Celebrating A Great Market in 2024
2024 marked another remarkable year for investors!
The U.S. markets notched a second record year of impressive returns, gaining more than 23 percent. The Mag 7—a group of large tech stocks—drove much of this growth, with Nvidia leading the charge for a second consecutive year.
Looking back to 1979, the 2-year returns for U.S. stocks are some of the best we’ve seen. The chart below illustrates the 2-year returns for the Russell 3000, an index that represents the performance of stocks in the U.S., since the first full year of 1979. Each grey line represents the growth of $1,000 over a 2-year period, and the orange line highlights the extraordinary growth from January 2023 through December 2024. Not only does the ending value stand out, but also the trajectory: U.S. stocks have demonstrated remarkable growth and resilience over the past 14 months.
Source: Dimensional Fund Advisors. Reflects the hypothetical performance of $1,000 invested in the Russell 3000 Index over two-year periods. Indexes are not available for direct investment. Assumes the reinvestment of dividends.
In good times, it’s easy to feel complacent (if not euphoric!). But our portfolios are built to thrive even in unpredictable conditions. The part of our portfolios allocated to U.S. stocks captured most of these returns, and while impressive U.S. returns have fortified portfolios for a second year, the chart above reminds us that these are not typical results.
Looking ahead, we see many reasons for optimism. Advances in artificial intelligence are driving innovation across industries and potential pro-business policies in the U.S. could add more of a tailwind to company profits. At the same time, careful attention is needed as each of these opportunities brings their own set of risks. Many U.S. stock prices already reflect the optimism around AI, so now those companies must justify their elevated stock prices through earnings growth. Some of the policies suggested by the next administration could be inflationary, while a rising U.S. debt burden may weigh on long-term bond performance and increase the cost of debt for companies.
Morgan Housel, a respected author and blogger, defines optimism as the belief that things will turn out well, even if there are setbacks along the way. That’s our view of the markets too. We fully expect occasional pullbacks, but we remain optimistic about long-term opportunities, both in the U.S. and abroad. Resisting the urge to chase short-term trends is one of the best ways to protect your portfolio’s long-term success. Let’s savor the good investment years but remain diligent and disciplined so we’re prepared for whatever surprise the market brings next. By staying broadly diversified across countries, industries, and companies, we position ourselves for both resilience and growth, ensuring your portfolio remains ready to navigate an ever-changing world.
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Past performance is not a guarantee of future results. . Index performance does not reflect the expenses associated with the management of an actual portfolio. Index returns reflect all items of income, gain and loss and the reinvestment of dividends and other income.
Actual client performance may be lower or higher than the performance data quoted. Performance data provided by fund manager. Returns less than one year are not annualized. Consult your WWP performance report or WWP Client Portal for more detail.
Waypoint Wealth Partners (WWP) is a Registered Investment Adviser with the U.S. Securities & Exchange Commission. Registration does not imply a certain level of skill or training. The information provided is for informational purposes only and should not be construed as investment advice or a determination that a particular product or service is suitable for any individual. This information should not be relied upon in making an investment decision.
The information represents the views of WWP at a specific point in time and is based on information believed to be reliable. No representation or warranty is made concerning the accuracy of any data compiled herein. In addition, there can be no guarantee that any projection, forecast or opinion in this material will be realized. Any statement nonfactual in nature constitutes only current opinion which is subject to change. Any reference to a security listed herein does not constitute a recommendation to buy, sell or hold such security. Past performance is no guarantee of future results. Any tax and estate planning information offered by WWP is general in nature. It is provided for informational purposes only and should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.
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