Jim Stanhouse CFP® spoke at the first breakfast meeting of 2024 where the following was discussed:

Most people noticed that 2023 turned out to be a good year, an excellent year actually with the S&P 500 index up about 26% at the year-end.  Going into the year and throughout the majority of the year most market watchers expected a recession with correspondingly bad investment performance for the year.

So, the most widely anticipated recession in recent times did not materialize in 2023. Although it could be said that a recession "rolled" through different sectors of the economy at different times and never manifested to the entire economy.  

The economy actually grew faster than expected, unemployment remained low, service sector spending remained strong, and inflation slowed.  Then the biggest positive influence came in the 4th quarter as the Federal reserve indicated it anticipated interest rate reductions to start in 2024.

We did have up and down volatility this year, and we should expect the same this coming year. Emotionally withstanding the volatility in the markets and the economy is the price that we pay for the long-term returns that we enjoy, which are greater than those we would receive in a risk-free investment.

What is expected for 2024.

Niels Bohr once quoted “Prediction is very difficult - especially about the future” That is very applicable to the economy and market forecasting.  Just as the investment community did not predict how 2023 would turn out, no experts (investment professionals, economists, academics) can say how 2024 will turn out either.

What do we know?

• ·        There will be volatility.
• ·        History has proven - long-term we know there will be growth – but not necessarily in any given year.

So what is an investor to do?

Focus on things that you can control (and don’t worry about things that you cannot.)

• ·        Equity allocation appropriate for your risk tolerance
• ·        Diversify your holdings
• ·        Passive investment style - don’t worry about beating the market, guarantee yourself to get the market - via indexing.  Most professionals do not beat the market, there is little chance for non-professionals to do so. 
• ·        Minimize expenses – be aware of expenses and manage them related to your investments
• ·        Minimize taxes – be aware of the taxation and manage it related to your investments
• ·        Manage your emotions
• ·        Avoid distractions (media sensationalism via entertainment/news and biased information)

A note to conclude:

We lost many great minds in 2023, one of which was Charlie Munger (Warren Buffet’s longtime business partner).  In addition to his investment success, he was famous for his many sayings on investing and life.

His formula for success. “It's so simple. You spend less than you earn. Invest shrewdly, and avoid toxic people and toxic activities, and try and keep learning all your life, and do a lot of deferred gratification because you prefer life that way.  If you do all those things, you're almost certain to succeed. If you don’t, you're going to need a lot of luck.” 

Had he lived just two more months he could have celebrated his 100th birthday. Through his well-disseminated wisdom and philanthropic activities, he will long be remembered.