Chronicles of fat years [2024-2027 Edition]

[Dr.PI]

After two much frequented and adored “When do we reach the bottom of the dip?” threads

Coronavirus: when do we reach the bottom of the dip?

I begin to ask myself if what we see these last days is only some short term agitation or if it will be followed with a recession due to decreased productivity and globally end with a real bear market. What is your strategy these days? Postpone any investment or invest as much as possible before it climbs again?

When do we reach the bottom of the dip? (2022-24 Edition)

I had fun and I learnt a lot with Coronavirus: when do we reach the bottom of the dip? Does it make sense to have a new one, based on the current situation on the stock market?

there is currently a growing comprehension that we are, by different measures, actually out of the dip.

I have taken it upon myself to start a new thread, where everyone is welcome to discuss current market situation, financial news, and, not at all less important, also our feelings about them.

Two current events have finally motivated me to start this new thread:

1. My favourite benchmark of the global stocks market, "MSCI ACWI IMI Net Total Return in CHF” as calculated by MSCI, finally has started to make new ATHs in nominal CHF terms.

As per 21.03.2024, it stands at 1996.77 CHF. The previous ATH from 16.11.2021 was 1947.97 CHF. The nominal benchmark is +31.2% from the 30.09.2022 bottom, +24.9% from the 26.10.2023 bottom and +14.9% YTD.
On inflation-adjusted basis it is still -2.7% from the previous ATH, +28.5% from the 30.09.2022 bottom, and 13.9% YTD.

This alone would be enough to declare the end of the dip, but then something else happened unexpectedly. You have probably guessed:

2. Swiss National Bank have decreased their short term policy rate.

So, here we are. I don’t think that we are going to have 7 fat years going on, but I think it is realistic that we might have fat 2024, 2025 and 2026 before things go sore in 2027.
This is just my gut feeling, and I hopefully will manage to not act on it.

Now let’s have fun.
PI

[Dr.PI]

Talking about feelings:

https://seekingalpha.com/article/4677229-bullish-sentiment-rising-expect-market-peak-august

[Cortana]

SP500 at 6000 by the end of the year?

[Mirager]

Getting paid on Monday with the difference being I am expecting a few thousand more than usual due to some delayed additional payments from Jan-Mar, having a debate between adding my usual or plugging the extras too… Likely will plug the extras too!

[marcel-burkhard]

@Dr.PI

there is currently a growing comprehension that we are, by different measures, actually out of the dip.

I wonder what gave it away … was it most major stock indices beating their all time records?

[Your_Full_Name]

@Dr.PI

@Ariana

2 - Would you consider investing 50k in ETFs at this moment, considering the high market conditions?

Markets are high most of the time.

In what sense, though …?

(sorry, couldn’t resist)

[Dr.PI]

We will know it when the tide will retreat.

[Dr.PI]

@marcel-burkhard

was it most major stock indices beating their all time records?

Yeah, but how meaningful are these results?

When do we reach the bottom of the dip? (2022-24 Edition)

tldr; Bottom of the dip? Not in Germany, it looks like all-time high:

[Brndete]

@Dr.PI

we might have fat 2024, 2025 and 2026

What’s your definition of a fat year? Just checked, my portfolio is around +15% this year, but to be memorable and label it the fat years, I’d like to see +30%. Per year, of course

[Dr.PI]

@Brndete

What’s your definition of a fat year?

Oh, just “above average”. And the average seems to be around 4-5% above inflation…

[Your_Full_Name]

Hey, you should check your computer security settings.

A prepress proofing chapter from the first edition of the Chronicles Of Fat Years [2024-2027] seems to have just been leaked to the Intertubes …

(Source: @TCSconsulting on Twitter)

[Cortana]

While I would love to see 2024-2027 being somewhere between 10-20%/year, it might harm my longterm goal.

[Your_Full_Name]

This time it’s different, though.

(I’ll see myself out)

[Mirager]

Is that because you’re accumulating? If so I’m having the same thoughts due to sequence of returns risks.

[Cortana]

Yes. Too many gains too soon.

[TeaGhost]

The interesting thing is that, at least on a very short duration, Europe, Small Caps and Emerging Markets started to Beat US Large Cap. If we have a strong, multi-year bull run, I feel it would be outside those markets that did well the last few years…

These years, I am both investing all savings surplus, and I am DCAing in a some excessive Emergency Fund Balances. The DCAing is essentially set up to last 5 years (started in July ‚22) and I now feel that I may take a few months out from the back and do an additional one-off invest end of March. Usually, these thoughts are not a good sign and a counter indicator…

[Cortana]

Funny. I thought about droping EM alltogether.

[Mirager]

Yeah, best thing we can do is build more safety nets to avoid having to sell at a loss via a flash crash and protracted sideways market, or even worse, slow grinding crash.

Of course diversification will always help.

[TeaGhost]

So did I… plan was to going forward simply not invest more in EM. Logic is that China is corrupt and Growth happened outside of share markets, India had conviscatory taxes and most other EMs are just bad to terrrible investments.

But was very surprised when I prepared my re-balancing and saw that things are changing. Didn’t see Small Caps, Europe and Emerging marktes heavily up (vs. World) in a long time. But this is only a very short term view - time will tell if it will hold…

[Cortana]

My EM allocation is already down to 7.4% (overall including 3a). It was initially at 12% when I started investing ~5 years ago. Most of this decline is due to its poor performance compared to the developed markets, especially the US.

I just can‘t see how EM stocks could outperform US stocks in the next 1-3 decades. But I also don‘t want to decrease my diversification and sell low.