2024 Market Predictions, Part I

Brit Ryle

Posted December 18, 2023

 

Last year, I just didn’t do it.

My friend and colleague of 25 years – Dave Roberts – and I were bootstrapping the first iteration of Pro Trader Today, and I don’t know, I just didn’t commit my stock market predictions for 2023 to paper…

Probably just as well, not many investment gurus got it right in 2023. 

Fortunately, our archives go back to late November 2022, so there is some record of what I was doing at the time. Turns out, I got a lot right…

Probably the best move I made coming into 2023 was telling our readers to buy Amazon (NASDAQ: AMZN). I wrote The Case for Amazon On December 29, 2022. The S&P 500 was at 3,827 and Amazon was trading around $86. 

Re-reading that article, I mention that I wrote up Meta (NASDAQ: META) the week before the Amazon recommendation – but – The Case for Meta is missing from the Pro Trader Today website and I guess that can happen when you’re building a start-up with just two people so I’m not going sweat it. Buying Amazon was a pretty good move last December…

Because the stock market was coming off its October 2022 lows. Of course, nobody knew that at the time. Inflation was still shockingly high and the Fed was nowhere near done with the rate hikes…

Still, the goal of investing is to “buy low” – but most individual investors struggle to determine exactly when that “buy low” threshold is hit. I’ve been in this business since 1998 – 25 years. I’ve seen stocks hit “buy low” levels several times and Amazon (and Meta) were showing all the signs…

Now, toward the end of 2022, I talked a lot about the emergence of what I believe is the biggest macro trend we’ve seen in decades – The End of Globalization. And I summed up my thoughts pretty nicely on December 23, in an article called Growth that Matters

I’m sharing a chunk of that article, because, it was the driving force that “saved” 2023:

But as American companies turn their back on globalization, move out of countries with elevated geopolitical risk (like China) and bring supply chains and manufacturing operations back to the U.S. and North America, we are at the start of a new era of American prosperity. 

New factories are already breaking ground. The next generation of high-performance semiconductors will be Made in the U.S.A. Manufacturing centers abandoned by globalization will rebound. Millions of jobs will be created…

I’ve dubbed this unstoppable trend The Second American Industrialization. And it’s starting with semiconductors…

The Chips Act of 2022 passed in July and provides $52 billion in incentives for companies to bring semiconductor manufacturing to the U.S. 6 months later, and companies like Qualcomm, Taiwan Semiconductor and AMD have announced nearly $200 billion in spending to build new manufacturing centers and expand existing ones. 

Semiconductors are the tip of the iceberg. Expect to see consumer electronics manufacturing surge in the U.S., to be closer to the supply. Next generation chips will feed a blossoming American electric vehicle market. New mining operations to supply the raw materials (like lithium), massive growth for natural gas production and Liquified Natural Gas (LNG) capacity to feed Euriope. Investment in renewables will march on…

Most investors remain focused on inflation, interest rates and the potential for recession. Very few are able to see beyond the next few months. And when investors do look ahead, all they can see is a looming recession for the U.S. economy…

I can’t tell you whether there will be a recession [in 2023]. But I can tell you that nothing in the economic outlook for the next 6 months will stop the supply chains from coming home, the new factories being constructed and a couple million jobs being created.

You may recall that coming in to 2023, the biggest topic on investors’ minds was recession. It seemed inevitable that the Fed’s rate hikes would push the U.S. economy into recession.

Call me a lone voice in the wilderness if you want, my forecast that de-globalization and re-shoring would create jobs and render a potential recession irrelevant was 100% correct. 

And this re-shoring trend that I call the Second American Industrialization is still in its infancy. The U.S. economy has not yet received the full benefit of the Second American Industrialization – and won’t for another few years. That, ladies and gents, is the opportunity that we now have: investing in the transformation of the U.S. economy toward true self-sufficiency.

My final message in 2022 was this, on December 30

It’s often said that the seeds of the next bull market are planted during the bear market that precedes it. At some point, we will look back at 2022 and see that the end of globalization, the return of supply chains and manufacturing to the U.S. and North America, greater scrutiny for trade with unfriendly countries like China are these seeds. 

In the coming years, these seeds will blossom into a revitalized American economy. A couple million new and high-paying jobs, a thriving middle-class, the re-birth of manufacturing areas and communities that were abandoned by globalization…and a raging bull market for the companies that are driving this new world order. 

As you know, I’m calling this revitalization the Second American Industrialization. And it’s really going to kick into gear in 2023. Personally, I’m fine with this bear market dragging on a few more months because it means the stocks I want to own will remain cheap, and maybe even get cheaper. We’ll be talking about all this a lot more next year…

So, Happy New Year, thanks for reading, and here’s to a better year in 2023!

What’s Ahead in 2024

The point is: no one was expecting much upside from 2023. More rate hikes, runaway inflation, spiking unemployment, recession…

And when Silicon Valley Bank failed in March, it sure looked like all the nightmare scenarios were crawling out from under the bed…

Now I don’t always quote Warren Buffett, but when I do, I choose this one: 

“For 240 years it’s been a terrible mistake to bet against America, and now is no time to start…America’s golden goose of commerce and innovation will continue to lay more and larger eggs.”

That little gem is from Buffett’s annual letter to Berkshire Hathaway shareholders in 2016. And it goes on: 

“It’s an election year, and candidates can’t stop speaking about our country’s problems (which, of course, only they can solve). As a result of this negative drumbeat, many Americans now believe that their children will not live as well as they themselves do.

That view is dead wrong: The babies being born in America today are the luckiest crop in history.”

In the wake of Japan’s 1941 attack on Pearl Harbor, Admiral Yamamoto reportedly wrote in his diary: “I fear all we have done is to awaken a sleeping giant…”

He was right. America’s turbo-charged industrial base won World War II and ushered in a generation of prosperity. 

History may not repeat, but it does rhyme. And now, China and Russia’s duplicity has once again awakened the sleeping giant. Focus your investments on the companies driving the Second American Industrialization. 

On Wednesday, I’ll share my specific Predictions for the stock market and economy in 2024.

Take care and I’ll talk to you Wednesday… 

Briton Ryle
Chief Investment Strategist
Pro Trader Today
brit.ryle@protradertoday.com
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