Broker Check

February 2024

Horizon Advisor Network Investment Committee February 5, 2024

Executive Summary

  • The S&P 500 index has continued to move into record territory. However, fewer stocks are participating in this upside event, leaving many parts of the markets with negative returns for the month of January.
  • This has led to a disparity in valuations and potential opportunities in different segments of the markets. Diversification will likely be appropriate and valuable going forward.
  • Economic news, such as inflation and employment data, continue to surprise to the upside. This may also lead to the Fed taking a slower approach in lowering interest rates as the economy remains resilient.
  • We would not be surprised to see bouts of volatility in different market sectors while investors seek more clarity about the path of the economy, the Fed, and upcoming elections.
  • We would like to remind you not to respond emotionally or on a short-term basis to the temporary ups and downs. Sometimes, doing nothing and being patient is the best strategy.

The members of the Horizon Advisor Network Investylitics Committee met on the afternoon of Monday, February 5th. As markets were hitting all-time highs for the first time in more than two years, we were happy to have the opportunity to review and share perspectives from the economists and market strategists we follow.

Major market indexes such as the Dow Jones Industrial Average and the S&P 500 Index have reached new record levels for the first time in more than two years. There were actually 512 trading sessions since the market's last all-time high on January 3, 2022. This is the longest stretch without a new all-time high since the Global Financial Crisis of ’07-‘08. As you can see from our first chart below, it is also the seventh-longest stretch since 1955 without the market reaching record levels. 

For many investors, it has felt like two years of running on a treadmill…lots of motion and activity but ending up standing in the same place you started when you were done. This is not unusual. From late 2014 until late 2016, we traversed a very similar landscape. The market ground sideways for nearly two years, causing much concern and frustration. Times like this require patience, discipline, and faith that a free market, capitalistic system will eventually lead to profits, growth, and the accumulation of wealth.

While the indexes have moved higher, fewer stocks have participated on the upside. The market has had very narrow leadership, driven by a handful of tech and AI companies. This has led to disparities in valuation, and the committee believes that there may be opportunities in less loved areas of the market. For example, you will note that small company stocks are still trading at their lowest relative level to the S&P 500, its large-cap sibling in nearly 15 years. We all know that you make money by buying low, and we can observe that small company stocks are certainly not at the frothy levels or valuations seen in large growth stocks.

We can also see that the average stock in the S&P 500 index is trading at a much lower valuation than the index as a whole. As we entered 2024, the forward P/E ratio on the S&P 500 index was 19.2X, suggesting that the index was fully valued. However, that valuation has been driven by just a handful of the mega-cap tech and AI companies. When looking at the equal weight index, in which all 500 stocks are treated the same, the valuation drops to a much more reasonable 15.9X.

Over the last month, economic news has continued to surprise to the upside. As you can see, the Citi Economic Surprise index, which measures actual results versus expectations, has moved significantly higher in the last 30 days. This comes as measurements of economic activity, employment, and inflation have all improved. While good news about the economy is generally to be cheered, it is important to remember that this may cause the Federal Reserve to take a more cautious and measured approach in cutting interest rates, which could disappoint the markets.

The Federal Reserve Bank has indicated that they will likely begin cutting interest rates this year. At its December meeting, the median projection from the Fed Governors showed an expectation that the Fed would cut rates three times in 2024. However, the bond market is pricing in as many as six rate cuts. Clearly, somebody will be wrong, and this could lead to bouts of volatility, which generally present opportunities to buy assets at lower prices.

The committee members would like to remind you that short-term volatility and fluctuations in the market are nothing new. They are the price we pay to have the opportunity to achieve higher rates of return. If your financial goals and objectives have not changed, it is likely not in your best interest to respond to these short-term, often headline-driven fluctuations in asset prices. As Warren Buffett has often said, doing nothing when it is the right thing to do is one of the hardest things. As Mr. Buffett has been an extraordinarily successful investor for many decades, we would suggest we heed his advice.

Source: AZ Quotes

As always, if you have questions about your specific and unique situation, please reach out to your advisor. We are here to help give you wisdom and guidance and help you navigate the news and noise of the markets so that you can reach your financial goals. Thank you for your trust and confidence. 

© 2024 Jesse Hurst

The views stated are not necessarily the opinion of Cetera and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein.  Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed.  Past performance does not guarantee future results.

Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.


Jesse Hurst - Chair, Impel Wealth Management

Nathan Ollish - Impel Wealth Management

Clint Gautreau - Horizon Financial Group

Kevin MyersATL Global Advisors

Grace HaydenAtlanta Planning Group

Dusty Green - Spencer Financial Inc. 


Jesse W. Hurst, CFP®, AIF®
Financial Advisor

*Award Recipient Jesse Hurst 

*The 2021 ranking of the Forbes’ Best–in–State Wealth Advisors1 list was developed by SHOOK Research and is based on in–person and telephone due–diligence meetings to evaluate each advisor qualitatively and on a ranking algorithm that includes client retention, industry experience, review of compliance records, firm nominations, and quantitative criteria (including assets under management and revenue generated for their firms). Overall, approximately 32,725 advisors were considered, and 5,000 (approximately 15.3 percent of candidates) were recognized. The full methodology2 that Forbes developed in partnership with SHOOK Research is available at

1 This recognition and the due–diligence process conducted are not indicative of the advisor's future performance. Your experience may vary. Winners are organized and ranked by state. Some states may have more advisors than others. You are encouraged to conduct your own research to determine if the advisor is right for you. 

2 Portfolio performance is not a criterion due to varying client objectives and lack of audited data. SHOOK does not receive a fee in exchange for rankings.