This will be the last weekly strategy note for 2024, and we wanted to take this opportunity to thank all of our clients for continuing to trust our business to help them with their financial affairs.
2024 has been another challenging year with interest rates peaking as inflation eased, a US election in November, continued Geopolitical risk in the middle east / Ukraine, slower global economic growth and higher unemployment.
Investment markets – 2024 – supporting charts below.
- With only 3 weeks to go, 2024 will likely be one of the strongest performance years in the last decade.
- The Australian Share Market will likely end in mid double-digit performance this year, i.e. circa 14% – 16% when you included dividends.
- The US Share Market will also likely end in high double-digit performance this year, i.e. circa 17% – 19%.
- Fixed interest investments will also end in high single digits, i.e. circa 7% – 9% and cash are still around 4 – 5%.
- The RBA cash rate remained unchanged for the entire year at 4.35%.
The Santa Clause Effect – is it repeatable?
The Santa Clause effect is a surge in the price of shares that often occurs in the week between Christmas and New Year's Day. There are numerous explanations for the Santa Clause Rally phenomenon, including tax considerations, happiness around the markets, people investing their end of year bonuses and the fact that the pessimists are usually on holiday this week.
CommSec analysed data over the past 70 years and found the Australian share market generally performs better in January, with the All Ordinaries rising in 50 of the 70 years and gaining 1.9% on average. December is not far behind, rising 49 times in the past 70 years and lifting on average by 1.8% during the month. Interestingly there is also one month that has consistently under-performed, which is June.
So the question remains, is there a ‘good’ or ‘bad’ time to trade shares? What returns will “Santa” bring this season?
As with any economic or financial data, a long period of analysis is required before a definitive result can be determined. Even with 70 years of data we are far from convinced that the trend is a reliable strategy for investors to depend upon. Certainly, the data shows that December, January and April have been stronger months in the past. It is important to know that the past will not always be a good gauge on the future, and consistency of investment usually trumps attempts to ‘time’ the market.
Office hours during the end of 2024
On a personal note, the team at Coastline Private Wealth wish you and your families a festive end of year and Happy New Year heading into 2024. Please note we will also be taking some time off to spend with our families and the office will be closed from Monday the 23rd of December and we will be returning on Monday the 13th of January. If your matter is urgent, please call the office number as the phone line will be diverted and we will also be checking emails on a regular basis.
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Our mailing address is:
PO Box 2082
Churchlands WA 6018
