2024 - Looking ahead
Hello everyone and welcome to the boodle February 2024 blog! If you're a returning client, thank you for your trust, and if you're new to boodle, welcome aboard!
The boodle blog is a tool that we publish for our clients to let them know what our opinion is of current market conditions, and by knowing what we at boodle are doing in the market, our clients are in a better position to understand their own financial equity portfolios, and thus maker wiser decisions with their money.
At boodle, we try to ascertain stock market conditions by determining several (many) key economic indicators that we have grown to follow over more than a quarter of a century. We generally don't like to publish what our view is of the market, until the second month of the year;February.
As we work on this important blog, the month of January just came to a close, so now we have some economic indicators that can help us understand the coming year.
The 2023 year to date return on the market, as measured by the S&P 500 was 26.24% and that great return followed after the negative -18.15% return that we suffered through in 2022. For 2024, Boodle is of the opinion that the market, (S&P 500), will be positive, but we caution our members against expecting a repeat of a 26.24% return. There are several factors that lead us to this conclusion, and we will share those factors with you.
The Federal Reserve raised rates in 2023, and just recently have paused future increases. We think that the Fed will cut interest rates modestly to help keep the economy moving in a positive direction. Rate cuts are usually seen as a "bullish sign" for stocks, and we think such future rate cuts will eventually help to underpin growth in the stock market, and thus help our members grow their portfolios.
The economic outlook for the 2024 U.S. economy is modestly positive. The unemployment rate continues to tick down and is flirting with historical lows. We believe that more Americans will enter the labor force, and companies will continue to add to their payrolls. We expect such a scenario to play out throughout 2024.
The stock market closed out the month of January with a very small year to date loss of -0.02%. Now, although we take note of the start of a new year in the market, such a small loss, is still a loss. This may indicate average gains for the market going forward, but if we end 2024 near historic gains, the market could rise around 10%. We will know if this is true in December.
The year 2024 marks a return to Presidential politics, and it appears that the voters may get the same two candidates that squared off in 2020 - Donald Trump vs Joe Biden. Both candidates are up in age, and a Presidential campaign may prove taxing to each of them. Boodle will be monitoring the 2024 election closely, and we will report on any news that we feel may affect your portfolio holdings.
The war drums are being beaten as the wars between Russia and Ukraine continue to drag on, and some does the war between Israel and Hamas. We do not anticipate a quick resolution to either conflict,and as these wars escalate, we would expect the volatility in your portfolio to reflect this escalation.
Boodle will continue to monitor inflation in the economy, and although it has retreated from its highs, we still experience some stubborn pockets of high inflation, examples being food & housing. The Fed will continue to monitor inflation, and hopefully they will get a firmer grip on this stubborn problem that has a negative impact on households throughout the nation, and the world.
Boodle believes that various indicators are flashing a "cautious green" sign for investors and we think the 2024 year will prove to be a year that will reward the patient, informed, and disciplined investor. In the coming months we will keep you up to date and informed about the stock market. We will adhere to our opinion that members should continue to use the approach of "dollar-cost-averaging funds into their brokerage and retirement accounts. If we believe that something fundamental has changed, we will let you know here or in your one-on-one consultation with us. We thank you for choosing Boodle, and we look forward to investing in 2024! Enjoy your month, and we look forward to working with each of you.