And just like like, we are in the final weeks of 2024. Welcome December!

It’s been a monumental year on many levels and for investors, it has been a year unlike any other. As of today, the three US equity indexes (DJIA, S&P 500, and NASDAQ) sit near record highs after rising 19.4%, 29.2%, and 31.5% respectively. A lot of wealth has been created which is something to be celebrated but don’t let it distract you from looking ahead to what comes next. As this Canadian always reminds herself (courtesy of Wayne Gretzky) – “skate to where to puck is going to be, not where it is”

Let’s take a look at what’s to come in December (and beyond) and discuss some actions you may wish to take after markets record year

Past Month

It’s no secret that markets took a meaningful leg higher post the US election. Why this reaction? While one can be sure what exactly moves markets, my assumption is it’s being driven by two main factors. First, markets do not like uncertainty so the very fact that we received the election results (without any debate or delay) removed hesitation in investors. Once the result was known, capital could be deployed with confidence. Second, the “red sweep” (ie: all three branches of government going to Republicans) does not seem to have been fully priced in to markets before the election. Historically, Republic dominated administrations have been market friendly as they tend to bring about lower taxes, less regulation, higher business activity, and a strong pro-business stance, which is likely leading to increased demand for risk assets post-election (ie: equities and even Bitcoin that has topped $100,000).

December Events Yet to Come

In the middle of holiday parties and doing your final shopping, you may overlook a few market moving events on the December calendar.

November jobs report – by the time you read this, we will have the November jobs report. As you may recall from recent writings, jobs data has become increasingly important as some slight weakness in the labor market have been observed (including an uptick in job openings in this week’s JOLTs data). The Federal Reserve has become increasingly focused on the labor market part of its dual mandate (with inflation being the other) and as a result, any weakness observed in Friday’s job report may lend support to another rate cute in 2024

November CPI – Next week (12/11/24), investors will receive November’s inflation report. While inflation has come down meaningfully in 2024, there remains concerns that it sill tend higher (especially in the face of potential tariffs (which will lead to higher prices for some goods) and lower taxes (which could spur added spending)). Next week’s report will give us an important data point regarding inflation’s path

December Fed meeting – On 12/18/24 we will get the Federal Reserve’s December rate cut decision. Markets are assigning about a 75% chance the Fed will once again lower rates by 0.25%. However, at the New York Times Dealbook conference yesterday, Chairman Powell struck a measured tone. He referenced the ongoing strength in the economy, slight uptick in inflation, and moderating job market as reasons why the Fed “can afford to be a little more cautious as we try to find neutral.” Said another way, the Fed needs to cut rates urgently when an economy is on a downward slide – and that is certainly not the case for the US economy today. This is good news but may result in a slower path to the neutral rate than anticipated at the start of 2024.

Where To From Here?

We will be sharing our 2025 outlook later this month, but as we look out to the final weeks of 2024, we remain relatively constructive on markets. There are several reasons for this, including historical patterns and seasonality trends, recent interest rate declines, cautious sentiment, and perhaps most importantly, the Trump and Federal Reserve “put” (ie: belief that future actions of the incoming Trump Administration as well as the Fed’s rate cuts will be supportive of markets). In our view, tailwinds appear stronger than headwinds but the above events could alter that path.

Perhaps most importantly, as we close our the year, we remind investors to not become complacent. It has been an exceptional year – but nothing goes up in a straight line forever. There will be a time when the trend lines reverse. You don’t need to worry about timing that move. You just need to stick with the procedures and best practices you have put in place for years (or even decades). These likely include (but are not limited to) rebalancing your portfolio to your target allocation, trimming concentrated positions, harvesting capital loses, securing known withdrawal needs in stable investments, doing adequate research for new investments, and continuing to implement your savings plan.

Investing may seem “easy” after a year like this but in our experience, it is not outsized market returns in a single year that drive the long term compounding of wealth. Rather, it’s years and years of discipline, consistent actions, and diligence that typically allow investors to reach their long term goals. Feel free to celebrate your 2024 results – but then get back to work stewarding your financial journey.

Onward we go,