Market Outlook 2024

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Episode Transcript

(00:00):
All topics and securities mentioned on straightTalk from the House or for informational purposes
only, and should not be usedas investment advice. Tanton Investment House does
not offer tax or legal advice.Investments or investment strategies covered are not a
recommendation or solicitation to buy or sellthe securities. Past performance is not a
guarantee of future performance. This isstraight talk from the House with certified financial

(00:22):
Planner Tracy Aton right here on thirteenten WIBA. Of course, Tracy comes
to us from Tanton Investment House,a fee only to do with offices right
in Middleton, the website Tanton InvestmentHouse dot com. That's t A N
t O N Investment House dot com. Telephone number six oh eight five zero

(00:42):
one, fifteen forty nine. That'ssix soh eight five zero one, fifteen
forty nine. Without any further adothis morning, certified financial Planner Tracy Anton's
with us. Tracy, how youdoing this week? I'm doing great,
Sean, and how about you.We're doing really well, and we've got
we've got fun conversation as always importantconversation, informative conversation. We've got it
all ahead. So it's going tobe a really really exciting show. As

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a matter of fact, what arewe going to be talking about today,
Tracy, Well, what we're talkingabout is some insights about the year ahead
in four twenty twenty four from RobLovelace. He's a portfolio manager with Capital
Group, which a lot of peoplerecognize the name American Funds, it's really
synonymous. So Rob has thirty eightyears of investment experience. He holds a

(01:26):
bachelor's degree in mineral economics from PrincetonUniversity, and he also holds the Chartered
Financial Analyst designation. So today,what we're going to do is discuss his
comments about a whole host of topics, and it covers everything from what he
thinks market will markets will do thisyear, how high interest rates might affect

(01:46):
the market, how the election mightaffect the market, and what types of
investments he finds attractive. We're goingto talk about some healthcare things he's looking
at, and finally, what hethinks the rate of return of the star
market over the long term should be. Because there's always this big discussion of
our rates, will global growth slowand therefore the stock market will not return

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the typical you know, nine tenpercent that it has done. Will will
it be something you know, moremuted than that. So we're going to
hit on all of all of thatbased on an article that he that his
commentary is in, you know,going over some of the show notes as
you talk and kind of set upwhat we're going to talk about this week.
My guess is we're probably going totalk about it next week too,

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because there is a there is It'sjust so much here, you know,
and he has such little nuances thatyou just you want to capture what he's
really saying. And so some ofthis is kind of detailed and maybe people
can replay because I know how itis when you're listening to the radio.
It's like in and out, yourin and out. But I do think
what he is, what he hasto say is pretty good importance because this

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guy was an analyst at American Fundsand he's worked his way up and he
manages some of the biggest funds thatthe American Funds have. One of them
that I really like as a globalgrowth funds done extremely well. I won't
I won't say the name, justbecause you know, that's not the point,
but it's just that you know,he has you know close to forty

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years of experience, so people listenwhen he has an opinion, and he's
also in the trenches looking at thesestocks, and so I think it's really
interesting and Scot that level of experience. He's been through many market cycles,
many elections, many high interest ratesand low interest rates. What does this
guy think about the trends that hesees. It's gonna be some fascinating stuff.

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As we talked this morning with certifiedfinancial planner Tracy Anton Worse. Tracy
comes to us from t Anton InvestmentHouse. The website Tanton investment House dot
com. That's t A N to N investment House dot com mentioned the
podcast. You can listen back rightonline. You can also subscribe right on
the website. Needs to know Tracyand the team at TEA Anton Investment House

(04:00):
as well as schedule and appointment ata time and a date that's convenient to
you. Tracy makes it real easy. Just head on over to Tanton investment
House dot com. Little widget willpop up. It says, let's talk,
and that's your place to schedule thatappointment again at a time and a
date that's convenient to you. Youcan of course as well always call the
office. It's right in Middleton.Six oh eight five zero one, fifteen
forty nine. That's six h eightfive zero one, fifteen forty nine.

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So Tracy, let's dig in,what does the current market outlook for twenty
twenty four. Well, looking attoday's market, it's drawing comparisons to earlier
times like the nifty to fifty areaof the nineteen sixties and nineteen seventies,
according to Rob Lovelace. He alsosays the late nineteens tech bubble and the
lead up to the two thousand andeight two thousand and nine financial crisis.

