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Wall Street's 2024 Predictions And Why It Doesn't Matter


stock predictions


You've seen the predictions or headlines before: "Top 5 investments of 2024" or "Where S&P 500 will finish this year". Let's go over a few others I've seen thrown around for 2024 and why I think it's nonsense.



Cautious optimism.


This one gets me every time. As an investor I think I'm cautiously optimistic 99% of the time. If you're not, your portfolio is either too conservative or too arrogant. I always invest with the idea that my investment is going to go up while I simultaneously try and decipher all the things that can go wrong.


There are one or two times in the past 15 years where I added a lot more risk to my portfolio than I should have - and it was because the market dropped by more than 30%.


And let's face it, if you are too conservative and listened to all the recession "predictions" that we started out with in 2023 you probably were underinvested and missed out on some great gains last year. I'll admit, I held more cash last year than I should have, but I was never entirely out of the market. And 2023 is a great example of why you should never do that.



Stocks and bonds should do well this year.


I've seen this one thrown around a little. What does "well" mean? 24% in the S&P like we had last year? Half of that, maybe 12%? The market averages 7% or 8% a year. Is that well enough? P.S. the market rarely shows returns of the long-term average.


Bonds had their worst year almost ever in 2022 and didn't do great in 2023. They'll probably do ok since the Fed seems like they won't be raising rates further. My against the grain prediction on bonds is that the Fed won't be able to cut rates as many times as the market thinks they will. Which means bonds should do fine but won't be as robust as everyone is saying. We'll see. A recession could help bonds have a strong year.



Price targets.


Throw em out the window. It's nearly impossible to get these right. It's harder to do this than pick if the market will be up or down for the year. You're time is better spent on how much risk you can take and then invest accordingly.



So what does matter?


Risk tolerance. It's tough to time the market. It's tough to make predictions. It's tough to control emotions. Investing can be tough in general. Make it easier on yourself. Figure out how much risk you can take in stocks and invest appropriately. By doing that you'll be able to remove the emotion of the ups and downs. You'll be able to not worry about price predictions. And, most importantly, you'll be able to hold stocks for multiple years (not just one) and let your wealth really accumulate.

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