Oct 11 2024 12 mins
With a strong but volatile push into the fourth quarter of 2024, the stock market has delivered great results to investors who have stayed disciplined.
In this video, we will discuss the 3 key themes on the minds of investors as we enter into the fourth quarter of 2024. We will discuss:
✅ What could the start of the Fed rate cutting cycle mean for investors?
The Federal Reserve kicked off its highly anticipated rate cutting cycle with a 50-basis point reduction in September 2024. History shows cash yields decline rapidly following the start of cutting cycles, falling by 2% on average just twelve months later. U.S. stocks have delivered a positive return of 7.2% one year after the initial cut, though depending on whether the economy avoids a recession or not within that year has led to starkly different results (+19.6% vs. –2.7%).
✅ How have markets performed in the months surrounding presidential elections?
Based on trends, we shouldn’t be surprised if we see an increase in volatility leading up to the U.S. presidential election. That said, history shows that it may be temporary, as markets tend to calm rather quickly once the results are in. A similar trend can be seen in stock prices, which on average have been choppy beginning in September and lasting into November of election years. However, after Americans go to the polls, investors who stayed the course have historically been rewarded with strong gains, both in the short- and long-term.
✅ Why should investors think of market volatility as an opportunity?
Volatility is a feature of investing, not a defect. However, many investors instinctually view it as something to fear and avoid, which can lead to poor behavior and subpar long-term results. Investors could benefit from thinking of the VIX as an “opportunity index.” Because while it’s always a good time to invest, history shows that some of the best opportunities have come during periods associated with elevated volatility.
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Advisory services are provided through Prosperity Capital Advisors LLC (“PCA”) an investment advisor registered with the United States Securities and Exchange Commission (SEC). Views expressed herein represent the opinions of PCA and are not intended to predict or depict performance of any particular investment.
All data provided, including any reference to specific securities or sectors, is provided for informational purposes and should not be construed as investment advice. It does not constitute an offer, solicitation, or recommendation to purchase any security. Consider your investment objectives, risks, charges and expenses before investing. These views are as of the date of this publication and are subject to change. Past performance is no guarantee of future performance.