Market Outlook: A Bullish Stance for 2024
As we approach the end of 2024, investors can breathe a sigh of relief, with the S&P 500 posting an impressive 27% year-to-date gain. Meanwhile, fixed-income investments, as represented by the AGG ETF, have struggled to make headway.
Asset Allocation: A Balanced Approach
Our investment strategy is guided by three distinct asset-allocation models, tailored to individual risk tolerance: Conservative, Growth, and Aggressive. We make informed tactical adjustments to these models based on our market outlooks, ensuring optimal portfolio performance.
Equities Take Center Stage
Our Stock-Bond Barometer model suggests a long-term bias towards equities, which should occupy a significant portion of diversified portfolios. We recommend a slight tilt towards large-cap stocks, drawn to their growth potential and financial stability. While small-caps offer value, we advocate for a more measured approach, allocating 10%-15% of equity exposure to this segment.
Homegrown Advantage: U.S. Stocks Lead the Pack
The performance gap between U.S. and global stocks has widened over the past year and five years, with domestic equities emerging as clear winners. We anticipate this trend to persist, driven by volatile global economic, political, and geopolitical conditions. However, international stocks present attractive near-term valuations, warranting a 5%-10% allocation of equity exposure.
Growth Rebounds, Led by Innovative IT Sector
After a brief hiatus, growth stocks have regained momentum in 2024, outperforming value stocks as interest rates stabilized. Looking ahead, we expect growth to continue its upward trajectory, propelled by the innovative IT sector.
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