2024 could be a very volatile year for the securities markets. Today’s headlines include talk of inflation, the potential for a recession, and elections that add up to financial uncertainty. Given these possibilities, is your portfolio positioned to help weather the storms that may occur between now and the end of 2024?
One of the less apparent risks is a portfolio based on a set-it and forget-it investment strategy. Regardless of market conditions, your asset allocation stays the same whether it is working or not.
Now may be the opportune time to rethink your investment strategy with a professional from an Austin-based asset management firm that uses an active investment management strategy that is designed to respond to current market conditions.
Whether accumulating or seeking to preserve retirement assets, now may be a good time to prepare for what may happen in 2024. We believe waiting increases your risk of being unprepared to respond to securities market changes, and this risk increases again if you intend to retire in the next calendar year.
In this article, we’ll explore ways you can position yourself to help protect and potentially increase your wealth, even during periods of economic uncertainty.
Planning for your retirement in Austin? Be sure to read our Quick Guide: Comprehensive Guide to Wealth Management in Austin
Understanding the Potential Benefits of Sector Investing
Sector investing is a strategy that focuses on allocating assets to specific parts of the economy, such as technology, healthcare, or consumer goods, versus investing in all industries, like an index fund.
In times of market volatility, persistent inflation, and the possibility of a recession, some affluent investors will seek sector investment strategies to pursue better returns and help protect their current wealth.
As we approach 2024, we feel that identifying some of the best sectors for investment will become increasingly important for long-term financial success. This targeted approach can position your portfolio to be less exposed to market volatility and seek to produce better results when the opportunities present themselves.
BCM Tips: Many wealth management firms outsource their investment research to larger financial institutions, focusing on developing more traditional “60/40” (60% stocks/40% bonds) investment strategies. At BCM, we have an in-house team of investment research analysts. We believe in giving our clients a truly personalized experience that includes portfolios tailored to their specific needs, risk tolerances, and relevant and timely goals based on current market conditions. Read our quarterly market reviews for more insights from our investment research team.
2024 Outlook and Considerations
Look For Quality:
When times get rocky, steady earnings and cash flows are valued over unknown future growth potential. The earnings of some industries and companies are typically not as impacted as the stocks of more speculative companies that benefit from a more robust economy.
People still need to turn on their lights, go to the doctor, and buy groceries. The stocks of these companies can help manage volatility.
Tech & Innovation:
On the other hand, if you are looking for long-term growth, you should consider tech and innovation stocks. Technology is changing our world — Artificial Intelligence is a recent example. But keep in mind seeking higher returns can also expose your assets to higher risks, so a more blended strategy might be right for you. It is important to remember we do not live in a one-size-fits-all world.
When you invest in real assets, you’re putting your money into something you can see and touch—like buildings, land, gold, or oil. Whereas companies issue stock in the form of pieces of paper, these tangible assets may be measured by rental income or barrels of oil. Their tangible value gives them staying power, and they may not be as susceptible to the impact of higher inflation or a volatile stock market.
Healthcare & Pharmaceuticals:
People need healthcare services regardless of market conditions. That’s why healthcare and pharmaceuticals might be a positive sector fit for your invested assets. Companies in this sector are typically more resilient because physical well-being still matters – even in down markets. It’s important to note that factors like evolving government regulations or clinical trial results can produce risk for these sectors.
What sets us apart from other investment firms isn’t just our services but the ethos that drives us.
Unlike large brokerage firms that invest clients in ready-made model portfolios for maximum efficiency and profitability, BCM believes our clients deserve our best thinking in various market conditions. This research is used to provide custom-tailored solutions to our clients.
All investors are not the same. Baby boomers and millennials are not the same. These differences drive our advice and recommendations.
We offer a partnership model for clients interested in a collaborative approach that fosters open communication and shared research insights. Alternatively, for those who prefer a more passive role, we provide consistent, reliable management that can be reviewed anytime at your leisure.
Unlike many wealth management firms, our core competence lies in our analysis and portfolio management services, not sales. We do not serve as middlemen between you and a third party that manages your assets for an additional fee. We are the money manager. This means you do not pay extra layers of fees to all of the parties that derive income from your assets.
We also hold ourselves accountable for your portfolio’s performance and are committed to helping you achieve your targeted returns. We’re not just the managers but also the decision-makers, equipped with in-depth research and knowledge about every asset in your portfolio. We don’t need to consult a third party about your portfolio. We know what we are invested in and why, and we are happy to share this information with you.
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Nothing contained herein is to be considered a solicitation, research material, an investment recommendation or advice of any kind. The information contained herein may contain information that is subject to change without notice. Any investments or strategies referenced herein do not take into account the investment objectives, financial situation or particular needs of any specific person. Product suitability must be independently determined for each individual investor.
Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Past performance is not a guarantee of future results. Investing involves risks, including the loss of principal.
Neither Asset Allocation nor Diversification guarantee a profit or protect against a loss in a declining market. They are methods used to help manage investment risk.
Sector Strategies: Portfolios that invest exclusively in one sector or industry involve additional risks. The lack of industry diversification subjects the investor to increased industry-specific risks.