Q4 2023
Q4 2023 and the year are in the books and 2024 is going to be interesting on many fronts.
More than one Election to note in 2024…
There is always something to start the year off for the prognosticators. Well how about this? We already have heard about the big decisions to be made south of the border, but most don’t know that there are 64 nations heading for a vote in 2024. According to Time magazine this also represents approximately 49% of the world’s population. Time says it’s not just an election year, but it might be “The Election Year”.1 As we write, it is looking like a possible re-match in the U.S. of the 2020 campaign all over again. We will see how this plays out. One thing is certain, each side has its’ pet causes and, as usual, some parts of the investment spectrum will benefit, and others will not.
We revisit, as in our last note, the US Presidential cycle and its effect on the market. See the below chart. We should note that looking back since 1928 there have been 24 elections with only 4 down years, the greatest swoon being Obama’s first term of -37%. Albeit that was in 2008 in the middle if the Great Financial Crisis.2 Let’s see if the current year follows the script.
Bizarro © 2020 Bizarro Studios, Distributed by King Features Syndicate, Inc.
Follow up on the Balanced Approach
2022 was, as noted previously, dismal for the balanced portfolio approach. This was due to losing efforts coming from both Equities and most notably Fixed Income. There were many headlines spreading the message about the strategy’s ultimate demise. Fast forward to the end of 2023 and the world didn’t end! Both bonds and stocks put up positive results and the old Balanced approach worked again. All one has to do is study a bit about the Yin and Yang or Zig Zag theory. Without rambling too much here, what we mean is when something gets overdone too much in one direction the inevitable snap back takes place. This is what occurred last year. Hopefully we won’t see these extremes again for some time. It is also good to note that quality investments don’t stay down for ever.
What’s coming?
2023 was “back-loaded”, meaning the returns, especially equities, were lumpy toward the end of the year. In fact, for many equity only, and some balanced accounts, things were looking bleak into the middle of the final quarter. Most portfolios went positive in November and December. Presidential years tend to skew positive in the second half of the year.
As well, FED easing can accelerate market moves. At present we are hearing about multiple cuts during 2024. We learned long ago though, something about counting chickens before they were hatched. We will see. One thing though is certain we are seeing far better rates for the fixed income component of our portfolios and managed prudently, this is a welcome change from the sub 2% GIC environment we had to deal with only a short time ago. There are also a few new gizmos coming out in 2024, like the Apple Vision Pro.
The Numbers
For the quarter ended of Dec 31st, the S&P/TSX was up 8.11% and up 11.83% for the year. The S&P 500 advanced 11.69% and +26.29% YTD. The NASDAQ went up 50.82% YTD on the backs of its 40%+ weighting in the “Magnificent 7”. The 2-year return isn’t quite as stellar but still respectable. It was down by almost a third in 2022. Gold was up 4.52% YTD.3 It is interesting how poorly most gold shares performed though. The commodity moves around but the cost of doing business goes up every year. It also doesn’t help when your mine is about to be nationalized or your project thrown into jeopardy like First Quantum Minerals is currently experiencing in Panama.3 Oil closed the year at $71.65 for the light Sweet Crude contract. This represents a loss of -10.72% for the year and -21.08% for the final three months. There was a spike into the 3rd quarter with some noise coming from OPEC.3 It didn’t last. We still have Macro and Geopolitical issues to contend with. All bets are off making any predictions here. On the currency front the Canuck buck appreciated 2.76% versus the Greenback for the year.3
As we reiterate, combining a well thought out plan, and asset allocation, we will get through what 2024 has to offer. If you have any question or concerns, please let us know.
We also would like to thank you for your continuing confidence and trust in our team. It truly is a privilege serve our clients!
To note for 2024
TFSA contribution limit is now $7,000 lifetime and $95,000 if you have been eligible since the inception of the program. (Age 18 or over from 2009 onward)
RRSP deadline date for 2023 tax year contribution is February 29th . Limits are set at: 2023 - $30,780 and 2024 - $31,560.
Tax information and packages will be out by early March. We can send directly to your CPA as well.
All the best!
Yours sincerely,
CIBC Wood Gundy
Burnett Okanski Dale Financial Group
1 Koh Ewe. "The Ultimate Election Year: All the Elections Around the World in 2024" Time, December 28, 2023
2 Source: Morgan Stanley
Source for market data: Thomson Revinitiv, Bloomberg
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