As far as professional equity investors are concerned, 2023 has already been in the books for weeks. 

There’s little to be done now that will affect this year’s relative performance, and there’s always big risk in any maneuver that has to play out within two weeks. So this is the one time during the year when it’s ok to go home and relax.

My expectation is that 2024 will be an interesting (which means “testing”) year. The traditional pattern is that the sitting president puts a little extra fiscal/monetary oomph into the economy during an election year on the idea that “it’s the economy, stupid” is the safest route to remaining in the Oval Office. The received wisdom is that the only president not to do this was Gerald Ford–and look what happened to him. Maybe add Jimmy Carter to that list.

Given that we’re in the aftermath of the pandemic, however, and trying to normalize ourselves after massive government stimulus, and saddled with a dysfunctional Congress, I think there’s virtually no chance of the typical election year boost to the economy. The other side of the coin is that there won’t be the following year letdown.

I think there’ll be lots of election-year noise. Biden won’t magically get younger. Trump appears increasingly unhinged (and I just don’t get how anyone can give him a free pass for having tried to stage a coup). My guess is that we haven’t scratched the surface of what has happened to the top secret documents Trump covertly left the White House with.  Recent reproductive rights litigation in Texas strikes me as showing that state’s government to be almost incomprehensibly cruel. Anyway, political developments may create lots of tradable ups and downs in the stock market based on the upcoming during the year.

As a citizen, I’m concerned. As an investor who also has a life, however, I’m not interested in short-term market moves, especially ones driven by political issues. 

my guesses

–overall, I think 2024 will be a sideways year, however volatile day to day trading may be

–let’s define concept as the elevator speech about the sources of future profit growth that make a company’s stock a good investment and valuation the price that comes from careful reading/analysis of a firm’s financials. 2020 was a purely about concept–and zero interest rates.  2021-22 was the air coming out of the balloon. During the first half of 2023, concept stocks bounced sharply, before giving up all their ytd gains during the third quarter. Recently, concept is back in fashion. 

–I’m finding that for now at least I’m building my portfolio by what I think of as a backwards methodology–more by what I want to avoid than what I’m desperate to hold.

—-I’ve held MSFT and NVDA for almost a decade, but I have little interest in the rest of the top 25 stocks in the S&P

—-I’m not interested in Energy or Materials (although there’s potentially something important in the Nippon Steel bid for US Steel, I think) or, to some degree, Industrials. These are all sectors that tend to do well when economic growth is strong, or at the beginning of a new business cycle

–I’ve started looking at smaller consumer-oriented names and stocks with high dividends

–I’m (unusual for me) finding myself more interested in good valuation than interesting concept, because I think the latter has still been picked over too much.