From the Desk of Joe Rollins
It is hard to explain how satisfying the financial year was for 2023. After the dire predictions of Wall Street for recession and a down financial market, we had one of the better financial performances in the U.S.’s economic history. The stock market rally resulted from improving inflation, the concept that the Federal Reserve was through increasing interest rates, and the clear indication that the economy was not falling into recession.
Almost a year ago, on January 11, 2023, I forecasted that the financial markets would increase roughly 20% in 2023. I admit that I was called many unflattering names due to that projection. After the loss in 2022 of over 18% in the financial markets, how could I even conceive a gain of 20% in 2023?
As I have repeatedly pointed out, I did not think there would be a recession in 2023, and fortunately, I was correct. I also forecasted that Corporate America would continue to hire people, and as long as people were working, they would spend money. Consumers were the most crucial component of Gross National Product (GDP).
So, I finally admit in writing that I was wrong. I thought that the number I predicted in 2023 of 20% was a high-end number. The final number ended up being higher than my optimistic prediction. The S&P 500 was up 26.3% during 2023, considerably higher than my projected 20%. I am happy to report my error.
There are many things I want to discuss in this posting, but first, I must reflect upon the excellent year we had in 2023. I also want to give my projections for 2024 and describe why it will be a fantastic financial year based on today's economic conditions. In addition, I want to try to explain the difference between the economic “soft-landing” and the so-called "hot-landing."
The main component is higher stock prices, with their most significant contributor being earnings. It looks like earnings are accelerating in the tech section, and I would be shocked if tech earnings in 2024 were not significantly higher than what they were in 2023. I also want to do some basic arithmetic regarding Roths and IRAs. I never entirely understood why there was such resistance by clients to funding IRAs or Roths annually. Lastly, I will not spend much time on it, but I need to describe why Chinese stocks are in a downturn and whether the likelihood of emerging market stocks taking off in 2024 is remote or attainable.
Before we get to the exciting information, I do need to report the excellent financial year in 2023. The Standard and Poor’s Index 500 stocks were up 26.3% for the year. Those stocks gained 11.7% in the last three months of the year and have a 10-year average of 12%. The NASDAQ Composite was up 44.6% for 2023 and made 13.8% in the year's final three months. That five-year index is up 14.8% per year. The Dow Jones Industrial Average is up 16.2% for the year 2023 and was up 13.1% for the fourth quarter of 2023. That 10-year average is 11.1%.
I always point out the returns on the bond index so that you can see the comparison between investing in stocks and investing in bonds. For the first time in quite a while, the Bond Index actually rallied during the fourth quarter. The Bloomberg Barclay’s Aggregate Bond Index was up 5.5% for 2023, earning 6.6% for the final quarter of 2023. This bond rally was predicated by the fact that the Federal Reserve would not increase interest rates further.
It is likely that in 2024, interest rates will fall, further rallying bonds. I will warn you to be careful and temper your excitement regarding bonds. Even though the fourth quarter was excellent, the 10-year average for bond performance is 1.8%. If you compare the three major indexes, which have a 10-year annual average in double digits, the 1.8% return on bonds is disappointing. There is a high likelihood that bonds will perform well in 2024 due to the possibility the Federal Reserve will cut interest rates. However, that rally should be significantly less than the return from stock investing.
I do not want to insult your intelligence on Roths and IRAs, but I am confused about why the public resists funding these accounts annually. I question when you can put money on a tax-deferred basis in a traditional IRA and pass up that opportunity. The “Cadillac” in investing is a Roth IRA. If you can get money into a Roth account that accumulates tax-free for a lifetime, you can make no other wiser investment. Every year in January, I encourage people to make these contributions; these encouragements are usually ignored. I also encourage people to make Roth contributions for their children. Contributing to a Roth account is huge if your child has any earned income. The compound effect of Roth’s being tax-free adds financial stability to anyone’s retirement, but so much more for a young child.
