Good Returns, Great Returns and No Santa Claus Rally

For most investors, 2024 turned out to be a good year. For some, a very good year, although I suspect historians will be most taken by details easily overlooked from this vantage point.
Certainly, the results speak for themselves. The year started strongly buoyed by expectations of multiple interest rate cuts by the Fed. Early in the year, interest sensitive stocks (many in the traditional value camp) led the charge. As Donald Trump’s political stock began to rise, so did animal spirits in the stock market led by (a very slim number of) technology issues.
Performance tracked well with risk. Investors who were bold, assuming bold is simply adding to positions that were last year’s winners and thus spurring them on to even higher valuations, did very well indeed.
The more traditional investors, assuming traditional is those focused on preserving buying power against the depredations of time and inflation with a focus on both price and dividend appreciation, did well early in 2024. Well enough that even a disappointing fourth quarter left them well in the black for the year. These conservative investors would have a good year.
So, for 2024 it can be said that fortune favored the bold.
But for how long? Increasingly and alarmingly, high returns are packed into fewer and fewer technology stocks trading at values that give pause to those of us who have been around awhile. Whether it was the “nifty fifty” in 1972 or the “dot-com bubble” of 2000, concentration of market participation has been a recipe for great performance, wealth generation and reputation making. Unfortunately, most of which was eventually lost in the subsequent collapse.
We don’t make market calls here at Iowa Wealth Management. Certainly, I don’t imagine spending my days screaming, “sell, sell, sell!” What all of us at IWM are doing is managing other people’s money (Glaser family money, too) in a prudent fashion that preserves the buying power of our client, family and endowment funds for generations to come.
As for 2024… we had a good year.