The stock market has been on an absolute tear. The S&P 500 is on pace for a fourth straight year of double-digit gains, something that’s only happened once before since 1928. That last time was the late 1990s, and it ended with the dot-com crash and a decade of pain. So naturally, a lot of us are wondering: is this too good to be true? To help make sense of it, Jean Chatzky sat down with Karen Finerman, co-founder and CEO of Metropolitan Capital Advisors and longtime panelist on CNBC’s Fast Money.
Finerman has managed money through booms and busts — the dot-com crash, 2008, all of it — so when she talks about this moment, she’s not speaking theoretically.
Karen Finerman on What Counts as a “Good” Economy
So much of this rally is being driven by companies growing without hiring, spending billions on AI, squeezing more out of the workers they already have, and funneling gains back to shareholders instead of employees. So what even is a “good” economy anymore?
Finerman doesn’t think this is a passing phase. “We’re not even the first inning of that,” she said, referring to AI’s effect on hiring and the broader economy. She pointed out that on paper, the U.S. is beyond maximum employment, but for complicated reasons, including a shrinking pool of available workers due to immigration policy, not because the job market is easy to access for everyone.
Her bigger worry is the medium term. “For a whole generation of kids, what is the workforce going to look like? What is the job market going to look like?” she asked, noting that white-collar jobs, long an engine of economic growth, are the ones facing the most headwinds right now.
The “K-Shaped” Economy and Retail
Jean Chatzy raised the idea of a “K-shaped” economy; some consumers spending freely, others tightening their belts as wages fail to keep pace with costs. Finerman said she “fully subscribes” to the concept.
She pointed to retail as a real-time illustration. Walmart, which she says addresses the whole income spectrum, had a disappointing earnings report and, in her view, was simply priced too high going in. Target, by contrast, came into the year with low expectations, a new CEO nobody was excited about, and has since turned in “an extraordinary job,” regaining traction with higher-end shoppers. TJX, meanwhile, stumbled after years of success, and openly admitted the miss was their own merchandising mistake, not a macro problem.
Her takeaway: the consumer is still largely employed, and that’s the single biggest thing keeping spending — and the economy — going.
The Bottom Line: Stay Invested, Stay Long
Finerman’s message: stay invested, diversify beyond the AI trade, and whatever you do, don’t borrow money to chase the rally.
Her approach instead is to keep your money in the market, in good times and bad: “I’m going to be long when it’s great. I promise you I will still be long when it’s terrible,” she said. “Doesn’t feel good, but I just try not to focus on that kind of thing.”
MORE ON HERMONEY:
- Use This Forever Paycheck Framework To Plan For The Retirement You Actually Want
- Spending More? This List Of Emotions Could Explain Why
- Protected vs. Growing: The Split Your Portfolio Actually Needs
