By: Shaw Pritchett, Principal at Jackson Thornton Wealth Management
What a year 2024 turned out to be! We started out the year coming off of an impressive 26.3% return by the market (S&P 500) which stood at 4,745.20 at the end of 2023. But even with those great results, many people were on edge for what was coming in 2024.
After sputtering out of the gate in January, the market had a great first quarter ending at 5,254.35 for a 10.7% return. Economic indicators were positive with inflation just north of 3%, consumer confidence rising and home sales increasing. One of the main conversations at the time (as it would be through the rest of the year) was the upcoming Presidential election and the primaries.
Growing uncertainty showed its face in the second quarter as the market declined to 4,987.33 through April 22nd, a 5.1% loss in just three weeks. We were concerned about inflation levels that were higher than expected and fears that the Fed’s tactics might not have been enough. The market quickly recovered from this sharp decline and finished the quarter at 5,482.87, up 4.3%.
Just when we thought it was safe, we started off the second quarter with an assassination attempt on Donald Trump on July 13th, the rhetoric of the Republican National Convention, and an announcement by Joe Biden that he would not seek a second term as President. That’s a ton of news and we are only three weeks into the quarter. Not surprisingly, the market suffered another stressful run – dropping 4.6% in the first week of August. Once again, though, investors looked through the news of the day, allowed sanity to return, and saw the market finish at 5,762.48 (up 5.1% for the quarter).
The last quarter of 2024 continued to have nervous moments, due mainly to the pending election with additional threats from hurricane damage across the Southeast and conflict in Israel. After the outcome of the election in November, we thought we were in for a great run in the market after a “Trump Bump” in early November. However, uncertainty returned in December where we saw the market retreat at the end of the year. With all of the turmoil, the market ended at 5,906.94, up another 2.5% for the quarter.
What lesson we can learn from last year?
There is always something to worry about when investing in the market. From inflation, political uncertainty, foreign unrest and natural disasters, there was a lot to be concerned about in 2024, but through it all the market was up more than 23% for the year. In years past, there were other concerns and looking forward, there will be unforeseen challenges that we must face as investors. Does that mean that stocks will go up again in 2025? Absolutely not, but chances are pretty good given the fact th at the market posts a positive annual return 73% of the time.
As a long-term investor, we know that it’s inevitable that we will be faced with a challenging market from time to time. There is no way to avoid it. But we take solace in the fact that we know that by staying in place through those challenges and only taking the amount of risk that is appropriate for us, we can weather any storm that is upcoming.
