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What You Need To Know About the Stock Market in 2024

By ITR Economics on November 7, 2023

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Whether it is the US economy entering a recession, geopolitical conflict in various places around the world, or even a possible US government shutdown, there is so much going on that could impact business decisions and the health of the stock market. With so many possible outcomes for the market next year, ITR Economics is here to provide you with data-based analysis regarding the stock market as we head into 2024.

Do Not Let Emotion Related to Current Events Influence Your Decisions

Mild Recession Forecast for 2024

One of the first things to be aware of when planning for next year is ITR Economics’ recession forecast for 2024. The stock market usually leads the economy by approximately three quarters; however, the relationship is not nearly as strong as other macroeconomic leading indicators, such as the ITR Leading Indicator™. Simply put, if you are making business decisions based solely on the stock market, you will be right about half the time and wrong about half the time. Instead, rely on our 94.7% forecast accuracy (at four quarters out) as you plan for the likely trends in the economy and your business’s markets.

On the investment side, while some severe stock market declines are associated with recessions, it is not as simple as “There’s a recession coming, so I should sell!”

It is not a smart strategy to think you can sell everything now and try to get back in at the bottom. In doing so, you would be more likely to miss out on the recovery that will come after certain variables – such as the Federal Reserve Board eventually cutting interest rates – are resolved. Instead, we counsel our clients to find a great financial advisor and focus on aligning their portfolio with their long-range objectives in consultation with that advisor.

Ongoing Conflict in the Middle East

The conflict in the Middle East could have an impact on the stock market. For example, oil supply is already tight around the globe. If this conflict were to grow into a larger-scale war and other countries were to get involved, oil supply could grow tighter, and oil prices could increase. Even though this could positively impact oil-related stocks, the stock market as a whole would likely react negatively to such an event.

Media headlines around global conflict can bring up a lot of emotion. Do not try to time the market and buy and sell stocks based on what is happening in the news. The stock market has been moving so much that investors would need a magic crystal ball to predict how a given conflict might impact the market.

Potential US Government Shutdown and Its Impact on the Economy

A US government shutdown could happen in the near future, but this is far from the first time that we have been in this situation. It is important to note that when the government does shut down, it does not 100% shut down; only certain elements of the government are affected.

In the past, the stock market has typically sustained a slight negative impact during the lead-up to a government shutdown and then recovered that loss during the shutdown. It is difficult to forecast the political landscape, and it is just as difficult to time your investments based on political activity. If you are planning investments based on a future government shutdown, that would not likely be a winning strategy, but rather a fear-based trade.

No matter what is happening in the news, the current economic trends, or government actions, do not let emotion drive your investment strategy. Do not panic or succumb to knee-jerk reactions when building your investment portfolio. Instead, let the data help steer you toward prosperity.

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Diversify Your Investment Portfolio for 2024

In times of volatility and elevated risks associated with geopolitical uncertainty, it is crucial to make sure that your portfolio is appropriately diversified. At this juncture in the business cycle, the leading indicator input is unusually varied, with some indicators rising and others declining. With many market outcomes possible in such a heterogeneous environment, diversifying your portfolio helps make sure you are best prepared no matter what happens in 2024.

The best way to make sure your investment strategy is in the best shape possible is to follow the data found in the ITR Optimizer™ and have a financial advisor you can trust.

The ITR Optimizer was developed with ITR Economics’ decades of experience regarding economic cycles, leading indicators, and financial trends. The ITR Optimizer is run by Bellwether Wealth and highly beneficial for interested investors as a portfolio wealth management strategy.

Not all financial advisors have the expertise to deal with a volatile financial market. Find a trusted advisor like Bellwether Wealth who can manage your money in the best way possible during such times of uncertainty.

2024 will be a tricky time for the stock market, but with the right insights from ITR Economics and our business partners, you will be on your way to building the best investment strategy for 2024. Be sure to contact us today with any questions you have!

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