Fourth Quarter Market Scouting Report: Navigating Market Volatility and Trends

Introduction

Adam Koós, President and Senior Financial Advisor at Libertas Wealth Management Group, presents his fourth-quarter scouting report, providing an in-depth look at market trends and investment opportunities. With upcoming U.S. elections and ongoing global volatility, Koós outlines key insights into the U.S. stock market, international stocks, bonds, commodities, and cryptocurrencies.

U.S. Stock Market: An Uptrend Amidst Uncertainty

The U.S. stock market remains strong, continuing its trend of higher highs and higher lows. Despite the typical uncertainty accompanying an election year, Koós points out that September, historically the worst month for markets, was positive in 2024—a promising sign. He also highlights that election-year volatility often leads to market corrections, especially in October, but the overall long-term uptrend in U.S. stocks persists.

Koós underscores the importance of staying invested in up markets and being cautious during downtrends. Rather than attempting to beat the market, he advises investors to focus on participating in positive trends and avoiding major downturns.

International Stocks: Lagging but Potentially Promising

International stocks have been trailing behind U.S. equities, and while they have shown some improvement, they have yet to reach all-time highs like their U.S. counterparts. Koós notes that small-cap international stocks, in particular, could offer future growth opportunities. Still, investors should remain cautious and wait for stronger confirmation of performance before making significant moves into these markets.

Bonds: Signs of Recovery After a Challenging Period

The bond market has struggled over the past two years due to rising interest rates. However, Koós signals that bonds are beginning to show signs of recovery as interest rates gradually decline. He explains that lower interest rates typically lead to higher bond values, making this asset class more attractive as rates continue to fall.

Koós advises that bonds are not outperforming stocks, but they are becoming a safer option, especially for more conservative portfolios. With rates expected to continue falling, investors should consider bonds a viable part of their asset allocation.

Commodities and Currencies: Mixed Signals

In the commodity market, Koós observes that oil and other energy prices have seen a recent uptick, largely driven by geopolitical tensions in the Middle East. However, the overall trend in commodities remains weak. Gold, which had been a strong performer, is now showing signs of consolidation, and silver, though volatile, has outperformed gold in recent months.

On the currency front, the U.S. dollar remains strong, and Koós does not foresee any significant devaluation in the near term. He emphasizes that the strength of the dollar is crucial for the U.S. economy, and there are no major warning signs of inflation-driven currency issues.

Cryptocurrencies: Bitcoin and Ethereum Flatlining

Bitcoin and Ethereum, two of the most prominent cryptocurrencies, have been stagnant throughout 2024. Koós notes that both assets are trading below key moving averages, with little momentum to suggest a breakout. For now, he recommends a hands-off approach to cryptocurrencies, as they have not shown any signs of reversing their downtrend.

Key Market Indicators and Signals

Koós discusses several market indicators that provide insight into the overall health of the market:

• S&P 500 Trends: The majority of S&P 500 stocks (74%) are trading above their 200-day moving averages, a positive sign for the broader market.
• Sentiment Indicators: The CNN Fear and Greed Index is currently leaning toward greed, which could indicate potential volatility. Koós advises investors to be cautious but notes that long-term trends remain favorable.

The Big Picture: U.S. Stocks Lead the Way

In the big picture, U.S. stocks remain the top-performing asset class, followed by international stocks and small caps. Bonds are finally showing positive performance after a long period of underperformance, and commodities remain at the bottom of the rankings.

Koós reiterates that while it’s important to maintain a diversified portfolio, U.S. stocks should remain a core focus for growth-oriented investors. For conservative investors, bonds are becoming more appealing as interest rates decline.

Final Thoughts and Recommendations

Koós concludes by reminding investors to stay disciplined and not let election-year fears dictate their investment decisions. With $6.3 trillion in cash sitting on the sidelines, there’s potential for a significant market boost once the election uncertainty subsides. He also emphasizes that those nearing retirement should take extra care to avoid significant losses, as recovering from large market downturns can be challenging for retirees.

Finally, Koós invites viewers to reach out for a second opinion on their retirement plans or financial strategy. He offers a no-cost consultation process through Libertas Wealth Management, ensuring that investors have the opportunity to make informed decisions for their financial futures.

This fourth-quarter report offers valuable insights for navigating market uncertainty while staying focused on long-term investment growth.