Here at The Price Group, we do not make short-term stock market predictions. Why? Because even the “best” are wrong most of the time. Warren Buffett famously continues to say “neither I nor you are smart enough to predict where the stock market will be within a year from now.” However, we do like to share our thoughts as it pertains to the trends that will influence The Price Group’s decision making over the next 12 months.
Below are the primary trends we believe could have the greatest impact on the economy and the financial markets in 2024.
The Resilient Consumer Gets Tired
We believe the U.S. economy will experience a mild recession during the 2nd half of 2024 because of slowing consumer spending. While we expected a recession during the 2nd half of 2023, the consumer has proven more resilient than anticipated.
Mr. Powell’s Monetary Policy
We are of the opinion that the Federal Reserve has already ended its most aggressive tightening cycle (i.e. increasing short-term interest rates) dating back to the 1980’s. While inflation is not at the 2% target that the Fed is hoping for, tremendous progress has been made. Most expect the Fed to cut interest rates later this year.
Bonds Are Back
We expect interest rates to fall further in 2024. Given the starting yields in 2024, we think it should be a good year for the bond market. We continue to favor investment grade (i.e. high quality) over lower rated segments of the market.
Critical Eye on Equities
During the last few months of 2023, stocks forgot how to move lower…. they only moved higher! We are of the opinion the markets have already priced in a lot of the good news as it pertains to the economy and interest rates. In 2024, we think the type of stock you own will be very important. We anticipate a wider margin of performance between different segments of the market.
Cleanest Shirt in Dirty Laundry
We continue to favor U.S. stocks over international stocks because the U.S. economy continues to grow at a quicker pace when compared to other developed countries. American companies also have better profit margins and grow their dividends quicker when compared to other international companies.1
Turning Up the Heat
We are entering a new year where a lot of people feel “good” about the stock market. This reality does not mean that markets will move lower but it typically does lead to more volatility. Parlay this with the fact that we have entered a U.S. presidential election year and you have a recipe for increased volatility.
Stay Focused & Stay Balanced
Having a diversified investment strategy is not a good way to “beat the market” but it is a valuable tool when navigating economic and political uncertainty like we see today in 2024. We are of the opinion that having a bonified and structured investment management process is going to be very important over the next 12 months.
Conclusion
Overall, we think there are some subtle headwinds for stocks and tailwinds for bonds in 2024 even with a mild recession. We continue to strongly believe that every family needs a wealth coach who understands and prioritizes holistic wealth planning. Would you like to review your Live Well Plan? Perhaps you would like our team to help you create a personalized Live Well Plan? The Price Group is here to help.
About the Author
Matt Price serves as a Partner and Managing Director for The Price Group of Steward Partners. He resides in Houston with his wife, Emily, their four children and "Fisher" the family golden retriever. Matt studied at the University of Pennsylvania – Wharton School of Business for his Certified Investment Management Analyst (CIMA®) designation after receiving his undergraduate degree from the University of Tennessee - Knoxville. Over the past 12 years, Matt has helped families make high quality, common sense decisions regarding their wealth and their legacy. Matt firmly believes everyone needs a wealth coach!
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1: Source: FactSet, Data as of 12/31/2023.
The views expressed herein are those of the author and do not necessarily reflect the views of Steward Partners or its affiliates. All opinions are subject to change without notice. Neither the information provided nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Past performance is no guarantee of future results.
Bonds are subject to interest rate risk. When interest rates rise, bond prices fall; generally the longer a bond's maturity, the more sensitive it is to this risk. Bonds may also be subject to call risk, which is the risk that the issuer will redeem the debt at its option, fully or partially, before the scheduled maturity date. The market value of debt instruments may fluctuate, and proceeds from sales prior to maturity may be more or less than the amount originally invested or the maturity value due to changes in market conditions or changes in the credit quality of the issuer. Bonds are subject to the credit risk of the issuer. This is the risk that the issuer might be unable to make interest and/or principal payments on a timely basis. Bonds are also subject to reinvestment risk, which is the risk that principal and/or interest payments from a given investment may be reinvested at a lower interest rate.
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