Take this simple arithmetic: If you add $100 a month to a Roth account when you start at age 25 and invest that in the S&P 500 until age 65, you will have over $1 million. However, if you wait until you are 35, that same amount goes down to $300,000. The dramatic difference in these two calculations is the compounding of interest. As Ben Franklin often said, “The most powerful force in the universe is compounded interest.”
By putting the money in earlier, you are compounding a more significant number at the end of your life, building financial wealth. I have never entirely understood why this concept is so universally misunderstood. Here, we have a situation where a relatively small amount of your net worth can be invested, and the compounding effect on a tax-free basis is unprecedented. Yet, every year, I am met with stiff resistance as I try to remind my clients to invest in IRAs or Roths. Retirement is imminent, and we want to set you up for success.
Going into 2022, the so-called experts on Wall Street forecasted a dreary economy with the U.S. economy falling into recession. Many of them have quoted the long-standing Wall Street axiom that any time the two-year Treasury Bond is greater than the 10-year Treasury Bond, you will shortly have a recession in the U.S. The so-called inverted bond yield has now existed for two and a half years. We see no chance at the current time that the U.S. will fall into recession, and with the Federal Reserve beginning to cut interest rates, there is a high likelihood that the inverted bond yield will be right-sided sometime in 2024.
After the historically lousy year in 2022, the so-called experts on Wall Street forecasted a dismal 2023. Bloomberg polled 22 top strategists and found they expected the S&P 500 to rise only 7% on average in 2023. Of the central banks, JP Morgan, Bank of America, and Morgan Stanley were among the big names forecasting a so-so year for equities. The only ray of light you saw in this regard was my projection of a gain of 20%. How could all of these major financial institutions have been so wrong for the 2023 year when, rather than the 7% gain, you had a considerable stock market rally with an increase of 26.3%?
The Wall Street experts were wrong in forecasting the economy because they missed the basic concept that the most critical component of the economy is keeping Americans working. In many of their minds, they were forecasting that corporate America would start right-sizing their employees and laying people off dramatically. Also, the enormous increases in interest rates were perplexing to them. In just 18 months, from March 2022 through August 2023, the Federal Funds Rate went from a historic low level of 0% to 5.5%, making all borrowing more expensive. Under prior financial times, this massive increase in interest rates would have made a significant dent in the economy and may have supported the big bank’s analysis. However, in 2023, that did not happen.
What actually came to fruition in the second half of 2023 is that inflation began to fall pretty dramatically. In 2022, inflation was up to a concerning 8%, but in the fourth quarter of 2023, it had dropped to roughly 3.8%. Falling inflation is a huge driver of corporate earnings. People do not realize that lower inflation reduces manufacturers' input costs and increases their margins. The most critical component of falling inflation is that it entices the Federal Reserve to cut interest rates. The decrease in interest rates increases the economy in many regards.
If you mention lower interest rates, everyone thinks about house mortgage rates; however, cutting interest rates affects the economy much more than consumer mortgages. For example, interest rates are a significant component of the purchasing of vehicles. Lower interest rates dramatically impact monthly payments for cars. Also, interest rates on furniture purchases, credit card payments, and other monthly payments are affected by interest rates. At the end of 2023, it was clear that the Federal Reserve would not increase interest rates further. The following rate change by the Federal Reserve would likely be a decrease rather than another increase.
So, you can say that you read it here first: the U.S. economy has now achieved the so-called infamous “soft-landing.” As I reported last month, we are in the Goldilocks economy of solid GDP growth, lower inflation, and potentially lower interest rates. We do not want an economy that is too hot or slow. The projected increase in GDP for the fourth quarter of 2023 is 2.5%. That is perfect. Not too hot, not too cold. The Goldilocks economy.
It is not like the Wall Street gurus do not have enough tools to create negativity. For the last two years, we have been talking about the fact that an increase in interest rates by the Federal Reserve would throw the economy into recession. It is clear that those fears of Wall Street were incorrect. So, the desired result was for the economy to fall into a “soft landing.” As mentioned above, I think we have accomplished that economic move. However, now, the so-called experts cannot control their concern about what is called a “hot landing.”
