With 2024 starting us squarely in the face, it’s only natural that investors are thinking ahead to the new year. More specifically, people want to know which investments will carry them to a successful and lucrative 2024. But who should you listen to?
There’s an entire industry of investment and economic prognosticators whose sole job is to predict where things are heading. Investors often seek guidance from these experts and analysts who claim to have insights into the future, hoping to gain an edge in their investment strategies. However, if we can learn one thing from 2023, it’s that we saw a continuous serious of failed and conflicting predictions from the pros.
One thing that never happened this year was the most predicted recession in history. Most economists and prognosticators expected that the U.S. economy would fall into recession during the year. Instead, the real gross domestic product (GDP) increased by a robust 4.9% in the 3rd quarter, after smaller increases in quarters 1 and 2, per the Bureau of Economic Analysis.
There were other notable misses as well:
- The substantial declines in housing prices predicted by many professionals as the Fed raised increase rates (and mortgage rates followed suit) never happened.
- Throughout the year, predictions for oil prices and energy all went in one direction: up. Whether it was OPEC’s cuts, the Russia/Ukraine war, the Israel/Palestine war, or any of a million other reasons, everyone expected oil to become more expensive. Instead, as of Christmas, oil prices had decreased nearly 5% YTD. Natural gas prices—in spite of what our own home energy bills tell us—declined almost 40% YTD.
- Dividend stocks, which many in the financial industry recommended as a great strategy for the uncertainty of 2023, dramatically trailed the broader market.
Perhaps the most glaring miss for 2023 was the stock market projections. On January 8th, The Motley Fool proclaimed that “We’ll still be in a bear market by year’s end.” This sentiment was not uncommon. Even the bulls were predicting single-digit gains for the markets in 2023. Instead, the NASDAQ surged 44% YTD while the S&P 500 rose 24% YTD as of Christmas. If you were unfortunate enough to listen to the experts and chose to park your money outside the market, you would’ve missed out on terrific gains!
What’s the big takeaway from all of this? That there are plenty of highly-paid professionals whose job it is to make predictions and grab the headlines, but their best guesses are just that—guesses. If you allow yourself to get caught up in the headlines, you miss out on the best part of investing: the near-certainty of long-term gains.
As I’ve noted before, the S&P 500, a basket of U.S. large company stocks, has historically gone up in 62% of individual months. After 1 year, there is a 79% chance of gains, and after 10 years that number is 94% (all based on historical performance). Know your goals, know how much risk you’re comfortable taking, and diversify your investments with a focus towards long-term investments.
And what about the pundits? Take those headlines with a grain of salt. Read the 2024 predictions with the knowledge that they are little more than guesses and should not trick you into dismantling your well-invested, diversified portfolio.
However you plan your moves, invest smartly and invest well!
Larry Sidney is a Zephyr Cove-based Investment Advisor Representative. Information is found at https://palisadeinvestments.com/ or by calling 775-299-4600 x702. This is not a solicitation to buy or sell securities. Clients may hold positions mentioned in this article. Past Performance does not guarantee future results. Consult your financial advisor before purchasing any security.
