2024, THE OUTLOOK FOR THE YEAR AHEAD
Inflation remains the main concern. Most economists are predicting no more rate rises. Even a reduction towards the end of 2024.
The US economy has been remarkedly resilient during 2023. Will it continue?
Recession is still the key risk in 2024. Why? Because interest may have already been increased too much. History tells us that when interest rates rise as rapidly as they have, a recession follows. As one commentator put it, “A Day of reckoning follows”.
We now have positive interest rates. That is, interest rates are giving a positive return after an adjustment is made for inflation. This is generally good for the economy.
Hopefully I am wrong, but it would not surprise me if interest rates rose at least one more time. If they do a “hard landing” or recession is more likely. Not so much in Australia but in the US.
Where to invest in 2024?
- Continue to increase exposure to Fixed Interest and cash.
- For direct shares consider Westpac, ResMed, Ramsay and A2 Milk company. Also consider a small cap fund manager. Smaller companies are likely to do well during 2024.
- International Shares and property keep steady with small increases.
- Invest in property for yield only.
Last year I said to increase exposure to Lithium stocks. This has proved to be wrong. The price of Lithium is back to where it was in late 2021. Gold stocks though have been good for portfolios.
I look forward to our next review meeting.
Yours Faithfully,
Steve Burge