Under this concept, the Federal Reserve would cut interest rates too fast, accelerating inflation, which would be highly detrimental to the U.S. economy. Based on the information at my disposal, it would appear that the Federal Reserve will cut interest rates slower than Wall Street anticipates. Most forecasts now are to cut interest rates six times during 2024, reducing the current interest rates from 5.5% to 4%. Most people would say that it is only a 1.5% decrease in interest rates, and how could that help the economy? Such a decrease would be massive in so many regards. Not only would it reduce home mortgage rates, but it would also reduce interest rates throughout the economy and likely create a new boom in consumer spending on cars, appliances, and basic credit cards.
There are so many examples of Wall Street warning us of potential financial disasters in 2022 and 2023 where they were wrong. The one that I find the most interesting is the price of oil. We all heard that due to the invasion of Ukraine by Russia and, lately, the unrest between Israel and Gaza, there would be a high likelihood that there would be a surge in oil prices to well over $100 per barrel. The oil price would surely increase with the U.S. sanctions on Russia and its oil exportations. In addition to those world conflicts, the OPEC Coalition vowed to raise oil prices by cutting back supply. These actions appeared to give oil the scarcity needed to dramatically increase the price per barrel.
But something interesting happened. Due to better technology, the U.S. began producing more oil per day than ever in its history. The U.S. average daily oil consumption in 2023 was roughly 12.9 million barrels. That is over a million barrels per day more significant than what was produced even in 2022, and more than 600,000 barrels per day than ever produced in the U.S. In addition, the U.S. became a major oil exporter, sending oil to oil-starved Europe and worldwide, filling in for Russia, which could no longer legally export. Suddenly, in one year, U.S. oil production filled the rest of the world’s needs, decreasing the price of oil instead of increasing.
Even though oil stocks were the best-producing financial stocks in 2022, they were one of the worst in 2023, having a negative rate of return. It is now anticipated that going into 2024, the price of oil will stay stable during the year due to the massive increase in production in the U.S. One of the significant components of the considerable rise in inflation in 2022 was the acceleration of the price of oil due to the Russia and Ukraine conflict. The U.S. has taken the lead in providing much-needed oil to the world, controlling the oil price.
The most important question that needs to be raised is, “What are we looking at for 2024?” When you look at the so-called economic indicators for 2024, it is pretty clear they are very favorable. Consider where we stand in the economy and what we expect in 2024. We know interest rates will fall in 2024, which is a massive positive for stocks and bonds. We also know that the economy is in a “Goldilocks” state, where the GDP is not too high or not too low. Once again, this is an excellent environment for stock market performance.
We also know that when there is a significant decline in the stock market, as we did in 2022, there are typically multiple years of positive performance. For example, in 2008, there was a 37% sell-off in the S&P 500 due to the economic downturn in the financial crisis. Not many people realize that after that terrible year, there were nine consecutive years of positive gain. I always think about this when clients want to go to cash when there is economic uncertainty. If you had gone to cash in 2008 and missed nine consecutive years of profitable operations, you would have endangered your retirement possibilities.
The most critical component related to future stock market performance is earnings. There was no question that we suffered from an earnings decline due to high inflation. Much of this earnings decline is related to Corporate America not wanting to increase prices too quickly and absorbing many costs associated with higher inflation. That was undoubtedly a good thing for the consumer, but a terrible outcome for corporate profits. In the first two quarters of 2023, corporate earnings were down 1.7% and 4.1%, respectively. It was not a pretty sight that corporate earnings were decreasing more throughout the year. I saw a significant change in Corporate America, where corporate payrolls were adjusted with falling inflation and improved profitability going forward. In the second and third quarters of 2023, corporate profits rose 4.9% and 2.4%, respectively. As you can see, as the year progressed in 2023, corporate earnings did a significant turnaround from negative to positive by the end of the year. So now, let me explain the good news.