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Right now, we're seeing some bigplayers dub the magnificent seven companies like Alphabet,
Amazon, Alt, Apple, Meta, Microsoft, Navidia, and Tesla.
Those are the top seven stocks thatare really making impressive gains past year.
In fact, about thirty percent ofthe S and P five hundred is
represented by those seven stacks. Becausethis S and P five hundred again is

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market cap weighted. So last yearsean seventy percent of the gain in the
S and P five hundred was dueto those seven stacks. So you got
five hundred stocks, but you gotseven. That basically is accounting for seventy
percent of the gain. So that'swhy investors, you know, according to
Rob Lovelace and everybody else that's talkingout there, are getting pretty antsy about

(05:31):
how pricey these companies are, andagain the narrowness of them of the market
gain. So that's not a goodthing. There are similarities, he says,
to the nifty fifties and nifty fiftyAnd do you remember that in the
nineteen sixties seventies, the nifty tofifty it was like stocks like IBM,
Sears, General Electric, those typesof names, and people are basically concerned

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about how concentrated the market returns havebecome back then. And it's the same.
It's very similar to what we're seeingnow with just a handful of stocks.
Leading kind of thinking of those ofthose just those bedrock when your childhood,
the things you products, you sawaround your house. They all add
that ge logo or the IBN oryeah, the Big Sears catalog. Everything

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came to them, very interesting stuff. As we talked to you never thought
they would go away, right younever you know, those would be they
would always be with us, alwaysbe there in some capacity. Yeah,
that is absolutely for sure. Aswe talked this morning, we certified financial
planner Tracy Onton right here on thirteenten WIBA. So is today's market exactly
the same as those previous periods orwhat do we need to think about there?

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Well, today's market isn't exactly likethose past periods. It does share
some similarities. And remembering those times, they all had market declines due to
recessions. They were also long marketcycles and they were not quick to crash
as like COVID dip or nineteen eightyseven crash. They unfolded over several years.
So if there's a resemblance to thosetimes now, we might expect significant

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volatility, especially since it's an electionyear, right, so, which tends
to add to volatility. So portfoliomanager Rob Lovelace, he said he's prepared
for that volatility and also prepared forwhat typically follows, which is a sustained
period of recovery. That's good tohear, and of course, sometimes gotta
gotta break some makes to make anomelets. We talk exact delicious omelets,

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Oh goodness, And I'm prepared.I love the way your analogies work.
It's like, okay, that's true, we make them work. Talking this
morning was certified financial planner Tracy Antonright here at thirteen ten wiv A,
always having a lot of fun.Don't forget. You can get to know
Tracy and the team at t AntonInvestment House all on the website Tanton Investment

(07:51):
House dot com. That's t AN t O N Investment House dot com.
And the telephon number the office rightin Middleton six eight five zero one
fifteen forty nine. That's six eightfive zero one fifteen forty nine. So
big question, Tracy, do youbelieve that the Magnificent seven? Do you
think they're priced too high? Orwhat's the thinking there? Well, again,
based on what Rob Lovelace says,he says it's like a waving a

(08:16):
red flag. So whenever you seea specific sector or a group of stocks
significantly outperforming the rest, it's asign to take notice. Whether it was
bank stocks before the financial crisis,dot com companies in the late nineteen nineties,
or oil stocks at different points,the market is sending a message that
shouldn't be ignored. So these sevenstocks now make up almost thirty percent of

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the S and P five hundred index. Rob said that should get your attention.
Basically, he said it's a bigdeal. We've gone back and investigated.
He said, the fifty to fiftywhich actually apparently was more like forty
something stocks, not fifty. Butremember remember those names like IBM, as

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I mentioned before, Sears, GeneralElectric, Another name would be Eastman,
Kodak, Procter and Gamble, MRK, Dow Chemical, Xerox, and Coca
Cola. And he said, whatwe found from that research are some really
key takeaways and lessons to learn goingforward. He says, overall, what
the research suggests is that those fortysomething stocks were overvalued. They went up

(09:24):
a lot and they came down alot. And he said, however,
about half of them turned out tobe worth holding onto because they bounced back
on the other side of the downturn. But the point there, I thought
was after I read that, well, he said, half half of the
stocks, when you know, cameback, But what about the other half

(09:45):
of the stocks? So that's whyI, you know, I concur with
him. I agree with him thatbasically, you know you've got stocks with
really high pees, doesn't mean youwould ignore those stocks and not have them
in your portfolio. We do aswell. But the degree that you have
them in if you own the Sand P five hundred and you have a

(10:07):
lot of money in that fund,you might want to, you know,
look at the risk level that youhave right now, because it's not five
hundred stocks and everybody thinks it is. And today's risk is much higher than
it was, say a year ortwo ago, because those stocks again have
led the market last year. Andso I would just again encourage you.

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If you own the SMP five hundredand a brokerage account and that's the main
a't your main holding, and it'sa very large number, you might want
to look to taking some gains offthe table, Well, look at it.
Digging digging into more of that injust a moment here on straight Talk
from the House with certified financial plannerTracy Aton. The website Tanton Investment House
dot com. That's t A Nt O N investment House dot com.

