Quarterly Client Update Q4 2024
We hope you had a wonderful Christmas and New Year! Our families are at great ages to celebrate and be together. We hope you enjoy the photos – it is hard to choose just a few! It’s always a special time of year, and we made some great memories.
We are confident the memories from those photos will last far longer than the memories of the markets in 2024, even though it was quite the year. For just the fourth time since 1928, the S&P 500 posted back-to-back 20%+ returns.
Do the significant returns mean US Stocks are overvalued, and the market is due for a big correction in 2025? The returns in the year after back-to-back 20%+ returns were -35%(1936), +7%(1956), and +21%(1998). These returns are all over the board, and the sample size is small, but even if all three years were negative, we would simply recommend taking the gains and getting back to your target allocation (which is what we have been doing). We strongly believe that making short-term predictions about the stock market is dangerous for your long-term financial future.
It is time for our favorite January activity – looking back at how economists' and fund managers' predictions fared in the previous year and being thankful we did not listen. We can’t help ourselves.
The S&P 500 started the year at 4,770. The median year-end Wall Street 2024 forecast for the S&P 500 was 5,0681, implying an annualized gain of roughly 6 percent. The most bearish was JPMorgan Chase2, with a 2024 year-end target of 4,200, down almost 9 percent. Morgan Stanley was also negative in 2024, calling for a year-end target of 4,500 and avoiding technology related stocks. Not all of Wall Street was bearish; Citigroup, Deutsche Bank, and Goldman Sachs were the most bullish, all calling for a year-end target of 5,100, which would be about 7 percent for the year.
In 2024, the S&P 500 hit all-time highs 57 times, closing at 5,881 for a 25% increase, including dividends—a far cry from what the experts were expecting.
As interesting as the statistics can be, this year will not be something you’ll be telling your grandkids about. It is the photos like the ones we attached that will be memorable. That is where the focus should be, not on a prediction from a Wall Street economist, the talking head in financial media, or a relative who is sure what will happen next. Our approach remains focused on long-term investment strategies tailored to your unique situation. As mentioned, we continue to rebalance portfolios to ensure they stay aligned with your goals.
The market won’t always be up 25%. We expect to endure down markets; we just don’t know when or for how long. The good news is that in the history of investing, there have been more good times than bad. We don’t need to predict when they come; we just have to remain disciplined when they do come.
As always, we are here to support you and answer any questions you may have. Please reach out at any time. We are committed to helping you achieve your financial goals and navigate the ever-changing market landscape.
Wishing you a healthy and prosperous New Year!
1According to FactSet
2At the time, the team was led by Makro Kolanovic, whose nickname was Gandalf due to his alleged foresight. He was a 2020 inductee to the Institutional Investor Hall of Fame. He was fired in July.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
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