In 2023, stock prices had a great year, with the Standard & Poor's 500 index closing up 24% and ending the year with a nine-week winning streak. However, in January 2024, many people were trying to talk down the stock market's potential, despite the positive year before. Some headlines from CNBC included "The 'Santa Clause Rally' is in trouble, and that may signal weaker stocks," " 'Big Short' investor Steve Eisman worries about the bullishness level on Wall Street," and "Why it could be a 'lose-lose' situation for Wall Street when the Fed does cut rates." The accompanying chart shows that believing headlines when financial markets seem uncertain can be dangerous. In October, many Wall Street experts said that interest rates would rise, and investors should prepare accordingly. However, by the end of the year, the interest rate had nearly completed a roundtrip.
As we begin the New Year, it's important to maintain a disciplined, well-planned portfolio approach that takes into account your goals, time horizon, and risk tolerance. While there may be some volatility in 2024, it's crucial to make portfolio decisions based on careful guidance and insight, rather than knee-jerk reactions to market cycles or daily headlines.
1. WSJ.com, December 29, 2023. "What Did Wall Street Get Right About Markets This Year? Not Much."
The S&P 500 Composite Index is an unmanaged index that represents the overall U.S. stock market. Index performance is not indicative of the past performance of a particular investment. Past performance does not guarantee future results. Individuals cannot invest directly in an index. The return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost.