5 Keys to Investing in 2024

“I have never known a good time to invest. There are always a dozen reasons why it makes sense to wait. Today is no exception…interest rates, the president, constant strife in the Middle East, excessive government regulations, and a Congress that is more a part of the problem than part of the solution. A Cautious person might be tempted not to invest under those circumstances – unless he wanted to take advantage of an opportunity.”

• Graham Halloway, late chairman of American Funds

Mr. Halloway could have said the above words yesterday; however, they were spoken in May of 1981.

• 5/1/1981 S&P 500 = 131.7
  • The S&P 500 was down 9.73% in 1981.
• 12/29/23 S&P 500 = 4,769
  • An annualized return of 8.71% over 43 years (5/1/1981 – 12/29/23).

Capital Group recently released an article titled 5 Keys to Investing in 2024. The above quote was a pivotal point for #5, but I was taken aback by the accuracy of the comment some 43 years later. Here is a quick summary of the article, but it is worth a quick read of the whole piece linked in blue above or the full link below.

1. Elections come and go, but results last a lifetime.
   1. More than half of the world’s population is heading towards polls from Taiwan to South Africa in 2024, and political news will dominate headlines for most of the year.
   2. Whether you have strong convictions or not about which candidate or party will steer our country in the right direction, historically, the party that prevails has little impact on long-term market returns. Since 1936, the 10-year annualized return of the S&P 500 is 11.2% when a Democrat won and 10.5% in years a Republican won.
2. Cash might not be as attractive as you think.
   1. In 2023, the prime rate and many money market fund rates increased to over 5%.
   2. Investors with cash on the sidelines could be missing out on future opportunities and look no further than the fourth quarter of 2023 to see where the S&P 500 rose 11.69% and the Bloomberg U.S. Aggregate Bond Index rose 6.82% over the last three months of the year.
3. Innovation is alive and well, but diversification matters.
   1. Breakthroughs in AI have driven the success of certain tech companies.
   2. However, diversification across regions and industries is still vital for managing risk and capitalizing on global opportunities, given the uncertainty heading into 2024.
4. The comeback story in Bonds may just be getting started.
   2023. In 2022, bonds declined in tandem with stocks for a full calendar year for the first time in 45 years. Continued increases by the Fed to the prime rate continued volatility during 2023.
   2024. With the Federal Reserve indicating it is likely done raising interest rates – historically, the end of a tightening cycle has been a good time to own bonds.
5. There are always reasons not to invest, but markets have been resilient.
   1. (See the above quote again)

Full link: https://www.capitalgroup.com/advisor/insights/articles/5-keys-investing.html

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