Quality stocks have outperformed the broad market in good times and bad, over the long term and over shorter periods. And these stocks are expected to continue to reward their investors well into the future. Therefore, if you want to invest safely, quality is one of the main conditions that must be met.
2023 turned out to be a great year for stocks. The rally, which sent the S&P 500 up nearly 25%, will go down in the history books as one of the few times, if not the only time, that the markets won their battle with the Federal Reserve.
While the FRS continued to repeat its “inflation remains high” mantra at every policy meeting, signaling higher interest rates for longer, the markets ignored these warnings and kept the party going. Now, after a sharp turnaround at the December FRS meeting, including a forecast cut of 0.75% in 2024, many investors are confident that the party in the markets will continue for a long time.
Past results do not guarantee the same scenario in the future
But as this year draws to a close, investors should ask themselves whether they expect the same conditions to affect stocks next year. While extrapolating the current trend into the future is a natural human trait, it is highly inefficient in the reality of stock markets.
2023-12-20 14:08:39
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