Beyond the Magnificent Seven | Liz Ann Sonders on Markets, Cycles & Investing

In this episode of Excess Returns, we sit down with Liz Ann Sonders, Chief Investment Strategist at Charles Schwab, for a wide-ranging discussion about markets, the economy, and investing. We explore her unique perspective on the current market environment, including her views on the end of the "Great Moderation" era and the transition to what she calls the "Temperamental Era" - a period likely to bring more volatility in both inflation and economic growth. Liz Ann shares invaluable insights about the importance of looking beyond headline index numbers to understand what's really happening in markets, the difference between behavioral and attitudinal sentiment indicators, and why changes in economic trends often matter more than absolute levels. We also discuss the evolution of market structure, including the impact of passive investing, and she shares some of the most important lessons she learned from working with legendary investor Marty Zweig. Drawing on her decades of experience, Liz Ann explains why investors should focus less on trying to predict the future and more on making sound decisions along the way. Whether you're interested in understanding current market dynamics or looking for timeless investing wisdom, this conversation offers something for investors at every level. Join us for this insightful discussion where we break down complex market topics into understandable concepts that can help inform your investment decisions. 0:00 Introduction and Liz Ann Sonders' key insights 0:33 Welcome to Excess Returns 2:43 Important PSA about social media imposters 4:04 Lessons learned from working with Marty Zweig 8:17 The end of the "Great Moderation" era 13:21 Are recessions over? Understanding the unique economic cycle 16:22 Market performance beneath the surface 20:02 Understanding market sentiment: behavioral vs attitudinal measures 27:58 Shift from consumer-driven to investment-driven economy 32:01 The importance of factor investing over sector focus 38:10 Discussion of capital markets and labor trends 40:28 Valuation as a sentiment indicator 46:07 The "Magnificent Seven" and market concentration 49:33 Benchmarking mindset and managing emotions 52:02 Quality factor investing and market outlook 56:08 The impact of passive investing and ETFs 1:00:26 Key lessons for investors 1:01:51 Closing remarks and where to follow #InvestingInsights #MarketStrategy #LizAnnSonders #Schwab #WallStreet #FinancialMarkets #StockMarket #MagnificentSeven #InvestorEducation #MarketOutlook #PassiveInvesting #ETFs #ValueInvesting #MarketCycles #2025Outlook