Alaric Securities celebrates at Nasdaq MarketSite
December 20, 2023 | Issue 47

Investment Outlook 2024: Asset Class Performance Forecast

Nikolay Stoykov
Managing Partner at Alaric Securities
Binoculars symbolizing foresight on Investment Outlook 2024: Exploring Predictions for Asset Class Performance Forecast

The financial horizon beckons with uncertainty and opportunity as we await a new year. In this comprehensive investment outlook for 2024, we scrutinize the trajectories of key asset classes—Bonds, Stocks, Oil, and Gold—offering insights that may guide investors through the twists and turns of the upcoming year. Anticipate trends and make informed decisions in the dynamic market landscape.

Bond Market Outlook: Anticipating a Bullish Run

Our gaze is fixed on a promising ascent in fixed-income instruments. Echoing our sentiments from a recent article where we pondered the likelihood of 10-year Treasury Yields reaching 2.8% in 2024, we expect bonds and fixed-income instruments generally to be the best-performing market in 2024. The markets expect the Fed to lower rates by 1,5% by December next year to 3,75%-4,00% for short-term rates and further decreases of 0,75% in 2025 to 3,00%-3,25% in 2025.

In our opinion, this is a very conservative estimate. Inflation over the next five years is expected to average 2,18%, and nominal short-term rates, historically speaking, have been around the levels of inflation or lower.

Therefore, we expect Fed Fund rates to average around 2,00%-2,50% by the end 2025. While we don’t know if the Fed will be more aggressive than expected in 2024, we think 10-year interest rates will anticipate a looser Fed and drop below 3% in 2024.

Stock Market Predictions: Navigating the Dovish Currents

We expect the dovish environments for bonds to trickle into the stock market. While the US stock indexes are having a good year in 2023, the performance was primarily driven by the realization that stocks, especially US stocks, are essentially a good hedge against inflation.

The performance of the indexes was not uniform as well – while the NASDAQ 100 Index is up over 50%, the Russell 2000 is up only 13%. While we are not necessarily bearish on the NASDAQ 100, we expect smaller stocks to outperform large capitalization stocks. It is probably worth taking a look at regional banks.

Oil Price Expectations: A Cautionary Tale

In keeping with our cautious stance in our article about Oil Price Projections, a wariness surrounds the outlook for oil and oil stocks. Electric vehicles are beginning to impact the global oil demand.

Did you know that 2022 US and China oil consumption was lower than in 2019?

The lower future prices for oil, currently at 60 USD/barrel for WTI 2035, do not indicate a decade-long global depression but rather that EVs will essentially replace ICE vehicles in the coming years.

Gold Investment Forecast: A Historical Asset in a Contemporary Context

For most of human history, gold has been equivalent to money. Since the dissolution of the Bretton Woods system, gold has tracked US inflation (with relatively large noise).

We have read all the bullish research on gold and gold stocks but remain skeptical about the asset class. While we do not necessarily expect lower prices, we see no rational reason why prices should rise more than US inflation expectations for 2024 of 2%.

As we look ahead to 2024, these predictions act as investors’ guide. They provide a clear view of different asset classes – bonds, stocks, oil, and gold. In a time of change, brilliant insights are crucial for those trying to understand the global market.


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