Looking back, 2024 produced nice results for most portfolios despite a continued disparity between returns for certain assets classes. The largest of companies that the media likes to emphasize in the technology space continued to do well. But many areas like small cap, value stocks and international really didn’t compete as well. Why not?
Rates. Inflation. Economics. All are causing havoc with equities right now.
Everything Econ - from me - will be updates as I see them. Planned to be regular posts on general thoughts, it offers a way to stay in touch with you, our client, about what I am doing and how I see it.
Interest rates have been on the decline per fed mandate. But this only impacts the shorter term rates, like savings accounts and short term CDs. Longer term rates are up and keep going higher. The thought here is the inflation we have endured is not over. And the economy is actually keeping workers employed and demanding goods and services….but at higher prices. How does this resolve and what does the market tell us?
Technically speaking, the 10 year treasury has been moving towards an upper end range. This has pushed the equity markets lower since December. What I would expect to see is the market correction reach the normal 10% decline. This is already the case in a number of indices. But as we near this level, keep an eye on the 10 year treasury to reverse course or hold steady under or around the 5% area.
Upcoming changes to tariffs, policies, etc of the new administration are creating equity downside. Some of these designed to help the economy longer term will cause a reset in the shorter term. We are seeing that currently, especially on securities that pay a dividend. It’s providing a chance to accumulate shares in such investments.
Hang in there and continue to hold and add to investment holdings. Watch the ECON videos for more details as that is what we are doing on your behalf!
Happy New Year 2025!
Stay tuned for more specific updates next week regarding what I see coming next in the equity markets, including much volatility anticipated!