Q1 2024 was a great quarter as you can see below in a partial screenshot from the Quarterly Market Review (Click to view the entire report). U.S. stocks had a year’s worth of growth in Q1, International above average, Emerging markets about average. Real Estate was slightly down and Bonds were mixed.
Past performance is no guarantee of future results.
The economy and markets (stocks/bonds) continued their daily and even hourly “dance” around economic reports on inflation reduction, possible future interest rate cuts, and the strength of economy/jobs. The markets moved up and down, fueled by speculative investors, with reports or Fed commentary that might indicate “inflationary pressures” causing market drops and with reports that might indicate “disinflationary pressures” causing market increases. The market “wants” inflation to drop closer to 2% so that there is no barrier to the FOMC (Federal Open Market Committee) starting interest rate cuts.
It seems so odd that speculative traders are disappointed when a strong jobs report is delivered. Such is the world looking for a slower economy so interest rates are likely to be cut sooner.
Meanwhile, longer term, 1, 5 and 10 years, see another partial screenshot below from the Quarterly Market Review. US stocks are very strong above their long term expected return. International and Emerging Markets are below their long term expected return. That’s why respected sources such as Vanguard suggest that in the next ten years, international and emerging have a positive probability for higher returns than US stocks. The idea is that underperforming or overperforming slices of the market tend to “revert to their mean” - their long term expected return. Of course, prediction is impossible, and that’s why Vanguard gives a wide range of possible 10 year returns. not a specific number.
It’s important to remember that investment performance data is statistically noisy which means that you need a larger sample size to form a statistically significant opinion about the long term performance. Most experts say that required sample size is 20 to 30 years.
Past performance is no guarantee of future results.
Models were up from about 2.5% to 8% for Q1 2024 and from 9% to 23% for the last 12 months. Our Social models (see Social Model details here), which, long term we expect to slightly lag our standard models (see Standard Model details here), again slightly outperformed in Q1 and over the last 4 quarters. At the 3 year mark and further back, however, standard models outperform social as expected.