Get Ready for Another 20% Rally in 2024

Shah Gilani|December 21, 2023

Plenty of investors are celebrating the market’s rally…

But how about some more good news as we close out the year?

After a solid 24% ride in 2023… the stock market’s got $6 trillion in dry powder – and a bit of history – that says we could see another 20% ride in 2024.

Investors have $5.89 trillion stashed in money market funds. That’s a lot of ammunition that could drive a powerful stock market rally in 2024.

And that money is sure to come off the sidelines.

One reason is the interest rate investors are getting on that money will be coming down.

The Fed made it clear it’s done hiking rates. It just flip-flopped on its “higher for longer” mantra.

Last week, Fed Chairman Jay Powell said inflation’s coming down, so cuts will be on the table in 2024. That signals an almost instant sea change from the inflation-fighting, rate-hiking regime the Fed started in March 2022.

Another reason investors will pull cash out of money markets and start chasing stocks is that cash is looking like trash compared with the returns stock market investors are enjoying.

Back in 2022, when Fed rate hikes were powering money market fund rates higher, cash was king.

But now… investors in the S&P 500 are ending the year with a 20% gain. Tech investors who’ve rode the Nasdaq Composite are reaping a 41% return.

Cash, which is returning just 4% to 5%, sure looks like trash.

As the Fed starts cutting rates, investors are going to be eyeballing stock market returns with envy…

And they will start piling in.

Institutional investors are already taking action. Last week, they withdrew $14.7 billion from money market funds and moved that pile into equity funds.

But that still leaves the institutional crowd with $3.62 trillion in sidelined money.

Retail investors, on the other hand, added $2.92 billion to their money market pile last week. They’ve got a stash of $2.27 trillion in cash.

But retail investors aren’t fools and will soon follow suit.

Trillions in cash will make its way into the markets.

History Repeats

Now, there’s something else that’s likely to drive investors into stocks in 2024…

History.

There have been only nine times in the past 95 years that the S&P has had back-to-back years with 20% gains. But five of those were driven by the same kind of setup we’re seeing now.

Take the 1982-1983 twin turbo years. The S&P rose 20% in 1982 and 22% in 1983. Those gains were fueled by inflation and interest rates coming down.

Sound familiar?

The four other back-to-back 20%-plus years were in the 1990s. They occurred in succession… from 1995 (37%)… to 1996 (23%)… to 1997 (33%)… to 1998 (28%)… to 1999 (21%).

(Big thanks to DataTrek for the stats used here.)

What drove those spectacular gains was consumers’ and businesses’ adoption of the internet.. technology… and all the products and services that technology spawned. Those products and services made the world more productive, they made it move faster, they made it understand and learn more, and they made it more profitable.

Technology’s doing it again.

Today, we’re talking about AI. It’s about to be integrated into every aspect of our lives… and into all the tech that’s already changed our lives. And it’s going to create a more profitable future.

Technology’s latest revolution and all of the ammunition sitting on the sidelines sure make 2024 look good.

Manward Money Report readers will hear all about it in their January 2024 prediction issue… and they’ll get two big picks to start the year right.

The market’s going higher.

And I can’t wait.