Summary of the stock market year 2024:
-Impressive performance: In 2024, the S&P 500 gained 24% one of the strongest performances since 1950, driven by a few dominant stocks. Nasdaq around 30%, gold 12% and Bitcoin tops everything with almost 50%.
-Focus on the "magic 7": Nvidia, Tesla, Meta and co. were major contributors to performance, with these top stocks delivering over 30% earnings growth recorded.
-Shift to ETFs: Over 1 trillion dollars flowed into ETFs, while actively managed funds 450 billion dollars lost.
-Political uncertainties: Donald Trump's inauguration brought risk-on sentiment, but also volatility and regulatory risk.
-International markets: While the DAX fell by 19% the Dow Jones remained at 13% lagged behind. China showed "solid" growth, but geopolitical tensions remain palpable
Review of the stock market year 2024
Exceptional market performance
The S&P 500 closed the year with a gain of 24% (similar to last year) - one of the best performances since 1950. The dominance of the "Magic 7" - $NVDA (-1,69%) Nvidia (+180%), $TSLA (-0,14%) Tesla (+74%), $META (-1,25%) Meta (+70%), $AMZN (+0,03%) Amazon (+50%), $GOOGL (-0,22%) Google (+40%), $AAPL (+0,29%) Apple (+30%) and $MSFT (+0,48%) Microsoft (+15%) - shaped 2024, with these companies averaging +30% earnings growth, while the rest of the S&P 500 only achieved +4%. Their average price/earnings (PE) ratio of 30 is significantly higher than the $VUSA (+0,3%) S&P 500 average of 22.7 and shows that the market continues to expect strong growth. Excluding the ten largest stocks in the index, the PE falls to 18, highlighting the dependence of market performance on a small number of players.
ETFs and the relocation of capital
The year 2024 was characterized by a mass shift of capital into ETFswith a record inflow of over 1 trillion dollarswhile actively managed funds 450 billion dollars outflows from actively managed funds. This reinforces the dominance of large companies and changes the market structure in favor of passive strategies.
Economy and politics: influence of Trump and the Fed
The inauguration of Donald Trump as the 47th US president brought a new dynamic to the markets. The Fed adjusted its inflation expectations and raised the neutral interest rate to 3,1%which initially led to rising yields and a stronger dollar. Despite higher inflation expectations, the Fed plans to cut interest rates in 2025 and 2026.
International markets and China
The DAX rose by 19% and benefited from export-oriented companies. In the USA, the Dow Jones remained at 13% behind. China's economy continues to grow "robustly", but geopolitical tensions, particularly in the technology sector, are weighing on international relations. The PMI data for the service sector in China surprised positively, but sustainability remains questionable.
Personal insights and goals
The year 2024 showed me once again how important patience and discipline are when investing. I would like to:
1.Develop better analysis tools: Improve my TradingView indicators and evaluate financial data more efficiently.
2.Strengthen emotional control: Act less emotionally and impulsively and focus on rational decisions.
3.Live in the moment: Focusing more on the here and now and finding a balance between planning and appreciating the present.
4.Be more realistic: Recognize that investing is a privilege and appreciate it accordingly.
5.Increase efficiency: Continue to optimize my processes for analyzing and evaluating individual stocks.
I am very satisfied with my performance this year and hope that you have also come a little closer to your goals. Another post on my expectations for 2025 will follow today or tomorrow.
Future plans for posts
I intend to write more posts in the near future. I want to cover topics that are particularly important to me and that I think could be interesting and useful for many of you. Here are some of my planned topics:
1. crypto on-chain analysis
I would like to discuss the transparent nature of the blockchain to better understand who is buying and who is selling. On-chain data offers fascinating insights into the behavior of market participants, e.g. by tracking wallet movements, whale activity and long-term holder trends. The aim is to make more informed decisions and avoid emotional missteps.
2. tradingView indicators for company data visualization
I am working on a series of indicatorsto visualize specific aspects of company performance and facilitate analysis. Planned are
- Earnings Predictability
An indicator that shows at a glance how how reliably the management forecasts and expectations. This makes it easier to assess the stability and planning reliability of the company.
- Margin Dominance
This is about margin pressure and to recognize the pricing power of a company. The aim is to highlight companies with sustainable competitive advantages and stable margins.
- Debt Management
This indicator visualizes how healthy a company's debt This indicator visualizes how healthy a company's debt is, whether debt is taken on or reduced strategically and whether this is done at times when it is cheap or expensive.
- Capex Cycle Analysis
A visualization of the investment cycle of a company. The aim is to show how efficiently investments generate income and whether capital expenditure is being used strategically.
- Compounder Rating
An indicator that shows how companies that I classify as value compounders perform over different time horizons. The aim is to be able to better assess the long-term quality and stability of such companies.
I look forward to working on these topics and sharing them with you. If you have any suggestions or specific questions, please let me know!