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.
- Elections come and go, but results last a lifetime.
- 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.
- 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.
- Cash might not be as attractive as you think.
- In 2023, the prime rate and many money market fund rates increased to over 5%.
- 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.
- Innovation is alive and well, but diversification matters.
- Breakthroughs in AI have driven the success of certain tech companies.
- However, diversification across regions and industries is still vital for managing risk and capitalizing on global opportunities, given the uncertainty heading into 2024.
- The comeback story in Bonds may just be getting started.
- 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.
- 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.
- There are always reasons not to invest, but markets have been resilient.
- (See the above quote again)
Full link: https://www.capitalgroup.com/advisor/insights/articles/5-keys-investing.html
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