Last year was quite a rollercoaster in the markets. The S&P 500 surged by 26%, but here's the catch: the average stock in the index only saw a 13.8% gain. This disparity was largely due to a regional banking crisis and the market's keen interest in tech stocks, especially those advancing in artificial intelligence. Interest rates also had their moment, spiking in the fall over concerns about funding large deficits. Yet, despite these challenges, the market bounced back from the 2022 bear market as we closed the year.
VGA is looking at 2024 with optimism, anticipating further gains in the market and expecting more inclusive growth across various sectors and styles. The Federal Reserve is likely to reduce interest rates, and the inflation and unemployment numbers are playing nice, setting a hopeful stage for the year ahead.
Presenters:
Tom Samuelson, CFA, CMT, Chief Investment Officer, Vineyard Global Advisors
Kendall Dilley, CFA, CMT Portfolio Manager, Vineyard Global Advisors
Sam Caylor, Investment Analyst & Senior Trader, Vineyard Global Advisors
Original Broadcast: Wednesday, January 24, 2024
We have historically bounced back from bear markets, often within a year or more, with positive returns being a common theme. Specifically, the Russell 3000 enhanced dividend strategy is noted for its resilience in both bull and bear markets. Dividend stocks didn't have the best time last year, but with the expected easing of interest rates, there's hope for improvement.
And then in the core of our strategies, our screening methodology is twofold. We either look for growth at reasonable price or value at reasonable growth. And those make up the core of our stock strategies. They always have. They always will. - Tom Samuelson
There's much to look forward to in 2024, but it's not without challenges. On the bright side, we're seeing the end of the Fed's tightening cycle, inflation inching closer to optimal levels, and a strong labor market. AI-driven productivity improvements also add to the positives. However, concerns about a potential recession, the impact of higher interest rates, and geopolitical risks can't be ignored.
In the tech space, stocks might seem pricey, but if we zoom out to the entire S&P 500, the picture looks more balanced. Highlighted are the dynamics within the financial system, particularly the shift from quantitative tightening to easing, which might stir up some volatility.
Vineyard's equity portfolios and strategies consistently outperform well-known benchmarks like the S&P 500 and Nasdaq, especially in turbulent times. With a fixed-income investment strategy focusing on both short-term and longer-term corporate bonds, VGA is poised well, given the expected interest rate dynamics.
With a balanced approach to investment and a keen eye on market trends, Vineyard is gearing up for what could be another eventful year in the financial world.
*All data sourced through Bloomberg.
