Sources: The Just Service Global Investment Committee, Momentum fund managers (Harmony funds) and Dominion Fund management
7 Risks for Investors in 2024: A Quick Guide (from Momentum)
1. Inflation: Uncomfortably high across major economies, likely leading to slower growth and tighter financial conditions. Conclusion: Brace for stagnation and rising real interest rates.
2. Consumer Resilience: Savings dwindling, unemployment rising; expect reduced spending and higher debt delinquencies. Conclusion: Consumer debt could become a drag on the US economy.
3. China: Slowing growth, fiscal woes, and property market troubles add deflationary pressure globally. Conclusion: Limited Chinese stimulus could dampen recovery elsewhere.
4. Public Debt Levels: Mounting US debt and dysfunctional Congress create uncertainty and limit fiscal flexibility. Conclusion: Debt ceiling showdown could spook markets in 2024.
5. Geopolitics: Ongoing conflicts in Ukraine and the Middle East, plus US-China rivalry, raise security concerns and disrupt trade. Conclusion: Geopolitical turbulence could be a recurring market headwind.
6. Elections: Tight races in key countries, including the US Presidential election, could create market volatility depending on outcomes. Conclusion: US election's potential for a Biden-Trump rematch adds another layer of uncertainty.
7. Tightening Cycle: Mini-banking crisis in 2023 highlights risks, but overall strong balance sheets mitigate systemic concerns. Conclusion: Isolated damage in over-leveraged sectors like commercial real estate is possible.
Our view for 2024
We at Just Service agree with the recent writings of Dominion. They suggest putting aside technology sector (see below for the high growth areas) to consider other growth areas. There's an "old economy" giant quietly powering our modern world, and it's not getting enough love: mining companies and the energy sector.
These might seem like dusty relics of the 20th century, but here's the reality:
Metals like steel and copper aren't consumed, they're invested in. Buildings, roads, vehicles – these are the foundations of a thriving economy, and they're built on mountains of mined metals.
Mining efficiency has skyrocketed. We can now produce a tonne of copper with just 1% of the effort it took in 1800! Innovation keeps driving down costs, fueling economic growth.
But the easy gains are behind us. New breakthroughs are needed to maintain this efficiency, and labor costs and ore quality are pushing prices upwards.
This is good news for mining companies with top-quality assets. Rising costs squeeze out weaker players, boosting the profits of efficient producers.
And the demand for metals is only going to grow. Billions of people across the globe are still catching up with industrialization, and the green energy revolution needs a ton of copper.
The bottom line: Mining stocks are a powerful play on long-term trends like global growth and clean energy. They offer:
Exposure to rising metal prices: As demand outstrips supply, your investments benefit.
A hedge against inflation: Metals hold their value well, protecting your portfolio from rising costs.
Diversification: Mining adds a different dimension to your portfolio, reducing risk and boosting potential returns.
Now back to technology: High-growth areas in Technology 2024
Artificial intelligence (AI): Expect advancements in areas like natural language processing, computer vision, and robotics, driving applications in healthcare, finance, and automation.
Cybersecurity: With increased online dependence, cybersecurity solutions will be crucial. Look for growth in threat detection, data protection, and identity management.
Cloud computing: The shift to cloud-based services continues, fueled by scalability and cost-efficiency. Cloud infrastructure, platform, and software (IaaS, PaaS, SaaS) providers will see strong demand.
Cleantech: Sustainability concerns drive investments in renewable energy, energy storage, and green technologies. Expect advancements in solar, wind, and clean transportation solutions.
Quantum computing: While still in its early stages, quantum computing has the potential to revolutionize numerous industries. Investments in research and development are increasing, making it a promising long-term prospect.
As always talk to your adviser within the Just Service Network if you would like information or otherwise review your personal financial planning.
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The Just Service Client Service Team