Market Update: Three Market Insights for Q2 2024


This is Brad Barrie, Chief Investment Office and Portfolio Manager with Dynamic Wealth Group. Welcome to this market and economic update for the second quarter of 2024. In this video, we’ll discuss three key insights that have driven markets to new all-time highs this year and will likely be important as the year progresses.


The fact is that the market has experienced a sustained rally since the end of 2022, the presidential election cycle is heating up, and the Fed is expected to cut rates later this year. Over the next few minutes, we’ll discuss why all of these events are impactful.

First, the market has turned around since the start of the year when many investors were concerned about a so-called “soft” or “hard” landing due to high interest rates. Since the first half of January, the S&P 500 has experienced a strong rally and achieved 20 new all-time highs.

While this should be good news for long-term investors, some are understandably nervous as the market hovers around these levels. It’s natural to ask whether the market hitting new highs is a sign that it is “due for a pullback.”


This chart shows that historically, the market experienced many new all-time highs during a bull market run. This is because the market has tended to rise over long periods of time. So, by definition, it does spend a large percentage of time at new all-time highs.


Investors who worried too much about the exact level of the S&P 500 would have missed out on long-term performance not just this year, but each year from 2013 to 2021. At Dynamic Wealth Group, we believe in diversification from an asset class as well as an approach & methodology standpoint. Thus, we do believe in buy and hold and staying invested for the long run. However, we also believe in utilizing tactical as well as alternative investments, as this has been shown to help provide a smoother return experience.


Second, some investors are understandably nervous about the upcoming presidential election. However, this chart shows that the market has performed well across both parties going back nearly a century.


What this chart also makes clear is that the business cycle matters much more than who was in the White House. I’m reminded of a well known quote from former first lady Barbara Bush “Your success as a family… our success as a nation… depends not on what happens inside the White House, but on what happens inside your house.”


You see, the peaks and valleys on the chart are due to the expansions and contractions in the economy which, in most cases, had little to do with who the president was or which party they belonged to.


In fact, it’s probably been said that all presidents would cause the market and economy to crash. This was certainly said about Presidents Obama, Trump, and Biden before they took office. And yet, markets have performed extremely well over the past 15 years.


Of course, presidents do affect important policies around taxes, trade, regulation, and more. If you have specific concerns about a particular legislative proposal, it is important to have a discussion with a trusted advisor. However, this chart shows that, from an investment perspective, it’s important to not overreact to the outcome of an election or poll results when it comes to our portfolios.


Finally, the Fed is expected to begin cutting rates later this year. This will depend on inflation and the job market, among many other factors.
This chart shows the current level of the federal funds rate with the Fed’s rate projections. Their latest Summary of Economic Projections suggest that there could be three rate cuts this year, which the market currently agrees with.


While much could change between now and the first rate cut, falling inflation and the steady economic backdrop are generally good for both stocks and bonds. In many ways, these conditions represent a reversal of the challenging conditions of 2022.


So, despite the many challenges in the market, including the market being at all-time highs and the upcoming presidential election, it’s important for investors to stay focused by sticking to their financial plans and maintaining a Truly Diversified Portfolio.


We hope you found these insights valuable. If you are a financial advisor and would like more information on our Multi-Dimensional Approach, please visit our website DynamicWG.com, or reach out directly by emailing us at: Info@DynamicWG.com. If you are an individual investor, we are happy to address any questions you may have and put you in touch with a qualified advisor. Until next time, take care everyone, and make smart financial decisions.


Disclaimer:


Clearnomics and Dynamic Wealth Group, LLC are not affiliated entities. No part of this should be taken as investment advice. Consult your financial advisor for specific investment recommendations tailored to your specific situation.
Dynamic Wealth Group (“Dynamic”) is an SEC registered investment adviser. SEC registration does not constitute an endorsement of Dynamic by the SEC, nor does it indicate that Dynamic has attained a particular level of skill or ability. This material prepared by Dynamic is for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy, or investment product. Opinions expressed by Dynamic are based on economic or market conditions at the time this material was written. Economies and markets fluctuate. Actual economic or market events may turn out differently than anticipated. Facts presented have been obtained from sources believed to be reliable. Dynamic, however, cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source.
Dynamic does not provide tax or legal advice, and nothing contained in these materials should be taken as tax or legal advice.
Any reference to an index is included for illustrative purposes only, as an index is not a security in which an investment can be made. Indices are unmanaged vehicles that serve as market indicators

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