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What to expect for 2024 in financial markets and the average investor

Economy & Finance 0

An inescapable fact of the current businesscycle is that higher interest rates make credit harder to come by. JP Morganexpects the coming year to see more stress in certain sectors of the creditcomplex.


“For instance, there is approximately $4.5 trillion inoutstanding commercial real estate debt (about half of it floating rate), withabout $2 trillion of it due to mature in 2025. The office sector, representingabout 14% of commercial real estate, has been impacted by the lingeringpopularity of “work from home” post-pandemic. Elsewhere, default rates for U.S.high yield bonds and loans are also rising. “



BlackRock, an American multinational investment company with$9.42 trillion in assets as of June 30, 2023 expects continued growth in the U.S.stock market. The S&P 500 Index, have returned a far superior 20.8%year-to-date through Nov. 30. And a look at index data back to 1975 shows thatequities on average have performed better when the fed funds rate is in therange of 5%-10% than when it is below it.


While higher valuations, inflation and rates may muteoverall stock market returns relative to the prior decade, the investmentcompany sees attractive stock selection opportunities in 2024 amid a Fed pauseand outlook for broadening market breadth.


 An inescapable fact of the current businesscycle is that higher interest rates make credit harder to come by. JP Morganexpects the coming year to see more stress in certain sectors of the creditcomplex.


“For instance, there is approximately $4.5 trillion inoutstanding commercial real estate debt (about half of it floating rate), withabout $2 trillion of it due to mature in 2025. The office sector, representingabout 14% of commercial real estate, has been impacted by the lingeringpopularity of “work from home” post-pandemic. Elsewhere, default rates for U.S.high yield bonds and loans are also rising. “




Goldman Sachs has the following prediction - "Worldwide GDP is forecast to expand 2.6% next year on an annual average basis, compared with the 2.1% consensus forecast of economists surveyed by Bloomberg. In fact, Goldman Sachs Research’s forecasts for GDP growth in 2024 are more optimistic than the consensus for eight of the world’s nine largest economies, as of Nov. 8, 2023. "

As we head into 2024, investors will find more options toput their money in and expand their portfolios than at any time since beforethe Global Financial Crisis. Bond yields are high. Equity valuations are fairand some stock prices have come down

Private markets continue to offer premiums over their public counterparts,while also becoming more accessible to new investors. Even cash doesn’t look sobad. 

Nevertheless, there are always risks, both new and old –from geopolitics to elections to unfolding growth and interesting ratedynamics. New investing instruments in high growth markets and industriespresent also new opportunities, but investors must be aware of the risks. Asthe adage goes, high risks beget high returns.


Those are worth weighing as you consider your investment options. But aboveall, stay rooted in your long-term financial goals.


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