How I'm Investing In 2024

How I’m Investing In 2024

I discuss my current investing outlook for 2024 and planning to be more aggressive in stocks.

I reflect on the investing decisions I made in 2023 and how I’m planning to make better decisions in my investment portfolio in 2024 by being less defensive.

Though the S&P 500 returned 26% including dividends last year, the stock market appears to still be overvalued. Berkshire Hathaway led by Warren Buffett is still sitting on over $157 billion, which is about 20% of Berkshire’s market cap.

I’m rueful of sitting more on the sidelines last year with having kept more cash in high yield bank accounts giving me 5% rather than aggressively investing in stocks like Berkshire Hathaway and Apple, though I bought some last year.

On January 31, the Federal Reserve’s Jerome Powell indicated that the Fed Funds Rate (which dictates a lot of interest rates that banks and mortgage lenders use) would remain unchanged at the current range of 5.25-5.5%.

Consequently, the stock market tumbled in reaction to the news that rates would not be cut yet. Though inflation has come down significantly, the Personal Consumption Expenditures (PCE) inflation index was still at 2.9% as of December 2023. Good news, however, is the US economy grew at a real GDP growth rate of 3.1% with a strong labor market and high consumer spending.

In order for the Fed to cut interest rates, they would need to see PCE inflation at a more “sustainable” 2%. If I had to take a wild guess, perhaps the Fed might cut the first quarter rate by summer 2024 if PCE inflation hovers around 2% by then.

But that would be a tall order, and some people are guessing there may possibly be three rate cuts in 2024 to end up in the range of 4.5-4.75%. Presumably the stock market may jump if the Fed starts cutting rates enough.

Despite this macro picture, as investors we should focus on doing fundamental analysis on companies we’re interested in.

Reflecting on one of my favorite investors, the late Charlie Munger said in his last Wall Street Journal (WSJ) interview in November 2023 that it’s going to be tough.

Charlie Munger advised that most people should just be in index funds, though maybe we might want to consider some of the Apples and Googles since significant market gains are coming from these few super competitors or big winners.

Perhaps we may want to consider investing in some of the “Magnificent 7”: Apple (AAPL), Alphabet (GOOGL), Microsoft (MSFT), Amazon (AMZN), Nvidia (NVDA), Facebook/Meta (META), Tesla (TSLA).

Or now that Tesla’s market cap fell below $600B after having once been at over $1T, perhaps Berkshire Hathaway should be considered part of the Magnificent 8.

So I’m considering following what Charlie Munger has advised and increasing my stock purchases on a more frequent basis than only taking chunks of money at a time and buying some stock I think is especially on sale at a given moment.

Recently WSJ Columnist Jason Zweig suggested investors write a letter to their future selves detailing our plans, why it makes sense, and what results we foresee. By writing it down, this can help us stay more level-headed when we may see scary news headlines and we resist the temptation to change our portfolio allocations. Hopefully we regret less and sleep well at night!

I hope my video “letter to my future self” is helpful as you consider what is best for your portfolio too!

As long as you stay true to yourself, your plan, and your investing temperament, that’s the best you can hope for no matter what happens in the stock market.

If you’re interested in learning how to take control of your finances and start becoming an investor like Warren Buffett, check out my free PDF guide.

I look forward to making more investor friends! Add me on Instagram: michellemarki