Capital markets in 2024: in 77 trading days up to more than 9 % return

2024 is the year when 47 % of the world's population will participate in elections. In the coming months, elections will be held in India and the European Parliament, and the US presidential election has the greatest impact on the US capital market.

Almost a century of statistics (from 1928 to 2023) of the American capital market, which represents 60 % of the global stock market, shows that the election year in the USA, i.e. the Äfourth year of the presidential term, is handsomely profitable. Especially when a democrat sits in the presidential palace. Will it be the same in 2024?

77 is a winning number that we Slovenians love very much when we move around the basketball floor. On the stock market floor in 2024, on April 23, 77 trading days are behind us, which brought good returns to investors in the capital markets. The American stock index S&P achieved a total return of 9.61% from the beginning of January to April 22, measured in euros. It would have been even higher if the Magnificent Seven technology stocks had not fallen by more in the second week of April. than 8 %, which also affected the correction of the S&P 500 index by 5.6 %. These are technology companies Tesla, Nvidia, Apple, Amazon, Meta Platforms, Microsoft and Alphabet.

Based on the statistics of the presidential cycle, can we expect positive returns this year as well?

We will discuss this with AleÅ¡ Lokar, this year's winner of the award for the best asset manager in Slovenia, at the financial webinar Winning strategy for capital markets in 2024.

The American presidential cycle ends in the fourth year, which is also the election year for the next term. The average return of the last fourth year of the presidential term, calculated from data from 1928 to 2023, is 5.5 %. Here, the average return in the last 100 years, when the president is a Democrat, is even higher. The fact is that Democrats are more inclined to spend, and the economy and the capital market react to this by expecting higher revenues and higher profits, which positively affects the level of the market value of shares.

But other factors also have an influence on the capital markets.

The inflation rate is not decreasing as expected, and related to this, the expected reductions in interest rates are moving into the future.
Geopolitical tensions have a short-term impact on the markets, in the longer term their influence is diluted.
Artificial intelligence, growing purchasing power of developing markets such as India, biomedicine and other economic trends are influencing investor expectations and the direction of markets in the future.

We are behind 6 months of over-the-line growth in the global capital markets. From January to mid-April, equity investors were rewarded with more than 9 percent returns. In mid-April, stocks of the tech giants faltered and attention shifted once again to stocks of raw materials, energy, industrials and financials.

Capital markets are characterized by short-term volatility: The market price of shares is influenced by investors' expectations in the future, which depend on various geopolitical, macro and micro developments. All investment classes are exposed to volatility, so two principles are important for investors: diversification or dispersion of investments and the principle of long-termism. Many people will be surprised to read that, despite short-term fluctuations, the historical long-term average annual return on capital markets is 6.5% after inflation.

Returns on global stock markets repeatedly show that being too much being conservative and sticking to bank deposits is not the most optimal choice for an individual's financial assets. Nevertheless, Slovenians have 26.38 billion euros of their savings in bank accounts and only 5.3 billion euros in mutual funds.

Which is the winning strategy for personal finance management in capital markets in 2024?

Sign up for the financial webinar and listen to the conversation with AleÅ¡ Lokar on Wednesday, May 8, 2024, at 2 p.m.

AleÅ¡ Lokar is the head of the management team for the sub-funds Generali of the Umbrella Fund: Generali Galileo, Generali Globalni and Generali Rastko, with a total value of 225 million euros in assets. In April 2024, he was recognized as the best asset manager in Slovenia at the 14th award ceremony for the Best Asset Manager in Slovenia, conducted by Revija and the Moje Finance portal, the leading media for personal finance management. AleÅ¡ Lokar received the award for best asset manager back in 2017.

The S&P 500 Index (Standard & Poor's 500 Index) is a market capitalization-weighted stock market index of 500 leading public stock companies in the USA. It includes representatives of various sectors and is designed to illustrate the performance of the entire US stock market. Many investors believe that this is the best indicator of the American stock market.

If you're not sure what to do, talking to a financial advisor can help you figure out the best approach.

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