Due to the proper sizing of Corporate America, corporate profits are anticipated to be higher in 2024 than in 2023. For example, it is expected that corporate earnings in the tech sector, in many cases, should be double what they were in 2023. However, the most critical component is the overall earnings of major corporations. FactSet’s survey of analysis projects 2024 earnings to accelerate through each of the following four quarters. They are projecting that by the fourth quarter of 2024, earnings will be 18.2% higher than in 2023. I cannot emphasize enough how vital this increase in corporate profits will be to stock market performance.
It is often said that while we sit and reflect on 2023 and how good a financial year we had, it is not an essential component of the valuation 2024. To evaluate 2024, you must be forward-looking. Celebrating the earnings of 2023 is excellent, but that is history. We do not care about prior financial information; we only care about forward-looking analysis. The stock market is always forward-looking and never backward-looking. If you analyze stock market performance based on previous history, you will miss the trends as Wall Street did for 2023. My favorite quote on the subject is from the famous economist Paul Samuelson, “The stock market has predicted nine of the past five recessions.”
So, what do we have for 2024 that is important? We have a moderate economy, potentially lower interest rates, and accelerating corporate earnings. That is the trifecta of components that lead to higher stock pricing. If the Federal Reserve does decrease interest rates throughout the year, corporate profits will begin to accelerate, and we will not have a significant fluctuation in the economy. Stock prices in 2024 will be higher than they were in 2023.
Every year, I predict what the market will do during the upcoming year. In 2023, I happened to be on the right side of that projection, indicating an increase of 20% in the markets, although the actual number was over 25%. I project that in 2024, the markets will be 11% higher, and then, if you add the dividends, the market should be 13% higher at the end of 2024 than at the end of 2023.
If you want to pick out sectors likely to accelerate, you once again have to give a nod to the tech sector due to its ability to produce revenue without incremental cost. I anticipate tech in 2024 will be substantially more profitable than in 2023. You should also see increases in anything related to interest rates. Utilities had an unbelievably lousy year in 2023 but will likely have a good year in 2024. Bonds had a modest gain in 2023, but I anticipate a more substantial increase in 2024. If interest rates significantly affect a stock, 2024 should be a good year. Therefore, 2024 should be a good year for virtually all financial segments, notwithstanding any significant political or world crisis.
I received a lot of interest in whether or not to invest in China and emerging markets. There are certainly times to do that, but people do not realize the difficulty the Chinese and emerging markets are having at the current time. China is undergoing a revolutionary change in its economy, which is not going well. China is one of the most indebted countries in the world. Their debts are so overwhelming that they must keep the economy going to break even.
Due to the current philosophy in China, they are doing what they can to run non-Chinese enterprises in their country, and it is working. You are seeing a significant transfer of corporate America moving their facilities over to Vietnam, Southeast Asia, and now India. These companies leaving China to avoid the political repercussions of their government will significantly hurt China in terms of jobs and commerce. Currently, China is not investable until they resolve their internal issues and how they will treat foreign manufacturers going forward in their economy. It is the foreign manufacturers that made China powerful and the foreign manufacturers that will make China weak. Hopefully, there can be some compromise in the year to come.
Oil prices significantly impact emerging market countries and also interest rates. Since virtually all borrow money from capital, higher interest rates affect them more than others. You are starting to see some significant increases in productivity in some Latin American countries. Still, many of these countries cannot be created due to political unrest, corruption, and the lack of capital. Currently, emerging markets are not a buy due to the flat nature of the price of oil. This can change suddenly with a significant worldwide crisis, but I do not foresee that happening. The war in Ukraine or the war in Gaza is unlikely to begin a worldwide crisis. However, nothing is inevitable, and we will watch it closely.
