2024 Outlook: A Tale of Two Halves
I want to start this off by saying that my analysis this year will be simple. I recently read a 2024 outlook that comprised of over 200 pages. In my opinion that is simply absurd. The bottom line is that like anything else, too much data is bad. Simple is better, but it doesn’t mean easy. In fact, the hallmark of a great teacher is being able to take complex ideas and distill them down into simple language that even a child could understand. That is what I aim to do here with this service. As one of my favorite traders says, “I do not do extraordinary things. I do ordinary things extraordinarily well.” While others inundate you with nonsense data that they nitpicked to fit their bias I want to focus on the most important yet simple aspect of all markets which is time and where we’re at in the cycle.
Now, this may be a hard concept to grasp, but once you do, investing becomes a lot easier. You will understand that above all, is price and time. Everything else that the media and people are telling you about the economy is just noise. I’m not saying its not important and that it should all be totally ignored but what I am saying is that if I was bullish, I could go out and find 1000 data points to support that argument on why the economy and markets are strong. Similarly, if I was bearish I could go out right now and find 1000 other data points to support that idea. The one difference in it all? Is where we are at in the cycle. You see the economy is literally always headed in one of two ways. We are always headed into either a boom or a bust, the difference, is TIME.
Since early 2023 I have been saying that we are in the beginning of the final stages of what will be the biggest global boom in history. This is where we get to the top of the cycle and the biggest gains are made just before the subsequent bust. Now, I am well aware of all the people screaming about the bad things going on around the world and in the economy. And guess what? They aren’t wrong.
There is a lot of bad news out there and a lot of it is true, but they are wrong in the sense that it’s all coming to an end tomorrow. You have to understand that this wall of worry can, and will, go on much longer than people think. This is going to be a tough year to navigate in the sense that there will be PLENTY of negative news stories to scare investors out of the market. It will once again be a year where we will likely see a large correction or two and everyone will be calling for doom only for the market to scream higher in the following months.
The biggest event this year is by far and away the U.S. presidential election. for the US and certainly the world this is a highly contested event based on opposing ideologies which can stoke some very high tensions when emotions run hot. This brings up a lot of uncertainties surrounding the outcome and what will happen whether this person or that person is elected. Markets hate uncertainties. We also know that markets are forward looking 6-12 months into the future depending on what you believe. So with one of the biggest events in the world happening in early November we should be expecting the market to start pricing in this uncertainty early in the year. We should also expect it to start pricing in the following result months before it actually happens.
With that said let’s look at some of the major past cycles in which we were also in an election year.