First Half of 2024
Both the stock and bond markets finished 2023 on a high note and with solid gains for the year. A peak in interest rates in late October led to sharp rallies in stocks and bonds the last two months of the year. The 10-year treasury dropped from a peak of 5.1% to 3.9% at year end over this same period. Most stock market “experts” seem to be predicting a 10% increase for stocks, but an 8-12% return has only occurred six times since 1926. We are less sanguine on the markets.
As of this writing, the market is expecting up to six interest rate cuts while Fed guidance is for only three. My expectations line up closer to the Fed, which may disappoint market participants. Factoring the upcoming election, geopolitical concerns, slowing economic growth and possible lower corporate earnings, volatility will likely be high. One interesting (and optimistic) nugget we came across this week is that all of the past 11 presidential election years have seen a positive return for stocks. Will 2024 make it 12?
We are positioning portfolios more defensively and favor dividend paying stocks, bonds (especially municipal bonds), writing covered calls on growth stocks and interest-bearing structured notes. We also view any pullbacks in stocks as a long-term opportunity. There will likely be several opportunities this year, in our opinion, with the increased volatility.
Despite our cautious stance for the year, we believe well-diversified portfolios and tactical purchases on market weakness will serve long term investors well. We thank our clients for their continued trust and confidence and remain optimistic on the markets in the future.
Best Regards,
Kenneth M. Lampos
Senior Vice President, Investments
Wealth Management Specialist
Any opinions are those of Kenneth M. Lampos and not necessarily those of Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the forgoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance is not indicative of future results. Diversification and asset allocation does not ensure a profit or protect against loss. Holding investments for the long term does not ensure a profitable outcome. Dividends are not guaranteed and must be authorized by the company’s board of directors. Investments in municipal securities may not be appropriate for all investors, particularly those who do not stand to benefit from the tax status of the investment. Municipal bond interest is not subject to federal income tax but may be subject to AMT, state or local taxes. Options involve unique risks, tax consequences and commission charges and are not suitable for all investors. When appropriate, options should comprise a modest portion of an investor’s portfolio.
