In 2024, we believe markets will make a definitive turn to a more recognizable place. En-route, the transition will be marked by meaningful shifts in a few key areas. Inflation is going down. The risk of a recession is bubbling up again as the effect of post-pandemic stimulus wanes. And the end of the Federal Reserve’s (Fed) rate-hiking campaign is indeed upon us.
Where the last two years had investors focused on inflation, market volatility, and striving for a sense of economic balance, we now can expect to see some return to the previous status quo—that is, a less-stringent Fed, normalizing inflation, and a slower growth environment. We’ve seen indications of this reset—receding inflation, rates stabilizing, more modest equity market performance, and go-forward economic forecasts that have been dwindling. From our perspective, this turning point for the markets and economic landscape can be characterized as a return to familiar economic and market patterns, leaving behind the volatility of policy and economic swings experienced in recent years, and moving toward a steadier environment.
All of this said, it doesn’t mean that 2024 won’t have its own surprises or potential challenges. Reflecting on 2023, we certainly experienced our fair share of unexpected events. There was positive news: The U.S. economy was strong and the stock market performed relatively well, despite the Fed tightening monetary policy and raising interest rates. On the downside, we faced a regional banking crisis driven by interest rate risk and saw escalating conflict in the Middle East, reminding us that markets are seeminglynconstantly overcoming obstacles.
Ultimately, 2023 revealed investor’s ability to weather the storm in the financial markets through Fed hikes, geopolitical tensions, and many other challenges as it pushed the S&P 500 through record high territory. Element Wealth Management stayed course in its formula despite Wall Street’s consensus of a potential recession during 2023. While Wall Street skeptics repositioned towards fixed income early on in the Fed’s rate hike,
Element Wealth Management recognized the strength in the financial markets. Pursuing investments we believe had the fortitude to withstand volatility and hold positions that partook in the S&P500’s growth, we also allocated clients’ portfolios towards fixed-income downside protected securities as a supplement. Although Element Wealth Management cannot predict the future with certainty for the outlook of 2024, our team works tirelessly to continue making progress towards clients’ long-term financial goals and planning during all economic swings through continuous education for ourselves and our clientele.
As Element Wealth Management did, we encourage you to create your own educated consensus on the market for 2024 or meet with one of our financial professionals who can assist you in meeting your specific financial milestones every step of the way.
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change. References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results. Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. All index data from FactSet. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy. For a list of descriptions of the indexes and economic terms referenced, please visit our website at www.lplresearch. com/definitions.
(925) 433-9533
By Chris Held, Element Wealth Management