It has been a great year in 2023, and I look forward to another great year in 2024. Now is the time to fund your IRA and 401(k). As we move into tax season, we look forward to sitting down with you and learning more about you and your finances so we can help you achieve a more secure retirement.
As always, the foregoing includes my opinions, assumptions, and forecasts. It is perfectly possible that I am wrong.
Best Regards,
Joe Rollins
It is hard to explain how satisfying the financial year was for 2023. After the dire predictions of Wall Street for recession and a down financial market, we had one of the better financial performances in the U.S.’s economic history. The stock market rally resulted from improving inflation, the concept that the Federal Reserve was through increasing interest rates, and the clear indication that the economy was not falling into recession.
 |
| SGo Dawgs! Clients Payal and Ketan Patel enjoy the Georgia game with their handsome sons! |
As I have repeatedly pointed out, I did not think there would be a recession in 2023, and fortunately, I was correct. I also forecasted that Corporate America would continue to hire people, and as long as people were working, they would spend money. Consumers were the most crucial component of Gross National Product (GDP).
So, I finally admit in writing that I was wrong. I thought that the number I predicted in 2023 of 20% was a high-end number. The final number ended up being higher than my optimistic prediction. The S&P 500 was up 26.3% during 2023, considerably higher than my projected 20%. I am happy to report my error.
 |
| Caroline ready to compete! |
The main component is higher stock prices, with their most significant contributor being earnings. It looks like earnings are accelerating in the tech section, and I would be shocked if tech earnings in 2024 were not significantly higher than what they were in 2023. I also want to do some basic arithmetic regarding Roths and IRAs. I never entirely understood why there was such resistance by clients to funding IRAs or Roths annually. Lastly, I will not spend much time on it, but I need to describe why Chinese stocks are in a downturn and whether the likelihood of emerging market stocks taking off in 2024 is remote or attainable.
 |
| A sweet moment between Josh and his favorite little sister |
I always point out the returns on the bond index so that you can see the comparison between investing in stocks and investing in bonds. For the first time in quite a while, the Bond Index actually rallied during the fourth quarter. The Bloomberg Barclay’s Aggregate Bond Index was up 5.5% for 2023, earning 6.6% for the final quarter of 2023. This bond rally was predicated by the fact that the Federal Reserve would not increase interest rates further.
 |
| Reid and Caroline in Montana discovering the next best thing to having wings |
I do not want to insult your intelligence on Roths and IRAs, but I am confused about why the public resists funding these accounts annually. I question when you can put money on a tax-deferred basis in a traditional IRA and pass up that opportunity. The “Cadillac” in investing is a Roth IRA. If you can get money into a Roth account that accumulates tax-free for a lifetime, you can make no other wiser investment. Every year in January, I encourage people to make these contributions; these encouragements are usually ignored. I also encourage people to make Roth contributions for their children. Contributing to a Roth account is huge if your child has any earned income. The compound effect of Roth’s being tax-free adds financial stability to anyone’s retirement, but so much more for a young child.
 |
| Jennifer enjoying the lights with some of her favorite people |
By putting the money in earlier, you are compounding a more significant number at the end of your life, building financial wealth. I have never entirely understood why this concept is so universally misunderstood. Here, we have a situation where a relatively small amount of your net worth can be invested, and the compounding effect on a tax-free basis is unprecedented. Yet, every year, I am met with stiff resistance as I try to remind my clients to invest in IRAs or Roths. Retirement is imminent, and we want to set you up for success.
