On Wednesday’s Benzinga PreMarket Prep, Todd Gordon, founder of Inside Edge Capital and TradingAnalysis.com, provided a rich analysis of market strategies, offering a sharp focus on the tech sector as we head into 2024.
2023 In Review: Diversification And Growth Fund Performance
Gordon highlighted his biggest mistake in 2023 as over-diversifying his growth fund, resulting in an excessive sector allocation. Despite this, the year was generally positive, without any major setbacks.
He emphasized the importance of focusing on mega-cap growth, which affected the growth portfolio's performance.
Gordon observed the tech sector’s resilience amid global economic headwinds, noting its strong recovery post-pandemic and the sustained demand for technological solutions.
Looking Ahead: 2024 Predictions And Market Indicators To Watch
For 2024, Gordon stressed the significance of yield curves, specifically the relationship between nominal and real yields. He pointed out the inversion scenario in the market, with a focus on the 10-2 real yield curve. His analysis suggests that a high interest rate environment (around 7.5% for mortgages), when offset by net costs and inflation, isn't as daunting as it appears.
He predicted a potentially more stable interest rate environment in 2024, which could benefit long-term investments in tech.
As yields go down, growth stocks, as tracked by the Vanguard Growth ETF VUG, should outperform value counterparts, as monitored by the Vanguard Value ETF VTV.
The expert pointed out the significant amount of money parked in money market funds (around $6.14 trillion in Q2 of 2023) and discussed how shifts in interest rates could influence market dynamics and investor behavior.
Gordon also delved into the potential impact of the Federal Reserve’s rate adjustments. He expressed cautious optimism, anticipating a continuation of the bullish market, but remains vigilant about possible downturns.
He suggested that any significant change in unemployment could be a precursor to a recession, highlighting the importance of monitoring these indicators.
Gordon, an Elliott Wave analysts, also provided a technical perspective on the S&P 500, discussing potential resistance zones and forecasting a need for a pullback after a five-wave move in the market.
For 2024, Gordon anticipates further growth, particularly in areas like AI, cloud computing, and cybersecurity, driven by ongoing digital transformation trends.
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