It’s hard to believe that it’s already 2024. Time has flown, and at the time of recording, it’s been two years since the market was at an all-time high. 2023 made it very clear that no one can predict the market. In episode 90 of the What the Wealth Podcast, we’ll discuss the strength of the stock market in 2023 and how to proceed in 2024.

The Fed Did Its Job

In the last few years, the Fed has raised interest rates aggressively in an effort to cool inflation. The move largely worked, and we avoided a recession. By the end of 2022, we saw rate hikes from 0% to 5%. There were a lot of dire predictions from financial pundits and experts, money managers, and the media that 2023 would be bad and we would see a continuing down market. A recession was coming; it would be a bad one, and there was no way to avoid it.

We were all left trying to decide what to do: sell and go to cash, bury our heads in the sand, and hope it would all pass, or tighten our bootstraps and continue on our course.

The Big Four Impact on the Market

Look at what we faced in 2023. We had a mini-banking crisis with several banks failing. There was the continuing war in Ukraine. There was a new war in the Middle East. And the Fed continued to raise interest rates.

What would you predict for the 2023 market if you read these four headlines? Surely, your prediction would be the same as many of the experts’: the market would continue to decline, and we would see a recession.

No One Has a Crystal Ball for the Market

Let’s look at some results from S&P Global:

  • S&P 500: Up 26.29%
  • Dow Jones Industrial Average: Up 16.18%
  • US Small Caps: Up 18.43%
  • International Developed Markets: Up 17.9%
  • International Emerging Markets: Up 9.85%
  • US Aggregate Bonds: Up 5.77%
  • US Government Bonds: Up 4.46%

These are amazing numbers, especially in light of the four dire headlines above! And while it shows you cannot predict the market, history can provide clues.

History is on Our Side

While the economy has not quite hit new highs, it’s close, and we have numbers we’ve not seen since 2021. This should be less surprising than it is. A Wealth of Common Sense put together some interesting facts.

Since 1928, so nearly 100 years of data, index averages annual performance following a year that saw a 20% plus gain, had a positive gain of 6.7%, and were positive 68% of the time.

This is really powerful. It shows that a good year doesn’t have to end, that it can keep going, and often does. So, while I offer no predictions for the rest of 2024, I fundamentally believe that while we will continue to see volatile markets, long-term investors who stay the course are rewarded. History is on our side to reach our dreams, goals, and retirement objectives.

If you enjoyed the podcast, check out my new YouTube channels. The videos are short, walk and talks, where I take a stroll and talk about whatever’s on my mind. I also have a Paradigm Wealth Partners channel and have recently created an Instagram page.