Q4 – 2024: Brandon’s Quarterly Market Commentary
01/07/2025Blog Categories
2024 was another impressive year for “risk assets”. And even though volatility in the markets was fairly tame, there was no shortage of major headlines.
We had the S&P 500 hitting new highs (as well as gold and bitcoin). We had the Fed cut interest rates. Trump was nearly assassinated before winning the election, and Biden dropped out of the Presidential race. In the end, continued AI excitement drove equities to deliver strong returns in the U.S., and the mega-cap tech stocks dominated for the second year in a row.
This was particularly impressive because if you recall where we were one year ago (coming off a strong 2023), there was skepticism if the market could do it for a second consecutive year. I remember many analysts citing concerns about inflation, the upcoming election, and fears of recession.
So, as investors reflect on a good year, here’s a recap of the benchmark performances. I tend to like my colorful “quilt map” style, showing returns in Q4 and how things looked compared to prior years:
Looking back, here are some observations.
Amongst the good news for 2024 was that inflation came back down to earth, the economy remained healthy, and corporate earnings continued to grow. The S&P 500 hit 57 new highs in 2024, which was remarkable. And while 20% gains in the S&P 500 are not uncommon, back-to-back 20% gains in consecutive years are. It’s only happened 3 times dating back to 1950.
The 4th quarter was a mini roller coaster. The outcome of the November election sent stocks soaring as investors cheered the potential impacts of a Trump presidency. But in December, stocks were mostly negative, as the Fed signaled fewer cuts in 2025. But the quarter was positive, and the overall year was very strong. Here’s a visual of US stocks in 2024:
While the broad market was higher in Q4, we saw the growth stocks regain ground on value stocks compared to the prior quarter. The same technology companies that led the market over the past two years gained once again. To show you how the various components of the US stocks did for the year, I provide you this:
Only four of the eleven stock market sectors were positive in the fourth quarter. Consumer cyclicals (+10%) and financial stocks (+8%) were two of the brightest stars and led the individual U.S. sectors in Q4. Laggards included the basic materials, healthcare, and real estate sectors.
International markets were mixed but mostly higher for the quarter despite the turmoil in the Middle East and the ongoing Russia/Ukraine war. For the entire year, emerging markets (+8%) and developed markets (+19%) may have underperformed the US markets but had a nice year in their own right.
For bond investors, performance was muted. The lovely yields of bonds helped, but the Fed cut rates twice in Q4 (November and December). The interest rate cuts hold bond performance down somewhat. In all, bonds had gains that were positive but minimal (approx. 2-8% depending on the bond category).
Commodities were held back by weak demand in China, but still the broader commodity index delivered positive returns. Gold had a very strong performance in 2024 (@27%), mainly due to concern over the US fiscal direction. The price of oil dropped (gasoline down @8%) and was a major contributor to the overall decrease in inflation.
Yields on the 10-year Treasury note rose from 3.78% at the beginning of the quarter to 4.54% at the end of the quarter. Yes – even as the Fed cut the federal reserve rate, the treasury notes went the opposite direction! Mortgage rates ended 2024 close to 7%, which was down from their highs but still relatively elevated compared to the norm. Here’s what 2024 looked like for the average mortgage rate:
Looking Ahead:
It’s easy to see how the general public gets caught up in the recent stock market run. Two years of strong returns (and low risk) can be exhilarating! And those who sat on the sideline during that run might be inclined to suddenly jump in and take on excessive risk – hoping to ride the bull.
My advice to both sides: don’t let the bull throw you off. And let’s not chase returns. Sure, you can try to pick the hot stocks or the hot sectors…the ones that have done the best most recently. But if we are diversified in our approach, the portfolio will never keep up with the top-returning asset classes. It’s also not going to perform the worst. When you think about it that way, lagging a certain asset class (i.e. the S&P 500) is not underperforming… it’s part of the plan!
Now that we are moving on from the Presidential election mayhem, I am relieved not to have my mailbox stuffed with the political bashing. I will always be happy to move on from that. Moving into focus will be the new policies that the upcoming administration wants to enact and how they will affect the world. We’ll be tuning in to see what opportunities might be evolving.
Final thoughts:
I often tell my clients that the core of their investment plan isn’t the markets, individual securities, or even returns. It’s you—your aspirations, values, and vision for the future. What do you hope to achieve in the years ahead? What brings meaning and fulfillment to your life? These are the questions that I have been asking the most.
The beginning of a new year is an ideal moment to refocus on these questions. Take this time to reflect. Perhaps you’re looking forward to retirement and want to ensure you have what you need to live comfortably. Maybe you’re thinking about your family and how you can best provide for their future. Or you might be contemplating trying new experiences that bring you joy (bucket list trip? learning how to play guitar? volunteering?).
The markets will undoubtedly have their ups and downs in the coming year. With a strong investment plan—including a well-diversified portfolio—those fluctuations won’t define your financial journey. Instead, it will be shaped by the long-term goals you set and the steps you take to achieve them.
