Investing in 2024 will once again be challenging. We will see a lot of uncertainty and we will be flooded with a wealth of information. I will still sleep soundly, even if it gets more turbulent. My clear perspective and strategy help me avoid being swept away by the market noise.
Ignore the noise
The first and perhaps most important principle for me in 2024 will remain not to be influenced by the flood of information and headlines. YouTube videos, Twitter/X, will once again be firing from all cylinders to generate clicks. It is tempting to react to every headline and take every forecast seriously, but this often leads to hasty decisions based on emotion rather than sound analyses.
Such messages trigger an impulse to act (often in me, too). Acting in this way gives us the impression that we are in control of the situation. Empirically, however, we tend to do the wrong thing.
Crash prophets will be cash prophets will be crash prophets
One bet I would make at any time is that in 2024 there will be charlatans on every third corner predicting the next crash or selling new investors some bullshit courses. Crash prophets are simply crash prophets who only have one thought pattern that they reel off again and again.
Backtesting will expose the bullshit
As always, it will help to test supposed experts on their past statements. It’s unbelievable, but there are “experts” who are conjuring up the same doomsday scenarios as ten years ago.
People and investors who do not recognize their past misjudgments and investment mistakes are idiots and no good role models. In 2024, I will spend even less time dealing with such people and their nonsense. My time is better invested elsewhere.
Any theory that has been empirically falsified must be dropped. Being wrong is not a bad thing. The world is complex and it is not easy to understand everything. We all often draw wrong conclusions in the assumption that we are right.
However, despite all the errors in our own thinking and the falsification of our own statements, to continue to assume that we will be right in the future is ignorant and self-endangering. Ultimately, it makes us fragile.
It is incredibly liberating to say, “That’s true, you’re right” when your own argument has been refuted.
We know nothing
The truth is that the market will always be unpredictable. Instead of getting carried away by short-term trends and news, focusing on long-term goals and developing a strategy based on sound investing principles is better. We don’t know whether 2024 will be a good or a bad year on the stock market. That’s why I’m staying invested and putting new money into my existing company holdings or new companies every month.
Mission impossible: outperformance
Outperforming broad market indices is not my goal. I would probably fail miserably. If I wanted the best possible return, I would probably just buy an ETF. But buying shares and collecting dividends is a hobby, so I’m willing to give up a few percentage points of performance. The dividends simply help me to stay on the ball.
Of course, I keep one eye on the market and the overall performance of the stock markets. This is part of my check-balance approach. I want my capital to increase, not decrease. Unfortunately, the sad reality is that retail investors massively underperform the market.
So if I were to underperform broad market indices on a sustained basis substantially, I would change my mind. But that is not the case. Generally, my portfolio also reaches new highs when we see them in the S&P 500 or a World ETF.
I stick to my plan
Much of my asset management is generating passive cash flow via dividends. This approach is not designed for a few years but for decades. My previous track record of five to six years in which I have invested significant amounts of my own capital in companies is, therefore, just the early game for me. Maybe I’m just transitioning to the midgame, which has to start at some point, too :).
In any case, I still have a long way to go. Nevertheless, I am satisfied with what I have achieved. I have already experienced some rough times, yet my portfolio value and monthly cash flows only know the way up from a long-term perspective. The whole process is rather slow and gradual, but the trend is my friend and encourages me to stay the course
This plan is like my compass in the middle of a storm. And there is always wind. When share prices rise, some voices see this as a final “hallelujah” before the next crash. When prices fall, the same voices now see the end times coming.
I’ve actually only changed the plan significantly once and that was relatively early on, around 2018, when I started investing more in dividend stocks and stopped doing all the idiotic shenanigans.
It is important to have a clear plan and to stick to it consistently, even when the markets are going crazy. This does not mean stubbornly sticking to a strategy that no longer works, but rather sticking to the core principles and making adjustments when necessary.
A sound investment plan considers risk tolerance, diversification and a somewhat clear and realistic objective. By sticking to this plan, you can minimize the temptation to act impulsively and rely on a long-term vision instead.
Long-term over short-term
In times of uncertainty and volatility, it is tempting to focus on short-term gains. What will be the next big hype that will determine investing in 2024? Who knows for sure. It’s appealing to chase the hype, especially when you see how much money other investors are supposedly generating in a short space of time.
Patient people understand that long-term gains are often more stable and sustainable. Focusing on long-term trends, solid companies and a diversified portfolio can help weather the price swings in a volatile market.
It’s important to remember that the stock market broadly rises over the long term, even though there may be short-term fluctuations. By focusing on a long-term perspective, you can benefit from the power of compound interest and build real wealth over the long term.
In short: investing in 2024 could be challenging but manageable
Investing in 2024 could be challenging, but with the right strategies and a clear perspective, it’s actually quite easy to survive the stock market madness. By ignoring the noise, sticking to a well-thought-out plan and prioritizing long-term goals over short-term trends, you can build a solid foundation for long-term success in the stock market.
With this in mind, I wish my readers peace and confidence on their journey and the greatest possible success for 2024.