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Weekly Insights
Volume 13, Edition 1 | January 15 – January 19, 2024

Investor Resolutions for 2024

Doug Walters, CFA
It is resolution time, and we have some suggestions to help you enter 2024 a more confident investor!

Contributed by , , ,

We are a few weeks into the year, but it’s not too late to set some resolutions for the new year. I have a few… piano (again) and Spanish. Read on to see how I did on last year’s goals (spoiler alert – I did not hit them all). The beginning of the year is also an opportunity to take stock of your portfolios and consider becoming a better investor in the new year. We can help you kick-start that process!

Behave Yourself (And Read a Book)

No one should enter investing without a solid understanding of human internal biases that work against our investing instincts. If you are unfamiliar with Behavioral Finance, why not make it a resolution to read up on the topic? We write on the subject frequently in Insights, sometimes indirectly, but often directly. For example, at the end of last year, we published Behavior: Taming Your Investing Instincts in our Guiding Principles series. For a more comprehensive overview of the topic, pick up a copy of James Montier’s The Little Book of Behavioral Investing. It is an easy read and a great introduction to the topic.

Invest in a New Language

Yes, I plan to spend some time learning Spanish, but that is not what I am recommending here. I’m talking about diversification. Diversification is the one free lunch in finance (you can get more return for the same level of risk), yet most investors have too much home bias. Maybe you do not want to learn Spanish, but how about owning some Spanish stocks? We would not recommend international stock-picking for most. But exchange-traded funds (ETFs) can give you well-diversified exposure to International markets and other asset classes like Gold. We touched on diversification in a recent edition of Insights.

Go on a Diet…

An information diet, that is. Are you looking at your investments daily? Are you consumed by the headline noise coming through the many ports of digital information that we are all plugged into these days? Perhaps it is time to cut back – at least concerning investments. These headlines are designed to elicit emotion, which generally leads to bad investment decision-making. And watching your investments every day also can lead to anxiety. Great investors know the irrelevance of day-to-day moves and the importance of keeping a long-term focus. The reality is that it may take five to ten years to know if you have made good investment decisions. So, set aside your market anxieties and enjoy the day!

If you are a long-term, patient, disciplined, evidence-based investor, I may be telling you nothing you didn’t already know. But for most investors, one or all of these resolutions can be a game-changer in pursuing long-term wealth creation and your version of a great life.

To learn more about how each of the above resolutions is implemented in our strategies, contact one of our advisors. Good luck in the new year!

Contributed by Doug Walters, Eh Ka Paw, David Lemire, Max Berkovich

Resolution Scorecard: 1 for 2…

In the resolution edition of Insights last year, I announced I’d be learning the piano and Python (the programming language). The results were mixed. I played a little piano, but not enough to claim success. I did take a course on Python and know enough to be dangerous. I avoided a resolution on health (losing weight, exercising more, etc.). Ironically, I made significant strides on that front… There’s probably a lesson in there.

Headline of the Week

Some Sense of Normalcy

This week, earnings had a few moments in the spotlight, displacing the Fed Chair’s near monopoly of the market’s attention. January largely has seen markets pinning their hopes on more rate cuts happening faster, while the Fed has remained firm on anticipating three cuts (when the time is right). Earlier in the month, the market started to come around to the Fed’s way of thinking as economic reports continued to point to a soft landing that would only need minimal cuts to keep on course.

This week, chip maker TSMC gave an upbeat assessment of their business, which served to push markets higher, with the S&P 500 within a few whiskers of an all-time high. With earnings season underway, markets may shift their attention to company fundamentals. While interest rate cuts may be TBD, company earnings and forward guidance are key if markets are to build on the nice rally from the end of 2023.

The Week Ahead

Earnings season is in full swing, but inflation and interest rates will be the main focus even in a week full of the bluest of the blue chips reporting.

4th and Goal!

The first look at our Gross Domestic Product (GDP) for the last quarter of 2023 is out on Thursday.

  • Most investors expect an upward surprise to the 1.8% annual growth rate economists predict based on the Atlanta Federal Reserve’s GDPNow model predicting a 2.6% expansion.
  • This model has had a solid track record recently, giving some credence to optimism.

3, 2, …

Personal Consumption Expenditures Price Index (PCE), the preferred inflation measure of the Federal Reserve on Friday, is expected to take another tick down, and hopes are that the core number (excluding food and energy) will break through the 3% mark.

  • November’s reading was 3.2%, and October’s was 3.4%; consistent progress should get us there.
  • If, in fact, the index hits that level, traders will again place bets on a March rate cut.

Don’t Bank On It!

Three major central Banks face a rate decision next week.

  • Bank of Japan (BOJ) started the year with the Yen down over 5% against the U.S. dollar.
  • With cooling inflation and slowing wage growth, the expectations for an end to negative rates have been pushed out.
  • The European Central Bank (ECB) is expected to do nothing with rates; however, everyone is looking for hints on when rates will go down.
  • Markets have an 85% probability that April is that time, but President Lagarde is trying to nudge those expectations to summertime.
  • Business surveys in the Eurozone hint at a technical recession, adding some urgency to the inevitable rate cuts.
  • Bank of Canada (BOC) is also expected to do nothing, with a dramatic fall in core inflation to 2.6% annually, well within its 1 to 3% target range. The fight against inflation may have a victor. However, weakening demand may require some loosening of rates up North.

The Blues

Banks and health insurers lead off earnings season, but in week two, we get a little more diversified with blue chips like Johnson & Johnson (JNJ), Procter & Gamble (PG), IBM (IBM), GE (GE), Colgate-Palmolive (CL), Verizon (VZ), Visa (V), Intel (INTC) and American Express (AXP) on the calendar.

  • Despite all that star power, it will be Tesla’s (TSLA) earnings on Wednesday that will catch all the attention.
  • With shares down around 15% in the New Year, all eyes will be on CEO Elon Musk.
  • Tesla missed on deliveries when only 1.8 million cars were delivered versus the 2 million target last year.
  • Increased competition from Chinese automakers, vehicle price cuts, parts shortages, and higher wages in the U.S. are among the many headwinds Musk will need to address.
Indices & Price ReturnsWeek (%)Year (%)
S&P 500 -0.7-0.4
S&P 400 (Mid Cap)-1.11.1
Russell 2000 (Small Cap)-2-5
MSCI EAFE (Developed International)-2.5-5.6
MSCI Emerging Markets-1.62.5
S&P GSCI (Commodities)-2.25.2
MSCI U.S. REIT Index-1.42
Barclays Int Govt Credit01.6
Barclays US TIPS-0.43.1

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