The Stock Markets
2024 In Review
Other Essays Produced This Month
Your Investment Contributions Should Do The Heavy Lifting
Other Essays from the Archive:
Don’t Neglect The Golden Goose
For all other essays, see the full archive on the content page.
As we reach the end of 2024, investors have much to reflect on and deliberate.
Global equity markets (year-to-date) have delivered returns far above average, with below-average volatility (fluctuations in price).
However, at the start of the year, none of this was easy to forecast. From ongoing wars to numerous elections that led to regime change, 2024 has been a year that served up plenty of uncertainty.
As we wind down to a time that will, for many, be filled with family, special celebrations, and rest, let us reflect on a few lessons we’ve taken from 2024.
#1 – Ignoring The Noise Is Rewarded
After great market returns in 2023 and looming uncertainty, investors could have been forgiven for feeling anxious about the short-term impact on markets. Inflation and interest rates had not yet returned to their previous levels, and in some economies, the risk of recession was ever-present.
Yet, once again, the stock market (the great companies we use every day) has reminded us that it operates independently of the daily noise. The market is made up of real companies, selling real things, to real people.
As we leave this year behind, let us resolve to carry this message with us and remember that if we have a long-term plan, we can safely ignore most of the noise we regularly encounter, as hard as this is to do in practice.
#2 – Inflation Is the Investor’s Number One Enemy
Now that inflation is largely under control, it’s worth reflecting on its impact.
Often a silent threat that compounds over time, it reared its ugly head in a big way over the last three years. For a short period, its impact became obvious to all.
Skyrocketing living expenses have highlighted the importance of investing for longer-term growth rather than short-term preservation. With this lesson fresh in our memories, let us remember its dangers as we plan for the future.
Fortunately for the long-term investor, an investment in the global share market has consistently provided protection from this enemy.
#3 – Good Times Do Not Last Forever
After two excellent years for global markets, it’s precisely at this time that we should remind ourselves that good times do not last forever.
Stock market history shows that, on average, one out of every four years produces negative returns. While we do not know when the next negative year will arrive, we know it will.
We will never forecast markets, but we will always advocate for maintaining realistic expectations and being prepared for temporary market declines. Let us resolve never to be surprised when the market does what it has always done.
Thank You
In summary, 2024 has been a year in which investors' ability to anchor themselves to a well-thought-out, long-term plan has been crucial and richly rewarded.
As we head into a new year, let’s continue to focus on what we can control—maintaining robust financial plans and practising patient and disciplined investing. Most importantly, let’s resolve to stay in our seats when we next encounter market turbulence because it will come.
We thank you for the opportunity to guide you and your family. It is a privilege to serve you, and we look forward to working with you for many more years.
😀 Rational Optimism
The media is not a friend of the disciplined and patient investor. Ignoring the key determinants of lifetime investor returns, the media focuses on short-term returns, market predictions, and negative news.
We present the following as an antidote to the onslaught of negative news:
The Many Reasons to Feel Thankful in 2024
Scientists Discover World’s Largest Coral in the Solomon Islands
How mines control driverless trucks
📰 Read
The Things You Can’t Buy [3 minutes]. Are the tradeoffs you are making today appropriate for you?
How to Be Thankful for Your Life with One Simple Reset [4 minutes]. What would it be like to lose everything you currently have?
The Gifts We Give Our Kids [10 minutes]. The best things you'll ever give your kids won't cost a cent.
Don’t Give In To That First Desire [3 minutes]. Peace and satisfaction far outweigh the fleeting pleasure of immediate gratification.
When To Do What You Love [4 minutes]. "Follow your passion" is not the right advice for everyone.
The Perennial Regret: “I’ve been too Timid” [3 minutes]. Still more audacity!
🎧 Listen
The Collective Delusion [4 minutes]. Explores the powerful beliefs society attaches to money, and how these narratives can mislead us.
🍿 Watch
🖼️ A Picture is Worth a Thousand Words
The Two Largest Cities on Every Continent by Population
The UK’s Major Trade Partners in One Chart
Breaking Down The Global Equity Market
We hope that you enjoyed this month’s newsletter. Please let us know what you enjoyed, or write back with any of your own news.
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