With 2024 nearly in the books, Bob Doll has graded his predictions for the year—figuring he hit on seven of the 10.
Doll, President and CEO at Houston-based Crossmark Global Investments, a faith-based investment management firm, has been offering his 10 predictions for the coming year for more than 30 years, focusing on the trends and issues he believes are positioned to shape the economy and markets.
Doll’s predictions for 2024 fared better than his 2023 predictions, where only five of his 10 calls came to fruition. At the time he called that “one of our worst years and well below our long-term average of 7.0-7.5.”
In his “Doll’s Deliberations” commentary released Dec. 16, Doll elaborated on how the 2024 predictions fared, noting whether he deemed each one correct or incorrect. “As things currently stand, we will achieve seven correct predictions for 2024, in line with our long-term average,” Doll reported.
He noted that the U.S. stock market has experienced back-to-back years of 25+% returns, and while a handful of stocks account for the majority of returns, most stocks advanced, as economic growth exceeded expectations and valuation levels rose again. “By year-end, investors are counting on another good year in 2025 but are nervous about valuation levels,” he said.
What follows are Doll’s 10 Predictions for 2024, along with his comments about how they fared.
1. The U.S. economy experiences a mild recession as the unemployment rate rises about 4.5%.
Needless to say, the much-anticipated recession failed to materialize. While we are late in the economic cycle, excess COVID savings and then excessive government spending carried the economy higher. And while the labor market is weakening slowly, job growth in government, education, and healthcare kept the unemployment rate from rising much. Incorrect
2. The 2-3% inflation ceiling of the 2010s becomes the 2-3% inflation floor of the 2020s.
While technically we won’t know the accuracy of this prediction until the end of the decade, it is clear that inflation remains above the Fed’s target of 2%. (Trailing 12-month headline inflation is +2.7%, with core at +3.3%). Our view continues to be that the Fed’s 2% target will remain elusive absent a recession. Correct
3. The Fed cuts rates fewer than the six times suggested by the Fed funds futures curve.
When the year is complete, the Fed will have cut rates three times (100 basis points), much less than was anticipated by the consensus at the beginning of the year. A decent economy and somewhat stubborn inflation have kept the number of cuts to less than expected. Correct
4. Credit spreads widen as interest rates decline.
We entered 2024 with spreads fairly tight already. Anticipating an economic slowdown, we expected those spread to widen. Needless to say, that didn’t happen and credit spreads are very tight/record tight. Incorrect
5. Earnings growth falls short of the double-digit percentage consensus expectation.
Coming into 2024, the consensus expectation was for earnings growth of 12%. In the last couple of months, consensus expectations have moved down to high single digits. While profit margins have increased and top-line growth has been good, the combination was just not robust enough to get another double-digit earnings growth year. Correct
6. Stocks record a new all-time high early in the year, but then experience a fade.
Without a recession (Prediction #1) and continued earnings gains, not to mention increased valuation levels, stocks motored high virtually all year long. Incorrect
7. Energy, financials, and consumer staples outperform utilities, healthcare, and real estate.
As we write, the three predicted outperformers are up on average 19%, while the three predicted laggards are up only 11%. Financials were one of the best sectors, while healthcare was indeed the worst sector. Thankfully, our sector predictions have been among our best over the years. Correct
8. Faith-based share of industry AUM rises for the eighth year in a row.
The measurement of this one comes with a lag, but trends suggest a favorable outcome as more and more individuals, advisors, and institutions are attempting to align their investments with their values. Correct
9. Geopolitical crosscurrents multiply but have little impact on markets.
Wow! The world has been a mess this year—Russia/Ukraine, the Middle East, the Russia-China-North Korea-Iran alliance. Thankfully, there has been little, if any, impact on markets. Correct
10. The White House, Senate, and House all switch parties in November.
Much has been said about the Republican sweep and much more will be said in 2025 as policy proposals become reality. So far, markets are mainly euphoric about policy prospects for 2025. Correct
Looking ahead to 2025, Doll concluded by saying that among the key questions for investors is whether or not the economy, earnings, the Fed, and the new administration can come together to provide another good year for investors. “Considerable policy uncertainty exists for 2025, but recent economic indicators show that the U.S. economic expansion is alive and well,” he said. “No matter what transpires, the investment landscape will undoubtedly be exciting and challenging.”
Doll’s 2025 predictions will be revealed in a post at market close on Dec. 31.
SEE ALSO:
• Bob Doll’s 10 Predictions for 2024: Goldilocks Remains a Fairytale
• Bob Doll Adds President, CEO Roles at Crossmark
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
