The beginning of a new year is always fun. We reflect on our accomplishments of the past year and create goals for the new one.
My year started out great when I ran 5 miles on New Year’s Day – my longest run in more than a year.
The following day, I had a doughnut for breakfast, so I’m back to even.
I expect 2024 to be fascinating for the markets, the economy and our country. It’s a pivotal year in so many ways.
Obviously, the election in November will have ramifications for years.
But in the nearer term, everyone is wondering whether the Fed will or won’t change interest rates. And if it does, which direction will it be?
The overwhelming consensus is that rate cuts are coming in 2024. I’m not so convinced. We’re not seeing much evidence of a slowdown. That doesn’t mean it can’t happen, but the Fed is not likely to get out ahead of a recession and reduce rates to ward off a slowing economy. It will probably wait until it’s painfully obvious that the economy is in a downturn.
That doesn’t happen overnight (other than during a global pandemic). And even if that does occur again, it’s hard to imagine our government and many others immediately halting their economies as they did in 2020.
Last January, in the Annual Forecast Issue of my newsletter, The Oxford Income Letter, I said a new bull market would begin in 2023. It sure did. The S&P 500 gained 24% last year.
In 2022, I said value stocks would outperform growth stocks. That year was a difficult one for stocks, with the S&P 500 falling 19%. Growth stocks dropped 30%, while value stocks slipped 7%. It was certainly not a great year for value stocks, but their 7% drop was way better than the 30% haircut in growth stocks and the 19% reduction in the broad market.
With oil at around $75 per barrel early in 2022, I observed that the oil market was undersupplied and projected that crude would soar to $140. It peaked above $130.
In January 2021, I wrote, “I expect inflation to take off in 2021.”
Boy, did it ever. Inflation rose from 1.4% in January of that year to 7% in December… and eventually reached a high of 9.1% in June 2022.
Keep in mind, this was not at a time when anyone was really expecting inflation. We were in the throes of the pandemic. Fed Chair Jerome Powell had just called the U.S. economy “extraordinarily uncertain.”
So I have a history of not only making bold predictions but also being right about them – especially when the crowd is leaning heavily in the other direction.
In this year’s Oxford Income Letter Forecast Issue, which came out last week, I explained why I’m once again bullish on energy. In fact, I made 10 predictions, including forecasts on interest rates (this one will surprise you), the markets, the economy and geopolitics, as well as a shocking projection about the U.S. presidential election.
I fully expect 2024 to be a wild year in a variety of categories. Investing successfully will require you to use some foresight, be nimble and be willing to take action. Those of you who do those three things should have a fantastic opportunity to make serious money this year.