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  • Writer's pictureJoe DeLisi

How To Prepare Your Portfolio For 2024

Updated: Jun 27



2023 still has more than a month left as of the writing of this piece and even with only 10.5 months behind us, it’s been one of the most volatile years since 2008.  I’m not talking about ups and downs of the markets; I’m talking about the financial and worldwide news stories we’ve had to digest in 2023.  Here’s a list of just a few:

 

·       The Fed ever increasing rate hikes to battle high inflation

·       Three of the largest bank failures in U.S. history

·       ANOTHER debt ceiling “crisis” that came down to the wire

·       Artificial Intelligence and the “hope stocks” (my term) like Google, Microsoft, Nvidia, etc. that buoyed the U.S. large cap market

·       Fitch downgrade of U.S. credit

·       The Israeli war on terror

 

These events are recent as of mid-November.  We’ve endured a lot this year.  For my part I’ve done my best to keep you up to speed on what is going on, what might make me worry, what we should do differently and how I think your portfolios are poised to deal with the news cycles. 

 

Before I begin to speak about 2024, I want to personally thank every single client I have. I can’t think of anyone who panicked this year.  Those of you who were concerned, reached out to me, or waited until I contacted you, and you voiced your fear…then just about every single client I have stayed the course.  This is such a great indication that the work we are doing together is really paying off.  I’ve always said I’ll never call you with a “hot tip” (and if I do, you should fire me because I’ve lost my way), but that I’d also call you right away if I saw something that needed to be fixed due to something “broken” either in the markets or the portfolios.  As of November 2023, I’m happy to report our portfolios and your financial plans have really weathered the storms exactly as they are built to.

 

Now to 2024…..

 

We are in for a WILD ride.  I have zero doubt that 2024 is going to test your ability to stay the course for the long-term benefits of your balance sheets.  I believe the biggest story of 2024 is likely to be the Republican primary and then the Presidential election.  We are about one year away from what is primed to be the most contentious election in recent memory.  I have no idea who will emerge on the Republican ticket.  I also am not sure who will be on the Democrat ticket.  And therein lies one of our first challenges.  2024 will likely be dominated by news stories about former President Trump’s legal fights as well as his attempt to regain the Republican nomination and, ultimately, regain the White House.  Just as likely, however, we will also be inundated with conjecture over President Biden’s health and whether he will be the nominee and if not…who will?

 

This all will come to the forefront while pushing to the background things like corporate real estate defaults, very sticky inflation, rising debt, and a Congress unable or unwilling to work across the aisle.  This is a recipe for disaster…but not in the way you might think.

 

The thing we should all be watching out for is the media’s religion of “if it bleeds, it leads”.  No network, no anchor, no radio host is to be blindly followed, ever.  But especially not in 2024.  2024 will be a year of clickbait.  The media smell blood in the water and their job is to get your attention and to turn that attention to money in their pocket.  The easiest way to your attention is to predict doom.  That doom will likely be in the form of financial news that will really test your resolve.

 

So, what do we do about it?  We do that same thing we’ve done for the last 25 years that I’ve been advising my clients.  On the portfolio side of things, we continue to tilt portfolios to where risk pays premiums to us in the form of return.  We then rebalance to those risks as the opportunity presents itself.  This forces us to buy low and sell high even when we don’t want to (because headlines are scary!).  On the cash flow side, we continue to save at least 20% of our income.  We maintain significant cash reserves in high quality, short term fixed income as well as in the cash values of life insurance.  On the retirement side we continue to look for opportunities to spend the income off the portfolio when the markets are up, but to be sure to use our cash reserves when markets are down (we call this True Liquidity).

 

Beyond that, we simply BEHAVE.  There will never be panic coming from me.  I am also not living in a bubble.  I see what is going on in the world.  My job is to “worry for you”.  Trust me, I do enough worrying for all of us.  But let me do my job and continue to keep you informed of what you need to know and when you need to know it.  For your part, I ask you to please reach out to me with questions or concerns.  The only way your balance sheet will work for you is if we stay on track.  Most of that is about making sure you are comfortable with what you are doing even in light of scary news.

 

I hope I’m wrong about 2024.  Maybe it will be smooth sailing and the world will settle down.  But if it doesn’t, just know I am on your side and I’m constantly monitoring your balance sheet for you.

 

Merry Christmas, and Happy Holidays!

 

 

Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS). OSJ: 5280 CARROLL CANYON ROAD, SUITE 300, SAN DIEGO CA, 92121, 619-6846400. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative of The Guardian Life Insurance Company of America® (Guardian), New York, NY. PAS is a wholly owned subsidiary of Guardian. WESTPAC WEALTH PARTNERS LLC is not an affiliate or subsidiary of PAS or Guardian. Insurance products offered through WestPac Wealth Partners and Insurance Services, LLC, a DBA of WestPac Wealth Partners, LLC. CA Insurance License #0D34103 | Guardian, its subsidiaries, agents, and employees do not provide tax, legal, or accounting advice.  Consult your tax, legal, or accounting professional regarding your individual situation. | 2023-165041 Exp. 11/25

 

This material is intended for general use. By providing this content Park Avenue Securities LLC and your financial representative are not undertaking to provide investment advice or make a recommendation for a specific individual or situation, or to otherwise act in a fiduciary capacity.

 

Past performance is not a guarantee of future results. Indices are unmanaged and one cannot invest directly in an index. All investments contain risk and may lose value. Investing in the bond market is subject to certain risks including market, interest rate, issuer, credit and inflation risk. Equities may decline in value due to both real and perceived general market, economic and industry conditions. Data and rates used were indicative of market conditions as of the date shown. Opinions, estimates, forecasts and statements of financial market trends are based on current market conditions and are subject to change without notice.

References to specific securities, asset classes and financial markets are for illustrative purposes only and do not constitute a solicitation, offer, or recommendation to purchase or sell a security. Past performance is not a guarantee of future results.


The information contained in this material was based on information that was current prior to the expiration date. This historical material should be used as a reference only and may not be indicative of current circumstances or facts.

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