Entering 2024

Formerly "hot" sectors such as green energy, biotech and innovative but unprofitable tech have experienced large price declines in the last couple of years, and they have both to a limited and varying extent managed to climb again in recent months. The American Russel 2000 index, which contains the smallest 2,000 of the 3,000 largest American companies, is still well below the level at which it traded in January 2021. The well-known ARKK ETF, which contains American "innovation stocks", is still down 66% from its peak in 2021, and the green energy ICLN ETF is likewise trading 54% below its January 2021 peak. Many investors have large losses in these.

It is also a fact that even if the stock exchanges are traded at or close to record levels, this corresponds to roughly the same prices as they traded at the end of 2021. The price rise in recent weeks and months has thus only managed to lift the main indices back to where they were 2 years ago. Many investors probably feel as if they have been treading in a wet swamp for 2 years and at best have been standing still. Many are in the red.

Other markets have also presented challenges. Energy prices in Europe have fluctuated far more than we have been used to from previous years. However, after reaching a peak in the first half of 2022, they have come down significantly. At the time of writing, the oil price is trading exactly at its 200-week (4-year) moving average, which per definition must be normal. UK natural gas is traded 34% below the 200-week average, and roughly the same applies to American natural gas. A third below the 4-year average is more what you can call low than high.

For Nordic investors, the currency markets have also presented challenges. As is well known, Denmark has pegged its currency to the Euro, and Finland uses the Euro directly. However, Norwegian, and Swedish kroner have weakened significantly against the USD throughout 2021 and 2022. In recent weeks, however, much of this has gone the other way and the USDSEK is currently trading at its 200-week moving average, and the USDNOK has fallen below the 100-week average. Again, it is difficult to say that a price that is at its 2 or 4 year average is anything other than "normal".

Regarding expectations for 2024, you will see a lot of predictions from economists and brokerage houses at this time of year. But are they anything other than usual? Most stock analysts usually have a buy recommendation for the companies they follow. Stock analysts therefore believe that stocks will rise. Macro analysts often have a more negative view, and many expect weak economic growth in 2024. The risk of decline/recession will also often be mentioned. It is (as always) difficult to reconcile both of these views.

However, when it comes to interest rates and inflation, the views on both sides of the Atlantic now seem to be the same. Inflation is expected to fall further, and it is believed that the next move from the central banks will therefore be cuts in their interest rates. As both data and statements point in this direction, it is difficult to disagree with this view right now. However, it should be noted that very many people have the same view right now, and relatively few negative surprises will then be needed before the market moves in the opposite direction.

Perhaps 2024 will bring an end to the wars in Ukraine and the Middle East? Maybe we will get falling energy prices and falling interest rates? Perhaps the seemingly escalating trade war between the US and China will take a positive turn, and perhaps we will see a new upswing in world trade? Maybe 2024 will be a very good year?

At least we can hope for that. In any case, it is easy to imagine that the investment climate may improve somewhat as a result of the expected decline in interest rates. Otherwise, as always, it applies to both traders and investors to be alert and aware of the positions you take and the strategies you follow. If so, you should be fine anyway.

A very Happy New Year everyone.