⚡️ Will the January Effect Give The Markets a Jolt?

What’s on the Menu 🍴

Welcome to 2024, Dough-Growers!

As the fresh aroma of opportunity wafts in with the new year, it's time to toss that old bread and bake some fresh financial gains.

We're here, mixing the latest trends with seasoned insights, to help you rise above the rest.

Get ready to knead, fold, and grow your dough, because this year, we're rolling in the dough together!

Let's make 2024 the yeast of our worries and the most of our opportunities! 🥖💸🚀

• Is The Fed “Pivot” Going To Be A Problem For Stocks? 💼

• Are Ordinals Worth The Hype? 🤔

• Will the January Effect Give Stocks a Jolt? ⚡️

• Hedge Fund Investor’s Top Stock Market Predictions for 2024 📺

Today’s newsletter is a 4 minute read.

Is The Fed “Pivot” Going To Be A
Problem For Stocks? 💼

The Federal Reserve interest rate pivot has been top of investors minds lately.

It’s the part of the rate cycle where we can get excited about interest rates coming DOWN after being elevated for a period of time.

But, let’s not get ahead of ourselves.

There is an argument that the Fed rate pivot is not actually such a great thing.

Rate cuts historically have been associated with a weakening economy that’s in need of monetary stimulus.

This is why historically, we see the unemployment rate rise as the Fed pivots to lower interest rates:

So how has the stock market behaved during prior Fed pivots?

We’ve frequently (though not always) seen the stock market drop when the Fed lowers rates because of weakness in the economy.

Here are the major Fed policy pivots from the 1960’s through the early 90’s:

After the early 90’s, the Fed went into a lower interest rate environment for a prolonged period.

The stock market still fussed in a similar way on rate pivots in 2000 and 2007, and rightfully so as the tech and real estate bubbles burst.

Will this time be any different?

That is the question on investors minds.

History suggests that if the Fed does indeed pivot, it may not be a good sign for risk assets.

It does feel like investors are giving off a “this time is different” vibe though.

They could be right for one particular reason.

Lower interest rates could trigger a slew of home buying & selling that has been on hold due to higher rates.

Have you ever heard the saying “housing is the economy”?

An increase in real estate transactions could make for a potent cocktail of wealth effects and lower unemployment.

Either way we should be aware that a Fed pivot historically has NOT been a super bullish signal.

We’ll have to wait and see if this time will be different after all.

Are Ordinals Worth The Hype? 🤔

Have you heard the latest crypto buzzword zipping around?

It's "Ordinals," and it's not just another trend to scroll past.

Before you roll your eyes at yet another crypto fad, let's dive into why Ordinals might just be the next big leap for Bitcoin enthusiasts and digital asset collectors alike.

What's the Deal with Ordinals? Early 2023 dropped a tech bombshell when a savvy developer, Casey (@rodarmor), cracked the code to transform the tiniest unit of Bitcoin, a Satoshi, into a treasure chest for data.

Imagine stuffing a digital pixel with anything from art to code. This isn't just a technical feat; it's a cultural revolution.

Within months, Discord became a bustling marketplace for these inscribed Satoshis, birthing an entire community and redefining Bitcoin from a mere digital gold to a vibrant canvas of creativity.

Fast forward to May 2023, and the scene exploded with marketplaces and wallets rolling out the red carpet for Ordinals.

Those early bird scribblers and artists turned their $2 doodles into digital goldmines, fetching tens of thousands in this emerging market.

Alright, so you're thinking, "Why should I care?" Here's the scoop:

• First, Bitcoin's getting a splash of color with Ordinals, making it more than just a store of value. Think Bitcoin meets Etsy, but with a digital twist.

• Major exchanges like Binance are already riding the wave, catapulting tokens like $SATS and $ORDI past the billion-dollar mark.

• A whole army of builders is bringing the DeFi magic to Bitcoin, crafting everything from DEXes to bridges.

• Art on Bitcoin isn't just a passing trend; it's an eternal imprint on the Motherchain, far outliving any server's shelf life.

• When it comes to volume, Ordinals are giving Ethereum and Solana NFTs a run for their money.

With Ethereum's NFTs and DeFi providing a tried-and-tested blueprint, even a fraction of that liquidity shifting to Ordinals could spell out massive gains for those who dive in early.

So, whether you're a crypto old-timer or a curious bystander, 2024 might just be the year where Ordinals take center stage.

Will the January Effect Give Stocks a Jolt? ⚡️

As we ring in a new year, many investors feel optimistic about the year ahead.

And why shouldn’t they?

2023 ended with robust returns across multiple sectors, as inflation and interest rates cooled. The primary fear going into the year was largely defeated.

But there’s another reason some stock investors are excited: historically January is a strong month for stock market performance.

Since 1980, the S&P 500 index has produced a median monthly return of 1.57% in the month of January.

This historical pattern can be demonstrated as far back as the early 1900’s, and researchers have even given it a name: the January Effect.

Some reasons given for the January Effect include:

• Stocks that were sold for tax loss harvesting in December get bought back

• Year end bonuses & holiday cash gifts get deployed in January

• Investors are more optimistic at the start of a new calendar year

• The effect has become a self-fulfilling prophecy as investors anticipate the pattern

What else does the hard data tell us about the January Effect?

January returns have been positive 59% of the time since 1980, which shows there are plenty of years where stocks finish down in the first month of the year.

However, when the S&P 500 index posts a positive return in December, the following January has followed up with a positive return 66% of the time.

With 32 observations, it’s a relatively small sample size, but interesting nonetheless.

December 2023 was a strong month for the S&P 500, as the monthly return clocked in at a whopping 4.72%.

So historical stats suggest that January 2024 could very well be a good month for stocks, though there’s no guarantee.

There will be plenty of uncertainty for investors throughout 2024, but wouldn’t it be great if things kick off on a positive note?!

Video of the Day:
Will the stock market crash in 2024? 📺

The stock market surprised a lot of people in 2023.

How will the stock market perform in 2024?

Travis breaks down the current state of the economy & stock market, then gives some predictions for what could surprise investors this coming year.

Food For Thought 🧠

"Do not wait until the conditions are perfect to begin.
Beginning makes the conditions perfect.”
- Alan Cohen

DISCLAIMER: We are not investment advisors, and this content is for educational purposes only. We don’t offer financial, legal, or tax advice. Nothing we say is a recommendation to buy or sell any assets. Trading and investing are extremely risky, so please be careful and do your own research.