Going into 2022, the so-called experts on Wall Street forecasted a dreary economy with the U.S. economy falling into recession. Many of them have quoted the long-standing Wall Street axiom that any time the two-year Treasury Bond is greater than the 10-year Treasury Bond, you will shortly have a recession in the U.S. The so-called inverted bond yield has now existed for two and a half years. We see no chance at the current time that the U.S. will fall into recession, and with the Federal Reserve beginning to cut interest rates, there is a high likelihood that the inverted bond yield will be right-sided sometime in 2024.
 |
| Lindsay and her daughter Marissa sporting their new hiking jackets, courtesy of “Santa." Looking good, ladies! |
The Wall Street experts were wrong in forecasting the economy because they missed the basic concept that the most critical component of the economy is keeping Americans working. In many of their minds, they were forecasting that corporate America would start right-sizing their employees and laying people off dramatically. Also, the enormous increases in interest rates were perplexing to them. In just 18 months, from March 2022 through August 2023, the Federal Funds Rate went from a historic low level of 0% to 5.5%, making all borrowing more expensive. Under prior financial times, this massive increase in interest rates would have made a significant dent in the economy and may have supported the big bank’s analysis. However, in 2023, that did not happen.
What actually came to fruition in the second half of 2023 is that inflation began to fall pretty dramatically. In 2022, inflation was up to a concerning 8%, but in the fourth quarter of 2023, it had dropped to roughly 3.8%. Falling inflation is a huge driver of corporate earnings. People do not realize that lower inflation reduces manufacturers' input costs and increases their margins. The most critical component of falling inflation is that it entices the Federal Reserve to cut interest rates. The decrease in interest rates increases the economy in many regards.
 |
| Evan and Alexis celebrating New Year’s Eve at the Georgia Aquarium |
So, you can say that you read it here first: the U.S. economy has now achieved the so-called infamous “soft-landing.” As I reported last month, we are in the Goldilocks economy of solid GDP growth, lower inflation, and potentially lower interest rates. We do not want an economy that is too hot or slow. The projected increase in GDP for the fourth quarter of 2023 is 2.5%. That is perfect. Not too hot, not too cold. The Goldilocks economy.
It is not like the Wall Street gurus do not have enough tools to create negativity. For the last two years, we have been talking about the fact that an increase in interest rates by the Federal Reserve would throw the economy into recession. It is clear that those fears of Wall Street were incorrect. So, the desired result was for the economy to fall into a “soft landing.” As mentioned above, I think we have accomplished that economic move. However, now, the so-called experts cannot control their concern about what is called a “hot landing.”
 |
| Mal isn’t quite ready to say goodbye to Christmas |
There are so many examples of Wall Street warning us of potential financial disasters in 2022 and 2023 where they were wrong. The one that I find the most interesting is the price of oil. We all heard that due to the invasion of Ukraine by Russia and, lately, the unrest between Israel and Gaza, there would be a high likelihood that there would be a surge in oil prices to well over $100 per barrel. The oil price would surely increase with the U.S. sanctions on Russia and its oil exportations. In addition to those world conflicts, the OPEC Coalition vowed to raise oil prices by cutting back supply. These actions appeared to give oil the scarcity needed to dramatically increase the price per barrel.
 |
| A hole-in-one for client Lloyd King |
Even though oil stocks were the best-producing financial stocks in 2022, they were one of the worst in 2023, having a negative rate of return. It is now anticipated that going into 2024, the price of oil will stay stable during the year due to the massive increase in production in the U.S. One of the significant components of the considerable rise in inflation in 2022 was the acceleration of the price of oil due to the Russia and Ukraine conflict. The U.S. has taken the lead in providing much-needed oil to the world, controlling the oil price.
The most important question that needs to be raised is, “What are we looking at for 2024?” When you look at the so-called economic indicators for 2024, it is pretty clear they are very favorable. Consider where we stand in the economy and what we expect in 2024. We know interest rates will fall in 2024, which is a massive positive for stocks and bonds. We also know that the economy is in a “Goldilocks” state, where the GDP is not too high or not too low. Once again, this is an excellent environment for stock market performance.
