{"id":17494,"date":"2024-12-12T08:35:42","date_gmt":"2024-12-12T16:35:42","guid":{"rendered":"https:\/\/canary.kcprod.info/blog\/?p=17494"},"modified":"2024-12-12T08:35:44","modified_gmt":"2024-12-12T16:35:44","slug":"2024-predictions","status":"publish","type":"post","link":"https:\/\/canary.kcprod.info/blog\/2024-predictions\/","title":{"rendered":"What Market Pundits Got Wrong About 2024"},"content":{"rendered":"\n<p>Each year, commentators and pundits try to forecast what financial markets will do in the future. And each year, many of those predictions are wrong.\u00a0<\/p>\n\n\n\n<p>In this post, we\u2019ll look at three market predictions from the pundits that didn\u2019t come true in 2024. We\u2019ll also share some perspective about what those failed predictions mean for you as an investor.\u00a0<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">1. The S&amp;P 500\u00ae didn\u2019t have a rough year.<\/h2>\n\n\n\n<p>Heading into 2024, some experts encouraged investors to temper their optimism about US stock market returns and to expect worse-than-usual performance. The year isn\u2019t over, but with just a few weeks left in the year, it\u2019s looking like these experts probably got it wrong. As of December 5, 2024, the <a href=\"https:\/\/www.spglobal.com\/spdji\/en\/indices\/equity\/sp-500\/#overview\">S&amp;P 500<\/a>\u00ae is up over 27% year to date\u2014more than double its <a href=\"https:\/\/www.investopedia.com\/ask\/answers\/042415\/what-average-annual-return-sp-500.asp\">average return<\/a> (a little over 10% according to Investopedia) since its inception in 1957. And yet:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Hedge fund manager <a href=\"https:\/\/www.thestreet.com\/investing\/stocks\/fund-manager-who-predicted-the-s-p-500-rally-issues-new-2024-target\">Doug Kass<\/a> predicted that the S&amp;P 500\u00ae index would fall in 2024, potentially by 5-10%.\u00a0<\/li>\n\n\n\n<li><a href=\"https:\/\/www.businessinsider.com\/stock-market-crash-sp500-prediction-recession-2024-us-economy-outlook-2023-11\">BCA Research<\/a> warned in late 2023 that the index could decline over 25% in the coming year.<\/li>\n<\/ul>\n\n\n\n<p><strong>What this means for you: <\/strong>If you had avoided investing in US stocks in 2024 because you thought you\u2019d get lackluster returns, you would have missed out on returns that have (so far) been far above average. That\u2019s why we don\u2019t think you should try to time the market based on experts\u2019 predictions.\u00a0<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">2. The federal funds rate didn\u2019t come down as much (or as quickly) as some experts thought it would.<\/h2>\n\n\n\n<p>This time last year, many people expected that the <a href=\"https:\/\/www.wealthfront.com\/blog\/how-the-fed-funds-rate-impacts-the-wealthfront-cash-account\/\">fed funds rate<\/a> (and, as a result, other consumer interest rates and bond yields) would start to come down in 2024 as inflation continued to cool off. Directionally, this expectation was right, but the details were often wrong. Consider:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/www.kiplinger.com\/investing\/stock-market-predictions\">Kiplinger predicted<\/a> that cuts to the federal funds rate would happen during the first six months of the year, and that the Fed would avoid cutting rates in the fall because of the election. However, this turned out to be incorrect: The Fed held rates steady during the first half of 2024 and delivered a 50 basis point cut in the last FOMC meeting before the election.<\/li>\n\n\n\n<li><a href=\"https:\/\/www.morningstar.com\/economy\/we-predict-6-interest-rate-cuts-2024\">Morningstar predicted<\/a> six interest rate cuts in 2024. While it isn\u2019t yet clear whether we\u2019ll end up with two or three rate cuts this year (with one FOMC meeting still to go before the end of the year), we know we <em>definitely <\/em>won\u2019t end up with six by year\u2019s end.<\/li>\n<\/ul>\n\n\n\n<p><strong>What this means for you: <\/strong>If you had tried to use interest rate predictions to time the bond market and generate outsized returns in 2024, you probably would have failed. As we\u2019ve written before, it\u2019s <a href=\"https:\/\/www.wealthfront.com\/blog\/ask-wealthfront-yield-curve\/\">very tough to time the bond market<\/a> because no one can accurately predict the future,\u00a0 and expectations about future interest rates are already priced in. Instead, we suggest investing in bonds when you decide they fit your risk tolerance and overall investment goals.\u00a0<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">3. The US economy didn\u2019t fall into a recession in 2024.<\/h2>\n\n\n\n<p>Recession predictions have been a dime a dozen in the years immediately following the Covid-19 pandemic. However, no recession (typically defined as two quarters in a row of shrinking <a href=\"https:\/\/www.investopedia.com\/terms\/g\/gdp.asp\">gross domestic product<\/a>) has materialized yet.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Among the experts predicting a recession in 2024 was economist <a href=\"https:\/\/www.foxbusiness.com\/media\/us-economist-predicts-2024-bring-biggest-single-crash-lifetime\">Harry Dent<\/a>. Economist <a href=\"https:\/\/finance.yahoo.com\/news\/us-now-85-chance-recession-022705048.html\">David Rosenberg<\/a> put the probability of a 2024 recession at a notable 85%.<\/li>\n\n\n\n<li>The <a href=\"https:\/\/www.wealthfront.com\/blog\/ask-wealthfront-yield-curve\/\">yield curve<\/a> was inverted for <a href=\"https:\/\/www.cnn.com\/2024\/09\/13\/economy\/inverted-treasury-yield-recession-indicator\/index.html\">much of 2024<\/a>, which led many experts to predict a recession. While an inverted yield curve is often seen as a warning sign that a recession is imminent, no recession occurred in 2024 (although it\u2019s always possible one could occur in the new year).