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Whoa, I’m writing about a stock market crash on Friday the 13th! Is that tempting fate, or what?
People have been calling out a new stock market crash for much of this year. But the closer we get to December, the less likely it seems we’ll get one in 2023.
We can’t write off the chance. But if the bears are right, it looks like any crash might not happen until 2024 now.
The latest bear
Hedge-fund manager Paul Tudor Jones, founder of Tudor Investment Corp, is among the latest to turn gloomy.
Speaking to CNBC, he said: “The stock market, typically, right before recession declines about 12%. That’s probably going to happen at some point from some level.“
Hmm, a fall, probably, some time, from some level. It sounds like he hedges his bets too. Still, I presume he has a short-term horizon in mind.
His investing preference? He’s tipping Bitcoin and gold. That might be what hedge fund folk think about, but it’s not for me.
Worst since 1927?
US research firm MacroEdge recently said: “Equity risk premium is near its worst ever level going back to 1927.” They point out that similar situations in the past have been followed by big market corrections.
So, do I fear a stock market crash in 2024?
Here in the UK, no. These bearish views are all about the US S&P 500 index, and that does look a bit hot to me.
The value of S&P 500 stocks compared to debt, it seems, is the highest it’s been since the dotcom boom.
Cheap UK shares
By contrast, I don’t think UK shares are overvalued at all. The FTSE 100 has gained just 2% so far in 2023, lagging most of the world’s major indexes.
That’s partly because it’s been resilient in the past few years, and not as volatile. And maybe we Britons just aren’t as big on buying and selling stocks as our American friends?
Whatever the reason, many UK shares look cheap to me.
This is when, in 2024, FTSE 100 ordinary dividends could hit a new all-time record of nearly £90bn. That’s if broker forecasts are right.
What to do?
So, my feeling for 2024 is that we could easily see a US stock market correction. And even if FTSE stocks are cheap, I still reckon they could wobble and become even cheaper.
But I’m not going to try timing it.
If I can buy Barclays shares on a P/E of only five right now, I think I’d be mad to pass them up in the hope of a market fall.
The same goes for a top-up of my Aviva shares. I won’t shun a forecast 7.8% dividend yield on the off chance a share price slump might push it higher in 2024.
Best in a decade?
I rate 2023 as possibly the best year to start investing in UK shares of the past decade.
But if the market does oblige, and forces the prices of my favourite stocks even lower, 2024 might turn out even better.