 |
| 22-year-old client Phillip Hensley enjoying a round of golf at Jack’s Point in Queenstown, New Zealand. Stunning view! |
The most critical component related to future stock market performance is earnings. There was no question that we suffered from an earnings decline due to high inflation. Much of this earnings decline is related to Corporate America not wanting to increase prices too quickly and absorbing many costs associated with higher inflation. That was undoubtedly a good thing for the consumer, but a terrible outcome for corporate profits. In the first two quarters of 2023, corporate earnings were down 1.7% and 4.1%, respectively. It was not a pretty sight that corporate earnings were decreasing more throughout the year. I saw a significant change in Corporate America, where corporate payrolls were adjusted with falling inflation and improved profitability going forward. In the second and third quarters of 2023, corporate profits rose 4.9% and 2.4%, respectively. As you can see, as the year progressed in 2023, corporate earnings did a significant turnaround from negative to positive by the end of the year. So now, let me explain the good news.
 |
| A big congratulations to client/CNN anchor Michael Holmes on his win at the 44th Annual News and Documentary Emmy Awards. |
It is often said that while we sit and reflect on 2023 and how good a financial year we had, it is not an essential component of the valuation 2024. To evaluate 2024, you must be forward-looking. Celebrating the earnings of 2023 is excellent, but that is history. We do not care about prior financial information; we only care about forward-looking analysis. The stock market is always forward-looking and never backward-looking. If you analyze stock market performance based on previous history, you will miss the trends as Wall Street did for 2023. My favorite quote on the subject is from the famous economist Paul Samuelson, “The stock market has predicted nine of the past five recessions.”
So, what do we have for 2024 that is important? We have a moderate economy, potentially lower interest rates, and accelerating corporate earnings. That is the trifecta of components that lead to higher stock pricing. If the Federal Reserve does decrease interest rates throughout the year, corporate profits will begin to accelerate, and we will not have a significant fluctuation in the economy. Stock prices in 2024 will be higher than they were in 2023.
 |
| The fondest memories are made when gathered around the table |
If you want to pick out sectors likely to accelerate, you once again have to give a nod to the tech sector due to its ability to produce revenue without incremental cost. I anticipate tech in 2024 will be substantially more profitable than in 2023. You should also see increases in anything related to interest rates. Utilities had an unbelievably lousy year in 2023 but will likely have a good year in 2024. Bonds had a modest gain in 2023, but I anticipate a more substantial increase in 2024. If interest rates significantly affect a stock, 2024 should be a good year. Therefore, 2024 should be a good year for virtually all financial segments, notwithstanding any significant political or world crisis.
I received a lot of interest in whether or not to invest in China and emerging markets. There are certainly times to do that, but people do not realize the difficulty the Chinese and emerging markets are having at the current time. China is undergoing a revolutionary change in its economy, which is not going well. China is one of the most indebted countries in the world. Their debts are so overwhelming that they must keep the economy going to break even.
 |
| Ava allowing for a quick photo during her gift opening regime |
Oil prices significantly impact emerging market countries and also interest rates. Since virtually all borrow money from capital, higher interest rates affect them more than others. You are starting to see some significant increases in productivity in some Latin American countries. Still, many of these countries cannot be created due to political unrest, corruption, and the lack of capital. Currently, emerging markets are not a buy due to the flat nature of the price of oil. This can change suddenly with a significant worldwide crisis, but I do not foresee that happening. The war in Ukraine or the war in Gaza is unlikely to begin a worldwide crisis. However, nothing is inevitable, and we will watch it closely.
It has been a great year in 2023, and I look forward to another great year in 2024. Now is the time to fund your IRA and 401(k). As we move into tax season, we look forward to sitting down with you and learning more about you and your finances so we can help you achieve a more secure retirement.
As always, the foregoing includes my opinions, assumptions, and forecasts. It is perfectly possible that I am wrong.
Best Regards,
Joe Rollins
All investments carry a risk of loss, including the possible loss of principal. There is no assurance that any investment will be profitable.
This commentary contains forward-looking statements, which are provided to allow clients and potential clients the opportunity to understand our beliefs and opinions in respect of the future. These statements are not guarantees, and undue reliance should not be placed on them. Forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual results in future periods to differ materially from our expectations. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements.
