Ben Carlson, portfolio manager at Ritholtz Wealth Management and the voice behind A Wealth of Common Sense, dropped a line on Morningstar’s The Long View podcast that I keep coming back to.
Co-host Jeff Ptak summarized Carlson’s thinking as “it’s not the latte, it’s the Lexus,” and Carlson agreed, adding “and it’s the house too.” Quick Read – SPDR S&P 500 ETF (SPY) declined roughly 20% in 2022 during peak inflation but has gained 78% over five years and 263% over ten years, demonstrating that equities outpace inflation over decades despite short-term volatility. – Households spending more than 50% of gross income on housing and transportation risk wealth erosion from sticky services inflation, and those locked into pre-2020 mortgages at 3% rates maintain a significant financial advantage over buyers entering the market at 7% rates today. – The analyst who called NVIDIA in 2010 just named his top 10 stocks and SPDR S&P 500 ETF wasn’t one of them
Get them here FREE. The stakes are bigger than they sound. If you obsess over coffee runs while overpaying on a car note and a mortgage, you have optimized the wrong line items.
When inflation runs hot, as it did in 2022, the gap between the right house and the wrong one compounds against you every month. The verdict: Carlson is right, and the math is brutal Carlson’s framing is sound. He pointed out that for the average American, 50% of spending goes to housing and transportation combined, roughly 35% to housing and 15% to transportation.