<\/li>\n<\/ul>\n\n\n\n<p><strong>What this means for you: <\/strong>If you had stopped investing in 2024 because you feared a recession and wanted to build up an extra-large cash buffer, you likely would have suffered from significant cash drag this year. We think it\u2019s smart to have an adequate <a href=\"https:\/\/www.wealthfront.com\/blog\/build-emergency-fund\/\">emergency fund<\/a> in case of a rainy day, but avoid going overboard based on pundits\u2019 predictions.\u00a0<\/p>\n\n\n\n<p>Even if the US economy had entered a recession this year, we still think holding a globally <a href=\"https:\/\/www.wealthfront.com\/blog\/what-is-diversification\/\">diversified<\/a> portfolio of low-cost index funds would have been a good strategy for building long-term wealth. Because this type of portfolio (like <a href=\"https:\/\/www.wealthfront.com\/explore\/portfolios\/core\/classic\">Wealthfront\u2019s Classic portfolio<\/a>, for example) has exposure to other asset classes beyond US stocks, it can be more insulated from the effects of a recession.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The takeaway: It\u2019s hard to predict the future<\/h2>\n\n\n\n<p>It\u2019s tempting to try to predict the future, but it\u2019s not very helpful. The incorrect predictions in this post are a good reminder that it\u2019s very difficult to determine ahead of time how financial markets will move.\u00a0<\/p>\n\n\n\n<p>That\u2019s why at Wealthfront, we suggest investing in a globally diversified portfolio of low-cost index funds (like what we offer in our <a href=\"https:\/\/www.wealthfront.com\/investing\">Automated Investing Accounts<\/a>) and holding it for the long term. It\u2019s a time-tested approach to building long-term wealth, no crystal ball required.<\/p>\n\n\n\n<p><br><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Each year, commentators and pundits try to forecast what financial markets will do in the future. And each year, many of those predictions are wrong.\u00a0 In this post, we\u2019ll look at three market predictions from the pundits that didn\u2019t come true in 2024. We\u2019ll also share some perspective about what those failed predictions mean for [&hellip;]<\/p>\n","protected":false},"author":10000,"featured_media":17495,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[1282],"tags":[],"coauthors":[1270,2433],"class_list":["post-17494","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What Market Pundits Got Wrong About 2024 | Wealthfront<\/title>\n<meta name=\"description\" content=\"Wealthfront\u2019s experts take a closer look at the market predictions that didn\u2019t come true this year.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/canary.kcprod.info/blog\/2024-predictions\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What Market Pundits Got Wrong About 2024 | Wealthfront\" \/>\n<meta property=\"og:description\" content=\"Wealthfront\u2019s experts take a closer look at the market predictions that didn\u2019t come true this year.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/canary.kcprod.info/blog\/2024-predictions\/\" \/>\n<meta property=\"og:site_name\" content=\"Wealthfront Blog\" \/>\n<meta property=\"article:published_time\" content=\"2024-12-12T16:35:42+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-12-12T16:35:44+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/canary.kcprod.info/blog\/wp-content\/uploads\/2024\/12\/Screenshot-2024-12-11-at-11.26.02\u202fAM.png\" \/>\n\t<meta property=\"og:image:width\" content=\"1246\" \/>\n\t<meta property=\"og:image:height\" content=\"470\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Alex Michalka, Ph.D, Fang Rui, CFA\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@Wealthfront\" \/>\n<meta name=\"twitter:site\" content=\"@Wealthfront\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Alex Michalka, Ph.D, Fang Rui, CFA\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/canary.kcprod.info/blog\/2024-predictions\/\",\"url\":\"https:\/\/canary.kcprod.info/blog\/2024-predictions\/\",\"name\":\"What Market Pundits Got Wrong About 2024 | Wealthfront\",\"isPartOf\":{\"@id\":\"https:\/\/canary.kcprod.info/blog\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/canary.kcprod.info/blog\/2024-predictions\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/canary.kcprod.info/blog\/2024-predictions\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/canary.kcprod.info/blog\/wp-content\/uploads\/2024\/12\/Screenshot-2024-12-11-at-11.26.02\u202fAM.png\",\"datePublished\":\"2024-12-12T16:35:42+00:00\",\"dateModified\":\"2024-12-12T16:35:44+00:00\",\"author\":{\"@id\":\"https:\/\/canary.kcprod.info/blog\/#\/schema\/person\/dab26849baacffef502035f907045563\"},\"description\":\"Wealthfront\u2019s experts take a closer look at the market predictions that didn\u2019t come true this year.\",\"breadcrumb\":{\"@id\":\"https:\/\/canary.kcprod.info/blog\/2024-predictions\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/canary.kcprod.info/blog\/2024-predictions\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/canary.kcprod.info/blog\/2024-predictions\/#primaryimage\",\"url\":\"https:\/\/canary.kcprod.info/blog\/wp-content\/uploads\/2024\/12\/Screenshot-2024-12-11-at-11.26.02\u202fAM.png\",\"contentUrl\":\"https:\/\/canary.kcprod.info/blog\/wp-content\/uploads\/2024\/12\/Screenshot-2024-12-11-at-11.26.02\u202fAM.png\",\"width\":1246,\"height\":470},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/canary.kcprod.info/blog\/2024-predictions\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/canary.kcprod.info/blog\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"What Market Pundits Got Wrong About 2024\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/canary.kcprod.info/blog\/#website\",\"url\":\"https:\/\/canary.kcprod.info/blog\/\",\"name\":\"Wealthfront Blog\",\"description\":\"Personal Finance &amp; 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