The turn of the calendar is always a time of mixed emotions as we look back on the year that has passed, both its challenges and rewards, and begin to focus on the year ahead. 2023 was a year of ups and downs but after a rough patch in the autumn, equity markets rebounded and several sectors are projected to end the year with double digit returns.
Not surprisingly, Spot Bitcoin ETFs were recently approved in January and we expect bitcoin price to go higher with tremendous fanfare and volatility. While Spot ETFs will increase liquidity and open the door to institutional ownership, it may actually increase volatility and draw more trading on both the long and short sides.
With rate cuts on the horizon, history suggests that international equities and commodities may outperform. For the last few years, Americans traveling overseas have benefited from a relatively strong dollar, which made visiting other countries somewhat less expensive. However, a strong dollar has significant implications not just for the cost of dinner in Rome or tickets to the Louvre, but for investing strategy as well.
2023 marked an inflection point for markets with strong gains across both stocks and bonds. The S&P 500, Dow, and Nasdaq generated exceptional returns of 26.3%, 16.2%, and 44.7% with reinvested dividends last year, respectively. Despite the market choppiness so far this year, the S&P has come full circle and is now only about one percentage point below the all-time high from two years ago. What drove these results and how could they impact investors in 2024?
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