The market hit an all-time high this week, something I’ve been preparing investors for all year.
In fact, my first column of the year was titled “Why I’m Bullish on 2023.”
I noted that the pandemic was mostly behind us. And so was the highest inflation in 40 years. And so were supply chain snags. And so were aggressive interest rate hikes.
I insisted that we were “in a truly unique moment.”
I predicted “a serious rebound in stocks” – the Nasdaq is up over 40% year to date – and that “2023 – and especially the second half – should be a thing of beauty.”
Many readers wrote to say they were skeptical.
Most repeated the conventional wisdom that the Federal Reserve was likely to take interest rates so high that it would push the economy into a recession.
In recessions, sales and earnings at most companies decline. And so do their share prices.
So I reloaded in my next column, titled “Other Reasons I’m Bullish on 2023.”
Here I talked about rising wages, declining energy prices and the improving global trade outlook.
I also singled out artificial intelligence (AI) – which turned out to be the investment theme of the year – and said, “AI will ultimately help us unlock new energy sources, mitigate the effects of disease and increase productivity.”
Did I predict on which day the market would hit its low (October 27) or when it would hit a new all-time high (this week)?
I did not. That’s not possible. And I respect my readers too much to waste their time.
(I only wish the folks who predicted a crash all year felt the same way. But scary predictions – over and over ad nauseam – sell a lot of financial letters.)
Did I tell you when the Federal Reserve would stop cutting rates?
Of course not. No one can accurately and consistently know the Fed’s policies in advance. And you shouldn’t run your portfolio based on someone’s guess.
As Warren Buffett famously said, “If [the Fed chairman] were to whisper to me what his monetary policy was going to be over the next two years, it wouldn’t change one thing I do.”
Yet millions of investors try – and generally fail – to run their portfolios based on someone’s hunch about whether the central bank will raise, hold or cut interest rates.
So how did I prepare readers for the big upswing in stocks?
By pointing out all year that the U.S. economy is resilient and growing (up 5.2% in the third quarter), consumer spending is robust, businesses are hiring, and corporate earnings are beating expectations.
In sum, I spent all year presenting the facts and trying my best to make readers money.
I point this out because there are lots of investment analysts around the country – and all over the internet – trying to convince you that they have the right insights about how to beat the market.
Most of them aren’t just wrong. They’re often dead wrong.
Make it your resolution in 2024 to stop listening to them.
Not because they will admit they were wrong and apologize. No, they will go into Scary Predictions Phase 2.
That economic implosion? That stock market crash? They’re still just around the corner.
They weren’t wrong… just a tad early.
(A good summation is “often wrong but never in doubt.”)
Stay with us at Liberty Through Wealth in 2024.
Our investment advice is based not on lame guesses and crazy hunches but on battle-tested investment principles.
In fact, my January Forecast Issue of The Oxford Communiqué – coming out on Tuesday – will offer “Eight Megatrends for 2024 and Beyond.”
Each has the potential to make you a great deal of money.
But only if you tune out the voices of gloom and doom – and concentrate for a moment on what’s right with the world.
Not just what’s wrong with it.