2024 Market Recap & Looking Ahead
At Mana FLD, we believe that knowledge is power—especially when it comes to your financial future. We create these market recap posts to offer clear insights into market trends so you can make informed decisions with confidence. In today’s post, Stephanie Bucko, CFA®, CPA and Cristina Livadary, CFP®, RLP® bring their 30+ years of financial services experience to break down recent asset class performance, key market movements, and what they mean for your portfolio. From the strong finish of U.S. stocks in Q4 to the challenges faced by bonds and international markets, we’ll explore the factors shaping today’s investment landscape—and why a well-diversified strategy remains essential.
Asset Class Performance
US Large Cap stocks finished Q4 off strong, up 2.7% bringing the total gains for 2024 up 24.5%. Cash and US small caps also had small gains. Overall on the year, we continued to see a US dominated market. We saw broad sector performance, which is a positive sign for the market. The top performing sectors were telecom (+33%), financials (+28%), consumer discretionary (+25%) and technology (+20%). International stocks, including developed and emerging markets were hit in Q4, declining 7-8%. Bonds lost value in Q4 2024 as long-term Treasury yields rose, driven by persistent inflation and the Federal Reserve’s cautious stance on rate cuts. Strong economic data and increased government debt issuance put further pressure on bond prices, particularly in long-duration and investment-grade sectors. While high-yield bonds held up better, the overall bond market faced headwinds from rising yields and shifting investor expectations.
Extensive research has shown that, if you have a diversified portfolio, a whopping 88% of your experience (the volatility you encounter and the returns you earn) can be traced back to your asset allocation. - Vanguard.
Investment Commentary & Outlook
S&P Envy
In January of this year, we saw investors facing a case of "S&P Envy," a phenomenon fueled by the disparity between the performance of the S&P 500 and that of the more conservative 60/40 portfolio (60% US stocks and 40% bonds). The S&P 500 delivered a remarkable 25% return, while the balanced portfolio trailed behind at 15.5%. This marks the second consecutive year where the S&P’s blistering gains—26% in 2023—left diversified investors feeling like they missed out on the party. Historically, 2024 ranks as the 18th largest year of "S&P Envy," with a 9.5% performance gap between the two strategies. For investors with portfolios aimed at stability, watching the market’s golden child outperform yet again is like sitting through a wedding where the groom is the stock market and you're stuck at the singles' table, nursing a glass of flat champagne.
While the allure of S&P 500 returns is undeniable, this chart from Russell Investments reminds us of the enduring benefits of a diversified portfolio, such as the 60% stock (40% US & 20% non-US) /40% Bond index blend. Despite trailing the S&P 500’s stellar 2024 performance, the 60/40 portfolio delivered a respectable 10.9% return, slightly above its historical average of 10.1%. Over the past 45 years, the 60/40 portfolio has achieved positive annual returns 84% of the time, compared to the S&P 500, which has posted positive returns 78% of the time. This highlights the resilience and stability of a diversified strategy across global markets. Past performance is no guarantee of future results.
US Election Impacts
As the new presidential administration takes office, we want to share some key considerations for your financial plan. While policy changes will occur, history shows that markets and the economy have performed well under both parties. Our primary advice remains the same—stay the course.
That said, several policy areas could have financial implications:
Tax Policy: Current tax rates are likely to remain in place, including the extension of the Tax Cuts and Jobs Act. However, rising national debt means future tax changes are always a possibility.
Federal Budget & Deficit: Government spending continues to exceed revenue, now pushing national debt past $36 trillion. A new Department of Government Efficiency aims to address spending, though its impact remains uncertain.
International Trade: Tariff and trade policy shifts could influence inflation and global economic relationships. A newly formed External Revenue Service will oversee these policies.
Energy Prices: Increased domestic energy production may help stabilize costs, but geopolitical risks remain a factor. A new National Energy Council will focus on these issues.
Labor Market: Immigration policy changes could impact the availability of skilled workers. With job openings still exceeding the available workforce, maintaining financial flexibility remains important.
Looking ahead, markets face a mix of steady economic growth, fewer Fed rate cuts, and high valuations. Investor sentiment initially rose after Trump’s election victory but has since moderated. While policy decisions matter, many factors influence market performance, and history shows that a well-diversified portfolio remains the best path to long-term success.
Bottom line: Stay focused on your long-term financial plan. While policy shifts may bring short-term volatility, markets have consistently shown resilience across political cycles. As always, we’re here to support you through any changes.
Tariffs in Focus This Week
This week, fresh tariff announcements have once again grabbed headlines, stirring up debate and market chatter. While these developments can create a sense of urgency, it’s important to remember that such policy shifts are just one of many factors influencing the markets. Historical episodes—from the Smoot-Hawley Tariff of the 1930s to the more recent US–China trade disputes—remind us that while tariffs can trigger short-term market movements, they rarely define long-term market trends.
A Look Back at Market Reactions
Historically, equity markets have reacted with increased volatility following tariff-related news. For example, during the US–China trade tensions, equities experienced noticeable swings as investors grappled with uncertainty. However, once the dust settled, the broader market often resumed its long-term upward trajectory, driven by underlying economic fundamentals. Similarly, bond markets have shown resilience in these periods. Investors tend to seek the safety of government bonds when trade uncertainties rise, which typically supports bond prices and keeps yields lower in the short term. At the same time, corporate bonds, especially in sectors directly affected by tariffs, sometimes face higher risk premiums.
Past performance is no guarantee of future results, and while history provides valuable insights, it is no crystal ball. The market’s reaction to any new policy, including tariffs, is influenced by a myriad of factors, including central bank responses and evolving economic conditions.
Wrapping it up
As we launch into the second month of 2025, it’s important to revisit the core principle of successful investing: balancing risk and reward. This chart demonstrates the power of capturing 83% of both the S&P 500’s bull and bear markets. While the S&P 500’s full ups and downs over the past 17 years created a hypothetical ending value of $530,245, a portfolio capturing just 83% of the market’s movements—both positive and negative—still achieved $531,320 with significantly reduced volatility. This reinforces the idea that you don’t need to take on all the risk to achieve meaningful growth.
A globally diversified investment strategy offers precisely this advantage: mitigating downside risk while still allowing you to capture enough upside to reach your long-term goals. Diversification not only helps smooth the ride during turbulent market conditions but also gives you the confidence to stay invested, knowing your portfolio is positioned to balance growth and stability. As 2025 continues, we encourage you to keep this principle at the forefront, ensuring your investments remain aligned with your goals and resilience is built into your financial future.
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Stephanie Bucko and Cristina Livadary are fee-only financial planners based in Los Angeles, California. Stephanie is the Chief Investment Officer and Cristina is the Chief Executive Officer at Mana Financial Life Design (FLD). Mana FLD provides comprehensive financial planning and investment management services to help clients grow and protect their wealth throughout life’s journey. Mana FLD specializes in advising ambitious professionals who seek financial knowledge and want to implement creative budgeting, savings, proactive planning and powerful investment strategies. As fee-only fiduciaries and independent financial advisors, Stephanie and Cristina never receive commission of any kind. Stephanie and Cristina are legally bound by their certifications to provide unbiased and trustworthy financial advice.