2024 Stock Market Outlook

January 5, 2024 by atate@averewealth.com

Written by: Alleson Tate, CFP® on January 4, 2024

You would be hard pressed to find any expert in January 2023 who said the S&P 500 would be up 24% for the year. Yet, that’s just what happened. It feels like 2023 was revenge for the negative returns of 2022. People made money in just about every asset class last year except commodities. 

2024 is expected to bring Fed rate cuts, lower inflation, no recession, slower global growth, heightened geopolitical risks and uncertainty as it’s an election year (oh joy!). The Magnificent Seven mega cap tech stocks that ruled 2023–Nvidia, Microsoft, Apple, Google, Amazon, Tesla, and Meta are overvalued (aka expensive). Given their high valuations (they are roughly 38% more expensive than normal), it begs the question how attractive their risk-return profile is for 2024. That said, those seven are still expected to outpace the remaining 493 stocks in the S&P 500 next year.  

For 2024, Goldman Sachs is calling for a 6% increase in the S&P 500; while, JP Morgan is calling for a 8% decline in the S&P 500. As you can see, it’s anyone’s guess where we will end up.  Continue to expect the unexpected. 

One thing is certain, when (not if) the Fed cuts interest rates the 4-5% yield you’re receiving today on cash and cash equivalents is going down. If you parked cash in a high yield account because you were uncertain where the market was going, develop a plan to transition the cash to equities this year. 

Your goal should be to create a diversified investment portfolio with exposure to companies of all sizes domestic and foreign. No style or region has a patent on wealth creation. Having foreign exposure could prove beneficial this year as Europe has an improved economic backdrop and outperformance in Japanese markets is expected to continue (despite the recent earthquake). You should have exposure to these geographical locations as the Magnificent Seven could see some downward pressure from high valuations. US companies that prioritize dividends, have strong balance sheets, and lower floating rate debt will be more attractive. I’m talking about large cap value stocks. You see, 2024 is shaping up to be a year where portfolio balance is preeminent.

If you’re looking for more help with your portfolio, need a financial plan, want a second opinion, or just have a burning question you need to ask a CERTIFIED FINANCIAL PLANNER™ professional schedule an appointment. You can ask me anything you want for free for 30 minutes. 

Schedule the call here

*This post is for informational purposes only. It is not intended to be financial or tax advice. Please consult a licensed professional.

stock market bear and bull

Stock Market Update

November 1, 2023 by Jordan

For October, the S&P 500 touched its year-end price target of 4,200 and closed at 4,193. 

It’s still up 8.7% YTD with gains coming from 7-8 tech stocks following the AI trend. Economic conditions are still tight. Credit card and mortgage delinquencies are rising. Where we end the year is anyone’s guess. 

Planning Opportunity: Put any cash on the sidelines to work in a high-yield money market fund, treasury bond, or in equities. You’re missing out on a 4%+ annual return. 

Open Enrollment

For my W-2 folks, open enrollment is right around the corner. Schedule time for us to review any new benefit offerings or to fine tune your strategy for 2024.

For my entrepreneurs, open enrollment on the marketplace started today and ends December 15. Schedule time for us to review your current coverage to see if it still fits your needs.

Planning Opportunity: The High-Deductible HealthPlan with a Health Savings Account. This is the ONLY triple tax-advantaged plan. The funds go in pre-tax, grow tax-deferred, and come out tax-free.

BONUS: You can invest the HSA cash in the stock market to turbocharge its growth. In addition, you can use it to pay for health care costs when you retire. For those of you who are concerned about the growing cost of healthcare, I strongly encourage you to consider maxing out a Health Savings Account.

The key is that you don’t want to deplete the HSA to $0 at the end of the year like a Flexible Savings Account (FSA). Therefore, you need to be comfortable with paying for certain medical expenses out-of-pocket today. This is a mental shift for most people and can take some time for you to adjust, but it’s well worth it in the long run.