So where are we at?
Not where we thought we would be.
At the end of 2022, “everyone” predicted a recession in 2023 and a stock market correction or crash.
As of the close of trading on December 22, 2023, the S&P 500 is up over 25% for the year. The QQQ (Nasdaq) is up over 56%. Even the lowly TSX is up 8%, which doesn’t sound like much, but on Halloween, it was down 3% for the year and has staged a remarkable comeback, up 12% in the last 40 trading days.
“Everyone” thought Bitcoin would have a down year, before increasing in 2024 prior to the halving. Bitcoin is up 170% year to date, making it the best performing asset class.
I don’t remember what the consensus was for interest rates, but I can tell you what happened: they are exactly flat. The Canada 5-year government bond yield is exactly where it was at the start of the year. It was volatile, bottoming at 2.7% in March, and increasing to 4.45% on October 3 before collapsing back to 3.3% on Friday.
So what does this tell us?
It tells us that no-one knows what will happen in the future.
Here is my challenge to you, dear reader: Write down your predictions for 2024, with your reasoning, and check back in a year to see how you did. That’s the only way to demonstrate that you understand what’s happening in the real world.
My thoughts are this:
Inflation has peaked. By the summer of 2024 the year-over-year monthly change in the CPI in Canada will be zero. I’m not saying inflation is permanently dead, just that it will be zero by the summer.
As a result, interest rates will continue to fall. Bonds will be a great investment early in the year.
Falling interest rates are good for stocks. Stocks will boom in January and February.
Risk assets will also boom. Bitcoin will make a new all-time high in 2024.
This sounds great, right?
In the short term, yes. In the medium term, no.
Lower interest rates happen when there is less demand for money, which is what happens in a recession.
I was wrong in 2023, but I will double down on my prediction and predict a recession in 2024. When the recession becomes obvious stocks will fall, so don’t fall in love with any stock.
Those are my thoughts. If I have anything to add I’ll do a year end review next week.
A Pre-Year End Review
by JDH on December 23, 2023
So where are we at?
Not where we thought we would be.
At the end of 2022, “everyone” predicted a recession in 2023 and a stock market correction or crash.
As of the close of trading on December 22, 2023, the S&P 500 is up over 25% for the year. The QQQ (Nasdaq) is up over 56%. Even the lowly TSX is up 8%, which doesn’t sound like much, but on Halloween, it was down 3% for the year and has staged a remarkable comeback, up 12% in the last 40 trading days.
“Everyone” thought Bitcoin would have a down year, before increasing in 2024 prior to the halving. Bitcoin is up 170% year to date, making it the best performing asset class.
I don’t remember what the consensus was for interest rates, but I can tell you what happened: they are exactly flat. The Canada 5-year government bond yield is exactly where it was at the start of the year. It was volatile, bottoming at 2.7% in March, and increasing to 4.45% on October 3 before collapsing back to 3.3% on Friday.
So what does this tell us?
It tells us that no-one knows what will happen in the future.
Here is my challenge to you, dear reader: Write down your predictions for 2024, with your reasoning, and check back in a year to see how you did. That’s the only way to demonstrate that you understand what’s happening in the real world.
My thoughts are this:
Inflation has peaked. By the summer of 2024 the year-over-year monthly change in the CPI in Canada will be zero. I’m not saying inflation is permanently dead, just that it will be zero by the summer.
As a result, interest rates will continue to fall. Bonds will be a great investment early in the year.
Falling interest rates are good for stocks. Stocks will boom in January and February.
Risk assets will also boom. Bitcoin will make a new all-time high in 2024.
This sounds great, right?
In the short term, yes. In the medium term, no.
Lower interest rates happen when there is less demand for money, which is what happens in a recession.
I was wrong in 2023, but I will double down on my prediction and predict a recession in 2024. When the recession becomes obvious stocks will fall, so don’t fall in love with any stock.
Those are my thoughts. If I have anything to add I’ll do a year end review next week.