(10:52):
From the website, you can scheduleemployment at a time and a date that's
convenient to you. Again, thewebsite Tanton Investment House dot com. Tell
phone number three office right in Middletonsix so eight five zero one fifteen forty
nine. That's six eight five zeroone, fifteen forty nine. We will
continue our conversation with certified financial plannerTracynton next right here on thirteen ten wib

(11:13):
A. This is straight talk fromthe House with certified financial planner Tracy Anton
here on thirteen ten w ib A. Talking this week about what you expect
in twenty twenty four based on portfoliomanager Rob Lovelace, some great information provided
by him, and talking with Tracykind of kind of digesting and really breaking

(11:37):
this stuff down because it's it's veryvery good, important information and of course
Tracy can kind of help us understandexactly what Rob is talking about it.
Don't forget us. We talked withTracy. Great way to get to know
Tracy and the team is on thewebsite Tanton Investmenthouse dot com. That's t
A N T O N investment Housedot com. Tell phoneumer for the office
right in Middleton six so eight fivezero one one fifteen forty nine. That's

(12:01):
six oh eight five zero one fifteenforty nine. You can schedule deployment right
online or by calling the office.So, Tracy, have we have we
have we witnessed kind of a similarstoryline then with them Magnificent seven and then
nifty fifty four. Is this anythingnew? Yeah, so Rob Lovelace again,
who has like forty years of experiencemanaging and now he's a portfolio manager,

(12:24):
but he was an analyst with Americanfunds all those years as well,
and so he says it's not assimple as saying these docs are overpriced to
avoid them. He says ignoring themcould be risky. He said, however,
similar to the nifty to fifty,you shouldn't buy them all together because
they're not a cohesive group. Theydon't belong to the same industry or share

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the same driving forces. And hesaid, the reasons behind, for example,
test Law's performance are different from thosebehind Netflix or Meta or Microsoft.
So the magnificent seven is a uniquephenomenon that signals market risk, but it
doesn't dictate whether you should buy,hold, or sell. He said.
This is where again active management shines. Passive investors again get all these stocks.

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So when you buy like the Sand P five hundred he's talking about,
while active investors pick and choose whichstocks to own based on each company's
fundamental prospects. And I can't highlightthat enough. What he's talking about is
when you buy a mutual fund that'sactually managed, where there's you know,
a team of people that are talkingto the CEO, and they're talking to

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the CFO, and they're looking atthe balance sheets and the income statements,
and they're really looking at the competition, and they're really analyzing the company and
looking at the company earnings and theearnings going forward and saying, is this
a stock that we want to ownlong term, you know, over the
next five, ten, fifteen,twenty years and so. And that is

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so much different than buying an index. And I'm not against index funds per
se, but right now, likeI said, the SMP five hundred,
because it gets market cap weighted,it can get in a situation where it
gets very expensive. So you're owningyou think it's five Union stacks, it's
not five hundred stacks. Right now, thirty close to thirty percent of the

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SMP five hundred is seven stacks calledthe Magnificent seven. And he's just cautioning
that, you know, it's notthat these stacks are bad or good.
What he's saying is be careful howmuch percent that you own in each one.
And when you have an active manager, their job is to see what
are your best prospects, and they'reanalyzing each of these separate and saying is

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this good to own going forward?Based on what the price is? You
know, we all think, wellAmazon, everybody buys from Amazon for example.
Okay, And I'm not saying Amazonis good or bad. I'm not
saying by yourself. But what I'msaying is is the price matters. What
is that price of that stock andwhat is the price relative to what they
think their earnings are going to begoing forward? So whether it's good or

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bad, you know, those analystsare analyzing and looking to see based again
on hard you know, on thehard data of what the balance sheet income
statement is. You know, atsome point, is Amazon too expensive?
Right? And that's based on alot of factors that these portfolio managers look
at, and you know, alot has to do with earnings. It's

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basically earnings, and it's like,okay, that price to earnings ratio is
awfully high? Is that justifiable?Right? So? Anyway, that's that's
what passive versus active management is,and I typically do like both. But
we're now in a scenario where theS and P five hundred index is getting
expensive. Do you ever get achance to meet an analyst by the way
they're interesting people. Yes, Iactually did, so this is a fun

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story. So I was one ofthe mutual fund companies in Boston, you
know, I was early in mycareer, and he was kind of a
professor type and very nice guy.And he kind of like, you know,
shuffled his speed and you know,we talked. We walked around a
little bit, you know, andhe said, remember asking me something about

(16:19):
the airline that used to be outof Milwaukee that served chocolate chip cookies Express.
Yes, do you remember that?And he goes, he goes,
ever been on that airline? Hegoes, I'm thinking of buying some of
that. So, I mean thatwas kind of the highlight of my conversation.
But I thought they was a coolguy. He's just down to earth
but super educated. You could tell, like, you know, it wasn't

