Comfortable Latest 12 months! It ought to be.
After 2023’s 26.6% return, 2024 holds more in store. Fortunately, few are lampshade-on-head gleeful. Most investors remain skeptically timid, fretting about all those “risks” you hear abundantly.
As Sir John Templeton legendarily said, “Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.”
Today’s skepticism helps. Simply said, it’s far harder to kill a young bull market than almost anyone fathoms. Once they hit a primary anniversary (done in October 2023), they almost all the time get a second.
Hence, my forecast: Moderate double-digit S&P 500 gains, with big growth stocks leading early, and sure twisting to value stock leadership late in 2024. Perhaps lampshades dance next December.
Yes, I do know you think that that’s silly. Christmas Day 2022, I detailed here exactly why 2022 was more like 1966 and its bear market than any yr ever — and in so some ways — so 2023’s market should react very similar to 1967 (without flowers in your hair). It did. The S&P’s 1967 total return was 24%. Most all of my 1966-1967 parallels happened: a no capitulation-based stock market bottom, tech led up 58%.
Ken Fisher expects moderate double-digit S&P 500 gains, with big growth stocks leading early, and sure twisting to value stock leadership late in 2024. REUTERS
2024 should still resemble 1968 greater than most will fathom. The S&P 500 should return roughly 11-18%.
Ongoing inflation slowed to close normal. America’s widely anticipated 2023 recession? Any person higher put it on a milk carton. US GDP accelerated all yr. That “Mid-term Miracle” thing I extolled worked perfectly, delivering gridlock’s normal stock market big bang by blocking big, controversial laws.
While those 1966-68 parallels will start breaking down, 2024 should still resemble 1968 greater than most will consider. The S&P 500 should return roughly 11%-18%. Again, no recession. Normalized inflation with the Fed claiming victory and cutting rates — but lower than many hope.
A Republican, likely Trump, will win the White House. The GOP should take the Senate but probably lose the House (like and in contrast to 1968). I’ll handicap the political races in May.
Despite histrionics, politics are a 2024 tailwind. Since 1925 (when accurate data start), The S&P 500 climbed in 83.3% of presidential election years. Average returns: 11.4%. (Eerily near 1968’s 11.0%.) When positive, election years averaged 17.0%.
The S&P 500 climbed in 83.3% of presidential election years.
A shocking secret: At any time when the second yr of any president’s term was negative, like 2022 was, the following election yr, like 2024, has been positive each time since 1932’s Great Depression bottom. No exceptions! Expect it again! Bear markets scare the bejabbers out of us. And it takes a extremely very long time to get bejabbered back as much as where we’re optimistic. (Templeton again.)
And, after all, early in election years we fear the “flawed guy” wins. That fades. Upon election, overall, we all the time just like the winner higher than we originally expected we’d — improving sentiment —temporarily.
A Republican, likely Donald Trump, wins the White House. AP
Expect positive returns in 2024.
Our economy? Moderate growth will help finish inflation’s normalization (increased supply from growth is anti-inflationary, not inflationary as economists imagine) and helps growth stocks relative to value, like in 2023. But later yr rate cuts likely usher in value stock leadership.
Value stocks thrive from the accelerating bank lending that rate cuts render. They need bank lending to fund expansion initiatives. That comes as rate cuts steepen the so-called “yield curve.” Banks borrow short-term to fund the longer-term loans that permit mundane firms grow.
Reduced short-term rates increase bank lending’s profitability, creating more lending — helping the little piggies on the slop trough with more slop. Quite contrary to mythology, rate cuts aren’t needed for stocks to rise. 2023 proved that vividly!
Quite contrary to mythology, rate cuts aren’t needed for stocks to rise. Getty Images
Well-known worries can’t kill young bull markets. Optimism and euphoria do later. Only a supersized, surprise shock could now. None seemingly lurks. So, expect a good-to-great 2024. Perhaps save those lampshades for next Latest 12 months’s.
Ken Fisher is the founder and executive chairman of Fisher Investments, a four-time Latest York Times bestselling creator, and regular columnist in 21 countries globally.
