There has been high drama during 2024 whether you’re an investor, economist or historian.
Will Hobbs, our Head of Multi-Asset Wealth, shares his thoughts on how the year of 2024 has fared and looks at the winners and losers of the stock market over the last 12 months.
He said: “There has been plenty for investors and markets to contend with this year. Whatever happens in the wider economy at home and globally, we stand by our investment philosophy that a well-diversified portfolio of investments is one of the best ways to navigate any environment.”
A year to remember
For future historians gazing back at 2024, the return of President Trump will no doubt stand out as an event to remember.
There has been just as much to contend with elsewhere – the UK General Election and then the first Labour Budget, as well as plenty of geopolitical concerns including tensions in the Middle East and the war in Ukraine, to name just a few.
For investors and markets there were some shocks along the way, as is the nature of investing. For example, in early August, there was a dramatic sell-off in many markets around the globe, followed by a quick bounce.
Cash wasn’t king
The outlooks at the beginning of this year that were looking at the year-ahead, might have understandably had you wondering, why bother taking the risk to invest? But this was a good example of a year to have turned your head away from the noise, switched off social media and other such feeds, and simply got on with investing.
Healthy-looking interest rates on deposits can seduce people into stashing their money in savings accounts to avoid potential volatility in the stock market. But those that decided against investing and stuck their money on deposit were punished by missing out on gains – as well as contending with falling interest rates which diminished interest earned on cash deposits.
Highs and lows of 2024 returns
Returns on US shares are worth highlighting among those investments that provided exciting returns during the year.
These investments were supercharged by an absence of the expected recession and an increasingly present technological revolution. The surge in US business startups, enabled in part by the pandemic, seemed to stick, and many of the advances in the technology sector were often breathtaking.
Closer to home, the UK and Europe underperformed compared to the highs reached in the US. But if you had invested you wouldn’t have lost out, with moderate returns during 2024.
Certain events put a dent in shares such as the plight of the German economy which worsened substantially, together with the added pressure of a political crisis in the last part of the year. China’s wrestle with the aftermath of its giant property bubble became more difficult, which in turn impacted parts of Europe.
China itself has experienced a turbulent year as a result of its economic situation and policymaker attempts to improve things. However, investors have been rewarded for their patience, despite poor forecasts at the beginning of the year.
As well as successes in the technology sector – largely why US investments triumphed – financials were a winner. This category includes banks and insurance companies. Its success is down to several factors including that consumer spending remains resilient and in good health and that Donald Trump is championing deregulation, which makes life easier for the banking industry.
History doesn’t always repeat itself
As the year closes and a new one approaches and you’re on the lookout for opportunities, perhaps, it’s worth remembering that it’s important not to follow the herd and back this year’s winners on the basis of their performance alone. The strongest performing areas one year are rarely the strongest the next, so you need to make sure you are not swayed by numbers alone.
A long-term view
It’s important to remember that 12 months in investment terms is a short period of time and that taking a longer term view – of at least five years – is good practice.
It’s a case of getting invested, making sure you’re diversified and staying focused on your long-term goals to block out all the short-term noise that may cause you to veer off track.
What’s next?
The year of 2025 already looks set to be an interesting one. The behaviour of stock markets during 2024 is not a guarantee of how markets will continue to act in over the next 12 months.
