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by Kieran Osborne, MBus, CFA®, Chief Investment Officer
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February 7, 2024
As we look to what 2024 may hold, we wanted to share some key insights on our investment outlook. These insights are provided by Mission Wealth’s Chief Investment Officer Kieran Osborne and the investment team.
Market Update
Stocks have been supported by reduced inflation, a robust labor market, positive economic revisions, an increased likelihood of a “soft” or “no landing” economic outcome, a Fed pause, and expectations for rate cuts in 2024. Divergence in performance, particularly Growth vs. Value stocks, has led to enhanced rebalancing opportunities. Stock returns have recently been dominated by some of the largest tech-oriented names, but those same companies are now historically expensive.
Bonds have experienced recent strength, and current bond yields remain attractive relative to post-2008 averages. The benchmark 10-year Treasury yield is currently trading around the 4% level after being as high as 5% towards the end of 2023. We anticipate bond performance may be supported should the Fed begin cutting rates.
Mission Wealth Outlook
- We are positive on stocks but anticipate some moderation in stock market returns, particularly relative to the strength experienced in 2023.
- Longer term, we believe expectations should be reset for stock returns more commensurate with historic averages of mid- to high-single digits.
- Bond yields are more attractive today, and bond prices may be supported by Fed policy and macroeconomic forces.
- We believe alternative strategies may offer attractive risk-adjusted return potential and income, which may be increasingly important should we experience a moderation in stock market returns in the years ahead.
Ultimately, we continue to focus on long-term fundamentals and believe our portfolios are well-positioned to continue to meet the financial goals of our clients.
Economic Overview
Economic growth forecasts have been revised higher and indicate an increased chance of a “soft” or “no landing” economic outcome, though expectations remain for an incremental slowdown in economic growth. A still resilient consumer and easing financial conditions may support GDP growth, while on the other hand, labor market rebalancing, tight credit conditions, and leading economic indicators point towards a slowdown in growth.
Inflation has moderated but is expected to stay elevated near-term. Housing market dynamics and geopolitical issues may complicate the Fed’s path toward its 2% inflation target. The Fed may cut rates this year, however, we believe the Fed would need to see a significant deterioration in economic fundamentals for it to consider cutting rates more aggressively than its current timeline suggests.
Download Our Market Perspectives
For a deeper understanding of these market insights and their impact on your investment portfolio, we invite you to explore the full Quarterly Market Perspectives report by selecting the link below. Staying informed and committed to a long-term, disciplined investment approach is key to achieving your financial goals.
For all of this and more, please download our Quarterly Market Perspectives.
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At Mission Wealth, we are deeply rooted in an evidence-based investment strategy built on decades of Nobel Prize-winning research. We ignore the media noise and Wall Street hype, relying instead on a long-term approach and proven principles that reward investors over time. For more information on Mission Wealth's investment strategies, please visit missionwealth.com.
To meet with a Mission Wealth financial advisor, please contact us online today or call us at (805) 882-2360.
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