2023 Market Recap and 2024 Market Predictions

On this episode of A Wiser Retirement Podcast™, we discuss the potential impact of the 2024 election on the stock market with Casey Smith, Andrew Pratt, CFA, and Missie Beach, CFP®, CDFA®. We go over a 2023 market recap and their 2024 market predictions. We also discuss various market influences, including political manipulation, tax changes, the housing market, and inflation. We remind listeners about the importance of long-term investing, and to be cautious about what financial news sources you read or watch.

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Summary:

The Presidential Election and the Stock Market

The election will inevitably impact the stock market. People seem to become more concerned regarding the divisiveness and negativity surrounding the election, as well as the ages of potential candidates. According to historical data, a Democratic president with a Republican House and Senate has historically been the best scenario for the stock market. A balanced government, with both Democratic and Republican parties in power, has led to productive legislation and economic growth in the past. If this political alignment somehow took place, it could lead to positive outcomes for the stock market and the country as a whole.

Estate Tax Changes in 2024

In 2024, there will be changes to the exclusion amount for married couples. This number could decrease significantly, from around 24 million currently, to potentially between 11 and 15 million, making more individuals subject to estate taxes. Proper estate planning is very important for people in general but especially those high net worth individuals that will be affected by this change.

2023 Market Performance

The market in 2023 was not as doom-and-gloom as predicted, with the S&P 500 experiencing a strong year, up by over 26%. Contrary to widespread beliefs, most analysts expected a recession but it never materialized. Instead, strong corporate earnings, easing inflation, a signaled end to the Federal Reserve’s rate hike cycle, and AI optimism contributed to the surprisingly good overall market performance.

Housing Market and Interest Rates in 2024

While the Federal Reserve can lower short-term rates, mortgage rates are not directly affected and are instead influenced by the 10-year yield. Housing prices could increase if interest rates are lowered. The Fed is likely to hold rates steady for a few meetings, but we doubt that they are truly data-driven in their decisions. Lower rates, when they do come, may be too late to prevent issues in the real estate market.

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By Published On: January 8, 2024

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