First and foremost, all of us at McCabe & Associates, would like to wish you and your families a very Happy New Year and all the best in 2024!
Coming off one of the worst years ever in the financial markets in 2022, headlines dominated about recession fears, unprecedented tightening of monetary policy, banking sector scares, the worst year ever for bonds (according to the Barclays Aggregate Bond Market Index), and the economic hard/soft landing, yet we witnessed a complete reversal of market returns in 2023.
If you “stayed the course” (dollar cost averaged, rebalanced, and maintained your appropriate asset allocation) towards your financial goals, without over-reacting to all the above-mentioned items, you should be congratulated for your long-term focus despite all the alternate directions the economy could have gone.
Let’s face facts, the past few years have not been easy, we have experienced:
- A global pandemic that caused a tsunami of economic events
- A record unemployment rate increase
- Interest rates from ultra-low levels to an unprecedented increase in a short period of time
- Global supply chain issues
- Inflation levels we have not seen in 40 years
- A bond market that saw its worst crash in history
- A portfolio of 60% stocks and 40% bonds to experience its worst years ever (S&P 500 / Barclays Aggregate Bond Index)
- Geopolitical Events – Wars / Invasions / etc.
For those of you familiar with the Chicago area band – REO Speedwagon, the lead singer, Kevin Cronin, back in 1978 wrote a song titled: “Roll with the Changes.” Given the above-mentioned events and with the roller coaster ride of worry that we had faced despite all these events, the economic market seemed to “roll with the changes”.
The question for 2024 is what happens now? Do we go higher? Do we experience a recession? Will we participate in a Bull or Bear market? Will there be future events that cause market disruptions? Will the market crash? The answer is: Yes. Everything is cyclical and at some point, we will experience hard times and at some point like last year we will experience a sense of gratitude for staying the course.
The bottom line is “staying the course” is hard and to “roll with the changes” can be harder. As your advisors, we are always here for you and to guide you throughout these events. I think we can all agree the U.S. economy is the most robust, vibrant, and innovative in the world and the U.S. always finds a way as evidenced by our great history.
All the best in 2024
The views stated in this piece are not necessarily the opinion of Cetera Advisor Networks LLC and should not be construed directly or indirectly as an offer to buy or sell any securities. Due to volatility within the markets, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.
Re-balancing may be a taxable event. Before you take any specific action be sure to consult with your tax professional.
Asset allocation, which is driven by complex mathematical models, cannot eliminate the risk of fluctuating prices and uncertain returns.
Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.
The Bloomberg U.S. Aggregate Total Return Value Unhedged, also known as ‘Bloomberg U.S. Aggregate Bond Inex’ formerly known as ‘Barclays Capital U.S. Aggregate Bond Index’, and prior to that, “Lehman Aggregate Bond Index,’ is a broad-based flagship benchmark that measures the investment grade, U.S. dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed pass-throughs), ABS and CMBS (agency and non-agency).