Broker Check

January 2024 Investylitics

Horizon Advisor Network Investment Committee January 10, 2024

Executive Summary

  • 2023 predictions about the economy and investment returns ended up being very different from actual results as we ended the year.
  • As we begin 2024, all eyes continue to be squarely on the Federal Reserve Bank, as Chairman Jerome Powell indicated that the central bank would likely reverse course and begin cutting interest rates this year.
  • Supporting this view are expectations that both economic growth and inflation will continue to slow due to the lagged effect of higher interest rates.
  • As we move into the Presidential and Congressional election season, we caution against reacting to political headlines. Over time, markets are primarily driven by interest rates, economic growth and corporate earnings more than politics.
  • With stock and bond markets moving significantly higher over the last two months of the year, now is a good time to refill cash buckets for those of you taking RMD’s or needing to take withdrawals over the next 6 to 12 months.

The members of the Horizon Advisor Network Investylitics Committee met on the afternoon of Tuesday, January 9th. As we turned the calendar into 2024, we were happy to have the opportunity to review and share information from the economists and market strategists that our team follows.

As usual, the beginning of the year brings about many outlooks predicting what the markets, the economy, and the Fed will do in the upcoming year. Looking back, we would like to remind you that the consensus outlooks each of the last two years was clearly off base. We encourage you to to put too much weight into these predictions, as there will likely be future events, not yet known, that could Influence both markets and investment returns.

The committee continues to believe that in times of heightened uncertainty, the best strategy is to maintain a diversified portfolio. The biggest risk of a diversified portfolio is that you won’t make a killing, because you won’t have all of your eggs in the basket(s) that are going up. In exchange, you won’t get killed by having all your eggs in the basket(s) that are going down. Staying diversified and rebalancing your portfolio to take advantage of normal market volatility is a long-term strategy that can lead to successful investment returns.

Global stock and bond markets moved up sharply in the last two months of the year. Much of this was driven by economic news in November that led the consensus to believe that the Fed was done raising interest rates. This was reinforced when the Fed met in December, and said that they were unlikely to raise rates further. Fed chairman Jay Powell also indicated that the Fed could cut interest rates as many as three times in the coming year.

This led the stock market higher and interest rates lower. As you can see in our chart below the market is now pricing in six rate cuts by the Fed, as there is growing belief that both economic growth and inflation will continue to fall towards the Fed’s long-term targets. One side or the other will eventually be proven wrong, and this could create bouts of volatility in the markets this year.


To that end, the unemployment report, which came out on Friday, January 5th, showed that more than 200,000 jobs had been created. This was above expectations. The unemployment rate remained at 3.7%, a historically low number. However, the report also included negative revisions to the previous two months, a lower number of hours worked, and private payroll growth continuing to slow.

We would also like to remind you, our trusted friends and clients, not to get too wrapped up in the day-to-day political headlines. With both Presidential and Congressional elections coming up in this calendar year, the cable news and social media outlets are continuing to stir emotions. It is not uncommon for investors to get caught up in the news and noise. However, as you can see from our second chart below, the stock market has produced relatively steady and consistent results, regardless of which party is in charge.

Sources: Capital Group, Standard & Poor’s. Each 10-year period begins on January 1 of the first year shown and ends on December 31 of the tenth year. For example, the first period listed (1936) covers January 1, 1936 to December 31, 1945. Figures shown are past results and are not predictive of results in future periods.

This is because over time, investment returns are driven by corporate earnings, innovations, and interest rates much more so than who occupies the White House. Many people are disheartened by the political polarization that seems to have taken root in our country since the Global Financial Crisis of ‘07–‘08. However, we would like to remind you that there have been many amazing things that have been created through corporate innovation and a free market, capitalistic economy over the last 15 years. Many of these are items that we have come to take for granted and couldn’t imagine living without. This leads us to be long innovation and humanity, and short governments and politics.

Source: Invesco

Finally, as markets have moved back towards all-time highs, we believe that there is wisdom in raising cash for any RMD‘s, systematic withdrawals, or other cash needs that you may have in the next 6 to 12 months. We remind you that you make money over time by buying low and selling high. Today we have an opportunity to sell near highs, and reduce the potential impact of future volatility on your cash needs. If you have questions about your particular situation, please reach out to your advisor.

The investment committee appreciates your continued trust and support. We will continue to diligently watch and research our economic landscape. We will be ready to act if or when needed to manage your hard earned assets. It is a responsibility that we take extremely seriously. We are here for you. If you have questions, please do not hesitate to reach out.

© 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.

INVESTYLITICS TEAM OF HORIZON ADVISOR NETWORK

Jesse Hurst - Chair, Impel Wealth Management

Nathan Ollish - Impel Wealth Management

Clint Gautreau, Horizon Financial Group

Kevin Myers, ATL Global

Joy Schlie, FHT Financial Advisors

Dusty Green, Spencer Financial Inc.

Sincerely,

Jesse W. Hurst, CFP®, AIF®
CERTIFIED FINANCIAL PLANNERTM
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 www.forbes.com. Listing in this publication and/or award is not a guarantee of future investment success. This recognition should not be construed as an endorsement of the advisor by any client. No compensation was provided directly or indirectly by the recipient for participation or in connection with obtaining or using the third-party rating or award.

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.