The Great Moderation is Over: Here is What Comes Next | Practical Lessons from Liz Ann Sonders
Two Quants and a Financial PlannerMarch 17, 202500:52:44

The Great Moderation is Over: Here is What Comes Next | Practical Lessons from Liz Ann Sonders

In this episode, we break down key lessons from our conversation with Liz Ann Sonders, Chief Investment Strategist at Charles Schwab, exploring timeless investment principles and market dynamics that remain relevant regardless of current market conditions. From the end of the "Great Moderation" era to practical insights about market timing and portfolio management, Liz Ann's wisdom offers valuable perspective for investors of all levels.

Main topics covered:
• The transition from the "Great Moderation" era to what Liz Ann calls the "Temperamental Era" - understanding how inflation volatility and market dynamics are shifting
• Why "rolling recessions" matter and how different sectors of the economy can experience downturns at different times
• The limitations of valuation metrics as market timing tools and why they shouldn't be used for short-term decisions
• How uncertainty is a constant in markets and why claiming "above average uncertainty" is often misleading
• Important lessons from Martin Zweig about market timing versus trend following
• The dangers of benchmark obsession and why comparing everything to the S&P 500 can lead to poor investment decisions
• Why "all in" or "all out" market timing strategies rarely work and the importance of disciplined portfolio management
• Practical advice for handling concentrated stock positions and the challenges of rebalancing during market gains

0:00 - Introduction
3:16 - The End of the Great Moderation Era
9:28 - Rolling Recessions and Economic Cycles
19:28 - Valuation as a Market Timing Tool
22:52 - Uncertainty in Markets
28:33 - Market Timing vs Trend Following: Lessons from Martin Zweig
38:33 - The Problem with Benchmarking
42:27 - Managing Concentrated Stock Positions
46:16 - The Fallacy of "Get In or Get Out" Investment Strategies