If you are an investor, a new year is always exciting. What will happen? What to expect. Where are the opportunities and what are the risks? In this day and age, many people are busy making predictions, and we want you to take that word literally: predictions. It remains gambling what happens in a year. No one has a crystal ball. But of course we see certain trends and we know that certain events impact investments. In this outlook for 2024, wealth manager Nadia Bellussi takes you through investment opportunities and risks in 2024. Read along quickly!
Investment opportunities and risks in 2024
Never a dull moment in the stock market. Not in 2023, and not in 2024. To take you through what to expect for 2024, it’s good to take a quick look back at the 2023 predictions and outcomes.
The predictions for 2023 were:
- Especially uncertainty
- Persistently high inflation
- Chance of deep recession
- Interest rates would not rise further
- Stocks were overvalued and bonds would fall back into favor
In real life, we saw we saw this:
- Certainly a lot of uncertainty; banks were falling over, still war in Ukraine, climate change was holding up well, war in Israel.
- Falling inflation and the Netherlands skims past recession.
- ChatGPT suddenly made anything to do with AI “hot.
- The economy in the USA kept rising, the share prices of the The Magnificent 7 (Nvidia, Tesla, Meta Platforms, Apple, Amazon, Microsoft and Alphabet) went through the roof.
- ‘Hip hip hosanna’ on stock markets in the last quarter of 2023.
Outlook 2024
In 2023, stocks continued to rise, the last quarter was a good quarter and a recession did not occur. What to expect in 2024? What are the investment opportunities and risks in 2024?
How are we looking at 2024?
- Expectation of moderate economic growth and further decline in inflation
- From Q2 reduction in interest rates? If so, this presents great opportunities for bond investors. Because when interest rates fall, bond prices rise and vice versa. Negative interest rates we do not expect.
- Artificial Intelligence will continue to be a significant factor, even in 2024. It’s hot, it’s happening and where in 2021 everything around Crypto created hype, we’re seeing that happening around AI now.
- Doubts about economic growth China (lower growth or even recession?). Japanese stocks are extremely cheap. Asian markets benefit from a weaker dollar (look at Vietnam and India) and markets are cheaper from the U.S. and Europe
- P/E ratio of the AEX is around 14, just slightly cheaper than average. What a price-to-earnings ratio means? You’ll learn that in the Beginning to Invest course.
- Smallcaps are relatively low valued. Smallcaps refers to stocks of small companies with limited market capitalization. Market capitalization is the total value of all outstanding shares of a company. You will also learn all this in the Beginning to Invest course!
- Equity markets as a whole offer a reasonable entry point for the long term. With, of course, the ever-present fluctuations as corporate earnings stabilize or perhaps even decline first. Developed markets may be vulnerable due to relatively high valuations and moderate economic growth prospects.
- Equity markets will also be dominated by inflation developments and central bank interest rate policies.
- Real Estate; Returns are likely to remain low in the coming year due to increased interest costs, falling prices and a weak economy. Not until 2025 can investors count on healthy capital returns. However, technically, the European real estate market has the wind in its sails again. After a few weak years, it made a remarkable comeback during 2023. So an investment to keep an eye on, also in terms of dividend payments.
- Bitcoin: Never a dull moment when investing in bitcoins. Explosive price movements you get for free. We see sentiment improving as investors have re-entered in droves over the past year. Important moment this year is (between Jan. 8 and Jan. 10) whether the SEC, the U.S. stock market watchdog, gives their approval for a Bitcoin ETF. And what that will do to the stock price, who’s to say? Ps: in the Elfin community a number of fanatical Elfin crypto investors are active, they write regular updates on the ups and downs of crypto.
Which scenario we don’t want:
End up in a situation of deeper economic or profit recession for businesses. Many companies need to refinance their debts and naturally prefer a lower interest rate to a higher one. The higher the interest rate, the more strongly it weighs on business results.
Worsening geopolitical tensions: War in Ukraine and Israel, tensions between China and Taiwan and, of course, trade agreements on high technology (e.g. ASML) between China and the U.S. These geopolitical events could impact the economy and thus your investments
Do you prefer to play on themes?
So put these on your list and do your research!
- Artificial Intelligence.
- Renewable energy.
- Cybersecurity.
- China . . or still India?
For example, consider thematic investing with ETFs. Read more about ETFs here.
Investment opportunities in 2024: the conclusion
Investment opportunities and risks in 2024: what are they specifically? There is a good chance of another turbulent year but all in all we are quite positive! Don’t forget the rule: SPREAD, SPREAD, SPREAD & STICK TO THE PLAN!
Wishing you a great scholarship year!
This outlook was written by Nadia Bellussi.
Need help creating your investment plan? Become an Elfin member and get instant free access to the Starting to Invest course. Here you will find a lot of reliable information, including from Nadia and other advisors, and concrete tools to get started with investing yourself.
