2024 Market Expectations

I shared some thoughts on how the markets will fare this year in Barron’s alongside side four other investment professionals. Stocks Crushed Expectations Last Year. What Do Advisors See for 2024?

Be sure to read the whole thing for everyone’s perspectives. Following is my portion:

We think people should prepare, not predict, in 2024. A recession is a real possibility. Fixed income typically performs well in inflationary environments, and despite the recent pullback in yields, they are still at the high end of the range we’ve seen over the past 20 years. For most investors it’s prudent to have exposure to high quality fixed income. We expect equity returns to be above fixed income returns, but we view the gap to have tightened after 2023.

Within equities, the Magnificent Seven stocks represent ownership in great companies, but their prices seem inflated relative to the rest of the U.S. market. Taking an approach that is less concentrated makes sense. In the U.S., that means tilting toward value and having exposure to small- and mid-caps, which have lagged the S&P 500.

In emerging markets, large growth has lagged mainly because of China, so it may be a good time to add or build some exposure there. In general, most U.S. investors are underinvested overseas, and we think something like 60% U.S., 30% developed, and 10% emerging markets gives a portfolio balanced global exposure. Over the next 10 years, we expect foreign markets to outperform the U.S.