(16:41):
his place that you know, officechit chat wouldn't have been his strength.
You know. He was more aboutanalyzing the numbers. I don't know if
you remember Midwest Express they had thehot cookies to across seating on all.
My goodness, Tracy, that wasthat was lucky. They were the dream,
right, But what happened to youknow, Yeah, they got gobbled

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up and no longer. Yeah,that's that's why active management matters. You
know, well illustrated fantasic good goodfirst they would come back, though I
don't like. I don't know,pretzels aren't my thing. Oh nothing,
pizza stuff. Talking this morning wascertified financial planner Tracy Anton right here on
thirteen ten wib A talking this weekabout about some some projections from from a

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portfolio manager, Rob Lovelace, andwhat he is expecting for twenty twenty four
and kind of his outlook. AndI know that anyone that's looked by a
house, a car, those typeof things, they're paying attention to what's
been going on with interest rates andthey've moved in the past a few years,
So higher is that going to hurtthe stock market? Tracy or what

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is Rob's insight on that? Thatwas a great point. So Rob Lovelace
said, many people think that wheninterest rates rise it's bad for stocks,
and when they fall it's good.But it's not that straightforward. He said,
How it affects each company and sectorvaries, and it depends on how
long the trend lasts, so thatgeneral rule isn't very reliable. He said,
what we've experienced so far is thatmarkets have remained robust not because of

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changes and the interest rates, butbecause the economy has stayed strong despite the
rise and interest rates. So theinitial concern was that higher rates might push
up into a recession, hurting corporateearnings, which makes total sense, but
he said, which is ultimately whatmatters right for the stock market is earnings.
However, we've actually seen better thanexpected earnings from various companies and sectors

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and a lot of that. Mytake on that is it has to do
with we're coming out. We cameout of COVID and you know, it
defied. People had a lot ofsavings and people wanted to go out and
use them. Things. Makes perfectsense. And as we talk with certified
financial planner Tracy Anton here on thirteenten WIBA, you get to know Tracy
and the team more at t OnInvestment Hols. Makes it really when you

(19:00):
head on over to Tanton Investment Housedot com. There's a great website,
a lot of great links there tolearn more about Tracy and the team.
Also prime opportunity if you're looking formoney management to portfolio management, you can
schedule appointment at a time and adate that's convenient to you right on the
website Tanton Investmenthouse dot com. That'st A N t O N Investment House
dot com. Telephone number six eightfive zero one, fifteen forty nine.

(19:23):
That's six eight five zero one fifteenfour nine. So, as we were
talking then about about interest rates andother things, obviously this is not the
first time we've seen interest rates rides. What has this kind of stuff look
like in the past, Tracy,he said. Rob pointed out that even
though the Federal Reserve and other centralbanks raised interest rates aggressively, the market

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didn't react as negatively as was anticipated. So this period serves as a good
reminder that higher rates don't always leadto lower markets, and lower rates don't
always mean higher markets. He said, basically that it's worth noting that we're
in a slightly different environment now.With rates at the current levels. There's
an assumption that they'll eventually come backdown, and that's pretty much the talk

(20:08):
of the town. Everybody saying,well, when rates go down, this
is what will happen. Right,So everyone seems pretty convinced that rates will
decrease, he said, it's justa matter of when and by how much.
Buddy went on to say, youknow, this belief is another reason
why he actually believes the risk istilted toward the downside. There's a chance
that rates could remain high for anextended period, which adds to the potential

(20:30):
downside risk in the current market construct. He said. Fantastic stuff. This
week's we talked with certified financial plannerTracy Anton. As mentioned, we're going
to have to do a part two, so you're going to want to stay
tuned for that. If you missedany part of today's show, or you
want to listen back to previous programsor share the program, don't forget if
you head on over to t AntonInvestment House dot com. There's a link

(20:52):
right there to the podcast. Thisgreat information. Again, a lot of
lot of information each and every week. This week especially, you may want
to listen back, if something piquedyour interest you want to share with your
friends and family. Again, justhead on over to Tanton Investment House dot
com for the link to the podcast. Also, while you're there, you
can get to know Tracy and theteam. You can also if you're looking
for money management or portfolio management,you can schedule an appointment right on the

(21:14):
website tantoninvestment House dot com. That'st A N t o N investment House
dot com. Or of course,you can always pick up phone call to
the office right in Middleton six oheight five zero one fifteen forty nine.
That's six's oh eight five zero onefifteen forty nine, Tracy. Time always
flies by when we're hanging out.You enjoy this beautiful day. Thanks Sean,
you too,