Worcester Business Journal

wbjournal.com | December 25, 2023 | Worcester Business Journal 19 385 South Street, Shrewsbury, MA 01545 | T: (508) 842-0539 | F: (508) 842-0571 | www.ProvoWealth.com ECONOMIC FORECAST FOR INVESTING FACTORS TO CONSIDER: ROADMAP TO INVESTING IN 2024 Patriot CASH: Cash is back. Consider using cash where suitable like 5% plus, 1 year CDs. Also diversify CDs in the big Investment Banks (too big to fail) no more than $250,000 per company, per person, per account to maximize FDIC Insurance. Money markets are now yielding over 5% but remember they can lose value under extremely unusual circumstances and are not FDIC insured. Look for Money markets yielding north of 5% (as of the writing of this forecast) that have values starting with a B and have 30% plus liquidity per week. Please note that cash alternatives do still carry various risks, such as market or credit risk, and may lose value. BONDS: As bad as 2022 and 2023 were for bonds due to massive Federal Reserve interest rate hikes, those hikes should pause and even decline causing a strong bond market rally in 2024. Besides the normal benefits of diversification, yields are over 5% offering a strong income story. Statistically speaking bonds should rally in 2024 adding a lot of alpha to the portfolio (See 1994 and 1995 bond market). Alpha is often referred to as "excess return". Consider a laddered bond portfolio. A must is simply reading the Fed's minutes and comments about current and future hikes. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values vary and will decline as interest rates rise. Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. High yield/junk bonds – grade BB or below – are not investment grade securities and have higher risks than those graded BBB and above. STOCKS: Valuations are a bit expensive. Prices have become more volatile. Bears will say don't fight the Fed if they continue to raise the rates and/or they will argue look out for a prolonged recession. The bulls will argue that consumer spending is resilient, lowered earnings expectations are being mostly met and the economy will continue to expand. This reflects a long-term mindset to investing which is a positive sign for 2024. Inflation has declined significantly but not to the levels the Fed wants at this time. As with all investing, stocks investing has risk including loss of principal, and the prices of small-cap stocks are generally more volatile than large-cap stocks. LAST THOUGHTS: Leading economic indicators continue to struggle. Growth is moderating, which is the direct intent of the Federal Reserve Board. If you slow growth by decreasing borrowing through the raising of interest rates, then you lower growth and inflation. An economic slow-down causes layoffs which again lowers inflation. Inflation is a tax on those who can least afford it…the working class so the goal of lowering it is immensely important, but at what cost, your job? Make sure you have enough cash set aside for emergencies. What pitfalls are facing us in the next 6 to 12 months? Markets remain very difficult for short-term investors. Are you a long-term investor? Timing of the market is extremely difficult. Think long-term with your stock allocations and consider adding more to stocks, the worse it performs. 10% corrections occur every year but historically have been followed by a strong rally. Buy into the dips to accomplish long-term investment goals. CHRISTOPHER P. PROVO, RFC, CRPC PRESIDENT & CEO

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