4Q24 Market Review
In this post you will find information about the recent market performance, and our thoughts on what investment activity should be done in anticipation of the election (foreshadowing: none).
I must say that I was a little bit surprised when I looked at the data on “how the market did during the 4th quarter.” After a very strong stock market year, and many news cycle stories about the market’s “surge” since the election, I was expecting the 4th quarter to be all big up.
The results, however, are a mixed bag. The US stock market was modestly up, +2.8% for the quarter, though only +1.7% since the election. International markets slid downwards, with the magnitude of the move around twice the US market. Widening the lens to the full year, both the US and International stock markets were up substantially for the year with the US continuing a multi-year trend of out-performing international markets. The bond market experienced modest gains as well. For details see the “market reviews” linked below.
I find watching the markets interesting, though speculating on the “why” is dubious. Markets, or more accurately the investors who move markets, are forward-thinking, and so the divergent “US vs. International” result may indicate a projection among investors that US-based companies will perform better than those located internationally. Or perhaps, the stock market is just a giant popularity contest, and the US economy just experienced a wave of populism. Or perhaps, it is those and many other factors that accounts for the interesting but unpredictable short-term movements of the market. You may be able to guess my thinking: the markets are interesting, there is no one “reason” for market movements, and the near-term future is unpredictable!
It’s the time of year when predictions about market performance are all over the news. A good prediction is like a gooey donut – filled with cream and coated with sugar. It is designed to tempt and to deliver a short-term burst of happiness, but will do little for your long-term health. While predictions are like “click bait,” there are some good predictions out there. My favorite prediction that I’ve heard this year came from David Gardner, co-founder of the Motley Fool (see end note for reference). He said,
“I think the market is going up this year. That’s because I think the market is going up every year. My record as a market timer predicting one year ahead, somewhere around this time, is enviable. Because I think most people are kind of a coin flip and I get it right two-thirds of the time. And that’s because two-thirds of the time the market rises. And I think it’s always worth expecting it to rise, but recognizing it may not. In fact, one year in three the market loses value.”
I love that prediction, as it really is a re-statement of the historical patterns of the market. Mr. Gardner implies that the market is a wonderful mechanism to grow wealth but also complex and unpredictable. Is that a prediction? Yes, he is saying that he expects the market to act as it has historically! Imagine a baseball coach who puts a hitter up to bat. The coach expects that hitter to be successful. And yet, even the best hitter will “fail” two out of three times. Does that mean the coach was wrong? No! It is part of the game. As it is with investing.
My advice about investing is unwavering. Understand your goals (AKA the life you want to live). Craft an investment plan to support those goals. If possible, keep money you may need in the next five years out of the stock market. Try to envision that what ifs over the next 3 years – what might your portfolio gain? what might it lose? Make sure you are comfortable with those expectations.
Then, put the plan in motion and live your life!
The rest of this message includes links to a written review of market performance and John’s audio tour of the report.
Detailed Market Performance – a watch
The following link is a less than 5-minute narrated video of market performance and other resources in this blog post. Some people prefer a guided tour over a read. But, the tour will be too fast to read!
The investment market performance report is prepared by Dimensional Fund Advisors (DFA), one of our partners in investment management and client support. If you would like to find out more about DFA, you can visit their website directly at: https://www.dimensional.com/
In the narrated video, I also showed a research report from Vanguard titled, “Why the Time is Now for International.” If you would like to read the report for yourself, here is a link:
Detailed Market Performance – a read
To view a detailed analysis of investment performance in the US and global stock and bond markets, click on the button below.
Disclosures and end notes
Information contained within is generalized information about investing and the investment markets. It should not be considered investment advice, personalized or otherwise. Past investment performance is not a guarantee of future investment performance. Investing in markets comes with an inherent risk of losing money.
End Notes
(2) David Gardner on Motley Fool Money Podcast. January 11, 2025. It is a 45-minute listen. Here is a direct link:
Motley Fool Money January 11 2025 podcast – the case for Rational Optimism
