday.


Data as of 12/27/24 1-Week Y-T-D 1-Year 3-Year 5-Year 10-Year
Standard & Poor's 500 Index 0.7% 25.2% 25.7% 7.6% 13.0% 11.1%
Dow Jones Global ex-U.S. Index 1.4 3.6 4.0 -1.5 1.8 2.5
10-year Treasury Note (yield only) 4.6 N/A 3.8 1.5 1.9 2.2
Gold (per ounce) 0.0 25.9 26.4 13.4 11.6 8.2
Bloomberg Commodity Index 0.7 -0.5 -1.9 -0.7 3.8 -0.8

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, 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.

Idioms Don’t Say What They Mean…

If you’ve ever “cried wolf,” “gone the extra mile,” or “had butterflies in your stomach,” then you’re familiar with idioms—phrases that don’t mean what they say. They’re used to “add color” to communications, making what’s said or written more memorable. The English language has a lot of idioms about money. Test your knowledge of money idioms by taking this quiz.

  1. Someone says, “You can take it to the bank.” What they mean is you should:
    1. Make a deposit.
    2. Proceed with caution, it may be a scam
    3. Believe a statement is true and accurate
    4. Understand that a venture will generate a lot of money

  2. If someone is ‘living on a shoestring,” they have a very limited budget. Which of the following may explain how the saying originated?
    1. Shoestrings are thin and break easily
    2. Peddlers once made a living by traveling town to town selling shoelaces
    3. British prisoners would lower a shoe by its laces through cell windows hoping someone would give them money
    4. All of the above

  3. If you believe that a new product or service will do well you might say it will:
    1. Break the bank
    2. Put cash on the barrelhead
    3. Sell like hotcakes
    4. Hop on the gravy train

  4. When people offer aid to a person or group in need, they are:
    1. Striking while the iron is hot
    2. Following the herd
    3. Playing the long game
    4. Offering a helping hand

Answers: 1) c; 2) d; 3) c; 4) d

Weekly Focus – Think About It

“When we love, we always strive to become better than we are. When we strive to become better than we are, everything around us becomes better too.”

—Paulo Coelho, author

Wishing you and your families well,
Sean M. Dowling, CFP, EA
President, The Dowling Group Wealth Management

Please feel free to forward this commentary to family, friends, or colleagues. If you would like us to add them to the list, please reply to this e-mail with their e-mail address and we will ask for their permission to be added.

  • 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. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
  • 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 afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
  • 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 DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
  • 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.
  • 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.
  • You cannot invest directly in an index.
  • Stock investing involves risk including loss of principal.
  • The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Economic forecasts set forth may not develop as predicted and are subject to change. Investing involves risk including loss of principal.
  • The Price-to-Earning (P/E) ratio is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. It is a financial ratio used for valuation: a higher P/E ratio means investors are paying more for each unit of net income, thus, the stock is more expensive compared to one with a lower P/E ratio.
  • These views are those of Carson Group Coaching, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.
  • This newsletter was prepared by Carson Group Coaching. Carson Group Coaching is not affiliated with the named broker/dealer.
  • The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
  • Consult your financial professional before making any investment decision.

Sources:

http://www.sca.isr.umich.edu

https://data.sca.isr.umich.edu/fetchdoc.php?docid=24774

https://www.aaii.com/sentimentsurvey (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/12-30-24_AAII%20Investor%20Sentiment%20Survey_3.pdf)

https://www.aaii.com/journal/article/contrarian-indicators

https://www.barrons.com/market-data (or go to https://resources.carsongroup.com/hubfs/WMC-Source/2024/12-30-24_Barrons_Data_5.pdf)

https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202412

https://www.goodreads.com/author/quotes/566.Paulo_Coelho

https://grammarist.com/idiom/bank-on-it-and-take-it-to-the-bank/

https://library.wbi.ac.id/repository/293.pdf

https://www.merriam-webster.com/dictionary/shoestring#h2

https://www.merriam-webster.com/dictionary/hotcake

https://www.merriam-webster.com/dictionary/helping%20hand

ADV & Investment Objectives: Please contact The Dowling Group if there are any changes in your financial situation or investment objectives, or if you wish to impose, add or modify any reasonable restrictions to the management of your account. Our current disclosure statement is set forth on Part II of Form ADV and is available for your review upon request.