Forecasts & Financial Fortune Tellers
It’s a new year, which means there is a lot of Monday morning quarterbacking about what analysts got right/wrong in 2023, and a lot of financial fortune tellers gazing into their crystal balls about what the markets will do in 2024.
Frankly – it’s a lot of noise. So, we’ll cut right to the nitty gritty.
2023
The financial fortune tellers must have misread the tea leaves heading into 2023 because the consensus was doom & gloom, and yet the S&P 500 was up nearly 25% for the year. As always – a reminder that predictions about what markets will do in any given year are just that: predictions.
Keep that in mind as we turn to 2024.
2024
Looking at forecasts for the S&P 500 in 2024 from 10 well-known financial institutions – they range from a 12% decline to a 7% gain. The analysts who are down on the S&P (the Bears) cite a potential recession (for what it’s worth there have been calls for a possible recession since 2022 – this is no longer new information), geopolitical uncertainty and debt-laden consumers without money to spend.
The optimists (the Bulls) are feeling warm and fuzzy that the Fed will start to slash interest rates – which means borrowing money will get easier, which means people will spend more which is a win-win for corporate America and therefore a win-win for the stock market.
And whether you’re a Bull or a Bear pretty much everyone is pointing to the extra uncertainty because it’s a presidential election year.
Ok. First – we just need to get over these election year fears. We have presidential elections every 4 years. Our congress is on a 2-year cycle with seats changing hands on the regular. You can look back through all the data and there is nothing magical about an election year when it comes to the stock market. Nothing.
How the election impacts you personally – that’s a different story. Will leaders govern in a way aligned with your values? Do you agree with the legislation enacted by politicians? By all means – care about the outcome of the election because of what you believe.
But do not for one minute think that because it’s an election year – markets are going to do something unprecedented. They will do what they always do: take in all available information, process it, and react accordingly.
Also – do not for one minute think that if your candidate loses, the end of capitalism is nigh. It’s not.
Every 4 years, about half of this country freaks out when the other guy wins. While past performance is no guarantee of future results – the data shows that over time, markets move up and to the right regardless of who’s in office. If you’d like to see the research – let us know. We are happy to share.
As we said … all of this is noise. There are always those who will make the case for a brighter future. And those who equate uncertainty about just about anything with a negative outcome for the market. Remember: No one knows – and everyone has the same 50/50 shot of making the right call.
