3 Market Highs and Lows of 2024 Dear Reader, I hope you enjoyed ringing in the New Year! Around this time, we look forward to the New Year, make any resolutions and see what might be in store for us. In fact, before the holidays, I chimed with a few predictions for 2025 of my own. You can read them here. But of course, you can’t really ring in a new year without first taking some time to reflect on what happened in the previous year – the good, the bad, etc. So, in today’s Market 360, I want to talk about three of the best and three of the worst moments in the market during 2024. I’ll also share how you can fully prepare to profit in 2025. Let’s get right into it… High #1: The Fed Cuts Rates Three Times First, let’s talk about the Federal Reserve cutting rates. The main goal was to keep inflation at a target rate of 2%. While we never actually got there in 2024, the Fed became increasingly worried about the job market. Plus, like I always say, the Fed doesn’t like to stay out of sync with the bond market – and their target rate was out of line with the 10-year Treasury yield for much of the year. So, while we would have liked for them to happen sooner, we ended up getting three rate cuts in 2024. Beginning on September 18, a surprise “jumbo” cut of 0.5% was announced. It was the first rate cut in four years, signaling a major policy shift. Then, on November 7, the Fed unanimously decided to cut rates by 0.25%, citing concerns about the labor market but noting that inflation remained “somewhat elevated.” And finally, on December 18, the Fed voted to cut another 0.25%, leaving us with a current fed funds rate in a range of 4.25% to 4.5%. The biggest shock to Wall Street following the Fed’s latest meeting was the updated “dot plot.” The current consensus is for two rate cuts in 2025 which is down from the forecasted four rate cuts in September’s dot plot. I don’t want you to worry about this, though. The reality is that the Fed can’t see that far ahead in 2025. As I mentioned above, the Fed doesn’t like to fight market rates, so they could end up cutting rates more than once. You can read my full thoughts on this in another recent Market 360 here. High #2: Market Reaches Record Highs After Trump's Re-Election I think we’re all glad to have the presidential election behind us. Regardless of who your preferred candidate was, you need to understand that the market wanted certainty above all else. So, as election results came in on the night of Election Day making it clear that Donald Trump was the winner, Wall Street let out a collective sigh of relief. I’ve said before that whoever won Pennsylvania will win the election, and that’s exactly what happened. In fact, Trump won the key swing states Georgia, Michigan, Wisconsin, Ohio and Pennsylvania in the Electoral College. He also gained votes in every single county in the U.S. compared to the 2020 presidential election. By removing one of the last remaining uncertainties hanging over the market, stocks rallied significantly over the next month. The S&P 500 gained about 6.5%, the NASDAQ went up 10.0% and the Dow climbed 7.5% before giving back some of those gains to end the year. High #3: The AI Boom Continues The third highlight of the year has to be the continuation of the AI Boom which is showing no signs of slowing down. First, NVIDIA Corporation (NVDA) introduced its new Blackwell chip in March. As the successor to its legacy Hopper chip, it is set to be a huge game changer and essentially cements NVIDIA’s status as a monopoly. (I wrote about why NVIDIA is the Stock of the Decade here.) Also, in early December, Elon Musk announced a major expansion to his new supercomputer, Colossus. He partnered with NVIDIA, Super Micro Computer, Inc. (SMCI) and Dell Technologies Inc. (DELL) to bring it to life. (You can read more about it here.) It’s clear to me that AI is a force to be reckoned with. So, it should continue to dominate headlines and make investors a lot of money in 2025. Low #1: AI Clashes with Labor Now, let’s talk about the lows for the year. Back in October, news broke that the International Longshoremen’s Association (ILA) went on its first major strike since 1977. While most of the coverage focused on the ILA workers’ demands for a 77% increase in pay, I argued that this dispute was really about automation. In fact, the longshoremen wanted a total ban on automation. But as I stated then, that’s just not going to happen. What they need to realize is that automation and AI aren’t going away anytime soon. The fact is that AI is already reshaping the world as we know it. So while the ILA’s jobs are safe, for now, it’s only a matter of time before AI clashes with Big Labor once again. Low #2: Super Micro Gets Pressured After Short Seller Report I would be remiss if I didn’t mention one of the biggest market headlines of 2024. In late August, Super Micro Computer was the victim of a report by short-seller Hindenburg Research, which claimed accounting violations were committed. In the wake of the news, there was speculation that Super Micro would get delisted from the NASDAQ. An independent investigation found no evidence of fraud and Super Micro was granted an extension by NASDAQ to prevent itself from getting delisted. But the damage was already done, as the stock fell as much as 68% in the wake of the news. Now, the stock has since recovered some of those losses. And it has until February 25, 2025, to submit the required paperwork, including the delayed 10-K and 10-Q filings, to the Securities and Exchange Commission (SEC). But the fact is that a lot of these accusations arise from the fact that Super Micro has an extensive backlog. Its server solutions are in such high demand that some of the sales it is making won’t be fulfilled for another four to five years. And reports indicate that, so far, many of its customers are sticking with the company. So, while the pain has been real, Super Micro’s backlog remains strong and I expect the stock to get back on track in 2025. Low #3: Escalating Global Tensions For most of the year, we saw tensions escalating in the Middle East as well as between Russia and Ukraine. In Ukraine, roughly 40% of the country’s population is gone. Its infrastructure has been severely damaged and will take years to repair. Last month, Syrian President Bashar al-Assad was forced to flee Syria with his family to Russia. We’ve also seen political and economic tensions build in Europe, with the continent on the brink of a recession. Meanwhile, France and Germany are both set to have new elections. To make a long story short, they’re not in a good place right now. Bottom line, if President-elect Trump can diffuse some of the tension, the U.S. will benefit greatly from a “peace dividend.” The last real peace dividend was under former President Bill Clinton in the ‘90s after the fall of the Soviet Union. How You Can Prepare for 2025 Now, this is just a glimpse at some of the highs and lows of 2024. I’m sure there’s much more we can think of, but instead, we should focus on how we can be set up for success in the New Year. Later this month, all eyes will be on the inauguration of President-elect Donald Trump. When he officially steps back into office, I predict that he will issue a series of executive orders that will further accelerate the AI Boom. And thanks to my Stock Grader (subscription required), I’ve found several companies that are best positioned to profit. You can get the full details on how to profit in my special presentation here. (Already a Growth Investor member? Click here to log in to the members-only website.) Sincerely, | .png)
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