What’s going on here?

The CEOs of JPMorgan Chase and Goldman Sachs – used to lavish lives full of fancy suits and business-class travel – said this week that US stocks are expensive.

What does this mean?

The S&P 500 – the key US stock market index – handed investors returns of more than 20% in 2023 and 2024. And with enthusiasm for AI still mounting, hopes of widespread deregulation, and increased dealmaking, you can see why they’d bet on more of the same to come.

But investors have warnings to heed. Stocks are now in the top 10% to 15% of their historical valuations – and high government debt levels, inflation, and geopolitical tensions are threatening that bullish run. JPMorgan’s CEO has actually been sounding the alarm since 2022, and now Goldman’s boss has joined the chorus.

Why should I care?

For markets: It won’t always be “the good old days”.

Today’s stock prices reflect predictions that the US economy will either stay fighting fit or get in even better shape. But it seems retail investors have sensed a potential shift. They’re less optimistic about stocks than their professional counterparts so far this year, according to Bank of America, with only a quarter expecting stock prices to rise over the next six months. That could explain why they’ve pulled back on buying fan-favorite growth stocks like the Magnificent Seven since November.

For you personally: “Protect the downside and the upside will take care of itself” – Donald Trump.

Past bumper returns could tempt you to go all-in on stocks. But Goldman forecasts the S&P 500 will only return 3% a year, on average, over the next decade. Instead, you might want to blend stocks with bonds, commodities, and even some bitcoin to lower your risk while still chasing returns – that could boost your chances of hitting your goals.

What’s going on here?

The aerospace and airline industries reported diverse earnings on Thursday.

What does this mean?

GE Aerospace – the remnants of recently renamed and restructured General Electric – announced a stronger-than-expected final quarter of the year. And that was despite supply chain challenges throughout the industry and a challenging period for Boeing – one of its biggest customers. The cherries on top: a pickup in the firm’s dividend, a bigger-than-expected share buyback program, and a free cash flow forecast for this year that was higher than analysts predicted.

Not every firm could match that standard. American Airlines tried by announcing a stronger-than-expected fourth quarter – but its promise of a worse-than-predicted loss this quarter took investors aback. Rival Alaska Air fared a little better, following up a strong quarterly announcement with predictions of a smaller first-quarter loss than expected.

Why should I care?

For markets: No-frills flying.

In its former life, General Electric was a storied yet complex conglomerate. That meant investors had to get to grips with its aerospace, finance, power, and healthcare operations to figure out what the whole company was worth. And that amount of admin is why investors tend to slap a “conglomerate discount” on such sprawlingly complicated firms, pinching their share prices as a result. Well, the opposite has happened now, with GE having sold off everything but aerospace. The stock initially jumped 8% on Thursday, even after having risen 64% last year – almost three times the S&P 500’s 24% return.

The bigger picture: You can’t use Google Flights for this.

Investors cast judgment on the airlines, too, sending Alaska’s stock up an initial 2% and American’s down 4%. They tend to judge an airline based on how much capacity it has, how much of that it’s using, and how much it can charge its customers. American has been lagging on the second and third metric since last year, although it hopes to be back on track by the end of this one.