Date: January 10, 2024

Fearless Forecast 2024 – Stock Market To Tack On Another 11-15%

I had hoped to communicate my full 2024 Fearless Forecast with a grading of 2023 in one email. That’s not happening. Too much info. So I am sharing the largest portion first, my forecast for the stock market.

12 months ago, I had a lot to say. However, most people could say that about me on any given day. As 2023 began, the masses were universally aligned in the bear camp, the doomsday camp and even the Armageddon camp. Almost every pundit saw all scenarios negatively. Bear market, inflation, recession, higher interest rates. When it’s obvious, it’s obviously wrong.

A few of us had very different ideas.

In my 32 years offering my Fearless Forecast, I said 2023 had my highest conviction. I stated that all scenarios led to higher stock prices, higher bond prices, higher gold prices and higher Bitcoin prices. That’s why I called 2023 The Year of The Bull.

I thought that 2023 would deliver at least 15-20% on the upside with a shot at 30% if things broke well. I almost felt ridiculous offering that Bitcoin would double in 2023. 2023 was going to be an easy year. And it was.

But don’t take my word for it. I was all over the media screaming from the rooftops about what was coming.

Markets Not Pricing in Recession

Crazy Bullish Against All Odds

Year of The Bull

I even offered the skeptics an easy January barometer to test my theory and confirm The Year of The Bull.

“Everyone knows that corporate America has some trouble. And most companies with issues who do not pre-announce before their earnings release will likely warn about Q1 when they release Q4 earnings beginning next week.

The absolute key is how bad the damage is, if any. If stocks fall hard on the bad news then it is likely that the recession is not already priced in. That would eliminate scenario #1, the most bullish one. If stocks limit losses or even rally, it will be a very good sign that 2023 will be the year of the bulls.”

On the sector side, semiconductors were my top choice followed by biotech while energy would lag. I wrongly thought emerging markets would lead developed markets and Europe would beat the U.S.

And during 2023, I pounded the table loudly and often to buy any and all pullbacks. I was one of the few who saw the Silicon Valley Bank et al as isolated and not systemic. I laughed at those who called for a repeat of 2008.

In July I tempered my enthusiasm for stocks and called for a mid-single digit decline in Q3 with bottoms in August, September and October although I thought the last low would not exceed the September one. With high conviction I saw new 2023 highs in Q4 with all-time highs in Q1 2024. Although I was a week late in believing the October bottom, I was all over it as November began and rode that bull right into 2024.

2024 looks nothing like 2023. While I thought 2023 would be more front-loaded, I see the opposite in 2024 with some bumps and bruises during the first half of the year with a potential peak in mid to late January. Investors went from despondent and terrified in January 2023 to giddy and greedy to end the year. All of those late comers to the rally in late 2023 are going to be punished in Q1 2024 with a decline that stops just short of 10%.

However, let’s also remember that we saw epic momentum off of the October bottom and throughout the last two months of the year. There were dozens of price, volume and breadth thrusts which act like a rocket clearing the tower. It almost never ends there. Momentum feeds on itself and takes months and quarters to wear off before a large decline can even set up.

Politics aside, just as we hadn’t seen a down pre-election year for stocks since Germany invaded Poland in 1939, we haven’t seen a down election year with an incumbent running since the Great Depression.

In recent memory,

2020 +18.40% (35% decline in Q1)

2012 +13.41% (10% decline in Q2)

2004 +8.99% (9% decline)

1996 +20.26% (10% decline)

1992 +14.76% (6% decline in Q1)

1984 +1.40% (13% in decline)

1980 +25.77% (17% decline in Q1)

1976 +19.15% (9% decline in Q4)

1972 +15.63% (5% decline in Q2)

1984 was the only year in which the stock market began the year in a downtrend and it turned out to be the worst year of the lot. 2024 begins in an uptrend.

And as they say on TV, but wait, there’s more.

Assuming the S&P 500 scores an all-time high which is still an assumption and not a certainty, a fresh new high after not hitting one for 12 months typically leads to an average gain of 13% over the next one year.

Stocks are also only 15 months into a new bull market with momentum building. That usually leads to another 12-14% over the coming 12 months. Moreover, +20% years are usually followed by another up year by a margin of 17-4.

My friend, Ari Wald, pointed out to me that two-year periods of flat to down lead to the third year almost always being up by an average of 13%.

The years were:









When I add it all up, I arrive at the S&P 500 being up 11-15% in 2024 with a bumpy ride during the first half and gains coming as the weather warms. And for those wondering, the presidential election has absolutely no bearing on the stock market until we get to the end of October, if at all. We may love Biden. We may love the GOP candidate. We may hate Biden. We may hate the GOP nominee. It does not matter to the stock market.

The Dow Jones Industrials, S&P 500, S&P 400 and NASDAQ 100 see a string of all-time highs during the year. Unless the Russell 2000 immediately fails and falls below 1800, I think there is a reasonable chance that it gets back in the zone of its previous all-time highs around 2400.

On the sector side, technology will not run away like 2023, but it will not become the laggard either. I like financials, healthcare, biotech, energy and REITs. As a bonus, ARKK soars 40% at some point during the year.

Stand by for thoughts and forecast on fixed income, the Fed, gold, crypto, energy, the election and my favorite sports teams.


Paul Schatz, President, Heritage Capital