Brandon
We had the S&P 500 hitting new highs (as well as gold and bitcoin). We had the Fed cut interest rates. Trump was nearly assassinated before winning the election, and Biden dropped out of the Presidential race. In the end, continued AI excitement drove equities to deliver strong returns in the U.S., and the mega-cap tech stocks dominated for the second year in a row.
This was particularly impressive because if you recall where we were one year ago (coming off a strong 2023), there was skepticism if the market could do it for a second consecutive year. I remember many analysts citing concerns about inflation, the upcoming election, and fears of recession.
So, as investors reflect on a good year, here’s a recap of the benchmark performances. I tend to like my colorful “quilt map” style, showing returns in Q4 and how things looked compared to prior years:
Looking back, here are some observations.
Amongst the good news for 2024 was that inflation came back down to earth, the economy remained healthy, and corporate earnings continued to grow. The S&P 500 hit 57 new highs in 2024, which was remarkable. And while 20% gains in the S&P 500 are not uncommon, back-to-back 20% gains in consecutive years are. It’s only happened 3 times dating back to 1950.The 4th quarter was a mini roller coaster. The outcome of the November election sent stocks soaring as investors cheered the potential impacts of a Trump presidency. But in December, stocks were mostly negative, as the Fed signaled fewer cuts in 2025. But the quarter was positive, and the overall year was very strong. Here’s a visual of US stocks in 2024:
While the broad market was higher in Q4, we saw the growth stocks regain ground on value stocks compared to the prior quarter. The same technology companies that led the market over the past two years gained once again. To show you how the various components of the US stocks did for the year, I provide you this:
Only four of the eleven stock market sectors were positive in the fourth quarter. Consumer cyclicals (+10%) and financial stocks (+8%) were two of the brightest stars and led the individual U.S. sectors in Q4. Laggards included the basic materials, healthcare, and real estate sectors.
International markets were mixed but mostly higher for the quarter despite the turmoil in the Middle East and the ongoing Russia/Ukraine war. For the entire year, emerging markets (+8%) and developed markets (+19%) may have underperformed the US markets but had a nice year in their own right.
For bond investors, performance was muted. The lovely yields of bonds helped, but the Fed cut rates twice in Q4 (November and December). The interest rate cuts hold bond performance down somewhat. In all, bonds had gains that were positive but minimal (approx. 2-8% depending on the bond category).
Commodities were held back by weak demand in China, but still the broader commodity index delivered positive returns. Gold had a very strong performance in 2024 (@27%), mainly due to concern over the US fiscal direction. The price of oil dropped (gasoline down @8%) and was a major contributor to the overall decrease in inflation.
Yields on the 10-year Treasury note rose from 3.78% at the beginning of the quarter to 4.54% at the end of the quarter. Yes – even as the Fed cut the federal reserve rate, the treasury notes went the opposite direction! Mortgage rates ended 2024 close to 7%, which was down from their highs but still relatively elevated compared to the norm. Here’s what 2024 looked like for the average mortgage rate:
Looking Ahead:
It’s easy to see how the general public gets caught up in the recent stock market run. Two years of strong returns (and low risk) can be exhilarating! And those who sat on the sideline during that run might be inclined to suddenly jump in and take on excessive risk – hoping to ride the bull. My advice to both sides: don’t let the bull throw you off. And let’s not chase returns. Sure, you can try to pick the hot stocks or the hot sectors…the ones that have done the best most recently. But if we are diversified in our approach, the portfolio will never keep up with the top-returning asset classes. It’s also not going to perform the worst. When you think about it that way, lagging a certain asset class (i.e. the S&P 500) is not underperforming… it’s part of the plan!
Now that we are moving on from the Presidential election mayhem, I am relieved not to have my mailbox stuffed with the political bashing. I will always be happy to move on from that. Moving into focus will be the new policies that the upcoming administration wants to enact and how they will affect the world. We’ll be tuning in to see what opportunities might be evolving.
Final thoughts:
I often tell my clients that the core of their investment plan isn’t the markets, individual securities, or even returns. It’s you—your aspirations, values, and vision for the future. What do you hope to achieve in the years ahead? What brings meaning and fulfillment to your life? These are the questions that I have been asking the most.The beginning of a new year is an ideal moment to refocus on these questions. Take this time to reflect. Perhaps you’re looking forward to retirement and want to ensure you have what you need to live comfortably. Maybe you’re thinking about your family and how you can best provide for their future. Or you might be contemplating trying new experiences that bring you joy (bucket list trip? learning how to play guitar? volunteering?).
The markets will undoubtedly have their ups and downs in the coming year. With a strong investment plan—including a well-diversified portfolio—those fluctuations won’t define your financial journey. Instead, it will be shaped by the long-term goals you set and the steps you take to achieve them.
Brandon