Well, shit... another year in the books, and what a year it was! Time to make some fun predictions for 2024, but first lets reflect on the past year as we ponder the economic landscape of these crazy times. If anything, 2023 showed us that predicting financial markets is futile because, honestly, nobody has a clue about what's going on.
A defining characteristic of the past year was the stark deviation from the "expert" predictions. In 2022, a chorus of economists declared with unwavering certainty a 100% chance of recession in 2023. Alas, their crystal balls proved to be more elusive than accurate, showcasing the inherent unpredictability of economic dynamics. They were wrong, totally full of shit as we didn't have a global recession (lol @ Germany). Instead, we had an amazing bull market that slaughtered the bears and hopefully made you some money.. unless you were crazy enough to listen to Michael Burry and sold all your shit out of fear a depression was coming.
But not everything is well...
The financial symphony of 2023 witnessed a crescendo in personal debt, a notable increase from $800 billion to $1.2 trillion in just six months. And it looks like credit card companies are set to make record profits in 2024 (Buy VISA). Some economists coined the term "doom spending".. spending money (thru credit) on nice things because f*ck it, YOLO.. we're all gonna die one day and we won't take anything with us, right? Idiots.. While consumer spending enjoys a current upswing, the looming shadow of mounting debt suggests a potential deceleration of consumer spending in the future. So I wouldn't get too excited just yet.
Looking ahead, the year 2024 holds the promise of a soft landing, a maneuver designed to avoid an official recession, particularly within the confines of the U.S. market. As we step into 2024, the narrative is shifting. No longer engaged in an inflationary battle, the focus pivots towards cultivating a robust business cycle. This strategic shift is anticipated to usher in a series of rate cuts, designed to sustain the health of the economic ecosystem.
The narrative will take shape around Q2/Q3 2024 as rate cuts take center stage. This orchestrated move aims to lower the cost of borrowing, influencing the financial ecosystem and shaping economic activities. Rate cuts will mean lower savings yields (for all those happy with their current 4-5% safe returns at Goldman, Ally and such).
What's likely to follow? Market FOMO. An intriguing prediction for 2024 is the anticipated exodus of funds from savings accounts making their triumphant return to the markets. This financial migration underscores the fluidity of capital movements and the ever-changing preferences of greedy investors. "I only get 3% in my savings account now, the market is way outperforming, I should get into it!''
With this cash injection back into the markets, I'm expecting the the Nasdaq takes center stage with a projected 15% growth fueled by the Artificial Intelligence boom by YE 2024. Meanwhile, I think the S&P braces for choppy seas, expected to navigate with an overall annual growth of approximately 8%.
I think for 2024 there's a better play. Small Caps. Debt servicing will get cheaper, leaving the small-cap stocks with more cash to deploy across their businesses. I think these emerge as the stars of the financial show, poised to launch into prominence. This development signals a diversification of investment opportunities and potentially alters the traditional dynamics of market sectors. My top ETF pick for 2024 would be the Vanguard Small-Cap Value Index Fund ETF, ticker: VBR. It currently trades at around $180 but I wouldn't be surprised if it reached $200 within 6 months.
What about the external market risks?
On the geopolitical front, the anticipated end to the Ukraine war injects a note of optimism into global affairs. Simultaneously, a forecasted drop in energy prices provides a potential reprieve for economies grappling with fluctuating costs. Putin is up for re-election soon, and it seems the majority of the Russian population, and even Putin himself seem to have war fatigue and want this conflict in Ukraine over as fast as possible. Hopefully it ends soon.
In the political overture of 2024, speculation looms large with the potential return of Donald Trump to the U.S. presidency. Trump is surging in popularity as the liberal US elite try to lock him up, so this would be interesting. Lets remember the euphoria on the markets when Trump was elected in 2016, maybe this repeats?
Okay, last but not least.... Bitcoin. Yes, I am finally taking BTC seriously as the Bitcoin ETF might be coming soon. I don't know where the price of it will go in 2024, but laws of supply and demand indicate the price will go higher as it becomes a respectable asset category. Some 72% of financial advisors said they would be more likely to invest in crypto if spot ETFs were approved in the U.S., according to a 2022 Nasdaq survey of 500 advisors. I believe in diversification and have been holding bitcoin for years, so I think this is good news. If someone now doesn't own any BTC, I would encourage to shift 1-5% of your portfolio into BTC or one of these upcoming Bitcoin spot ETFs the next time we take a dip. All star investor Cathy Woods thinks BTC will rise to 600k by 2030, is she crazy? Maybe.. but I remember personally thinking a former colleague was crazy when BTC was trading at 2k and he said it would reach 20k, turns out I should have taken him seriously back then and put it all into BTC. So I'm not ruling anything out.
My biggest market hope for 2024... for PLTR to join the S&P500. PLTR to the moon.
Anyways, that's all for now. Good luck to you all. Wishing you all health and wealth in 2024.
