Watch our latest Quarterly Market Update.

2024 Stock Market Could be Volatile

2024 Stock Market Could be Volatile

January 15, 2024

US political uncertainty plus two wars could result in a volatile stock market this year, writes Peter Watson.

There are many reasons why 2024 could have a very volatile stock market.

Stock market volatility can be caused because investors are nervous. And there are several things this year that can make us nervous.

The wildcard is the US political uncertainty. Trump is facing an unprecedented number of legal battles and the most significant is whether he will be allowed to be a presidential candidate.

Trump has shown he is extremely unpredictable, and chaos seems to follow him in all aspects of his life.

Add to presidential uncertainty, there are two wars. Russia invaded Ukraine and more recently the Israel-Hamas conflict. Many worry that both wars could spread to involve other countries.

Stock market volatility does not mean stock values will decline over the coming year. Stock values could rise and fall far more than normal.

Nervous investors often buy and sell on emotion. Some will win and others will lose. Extreme volatility historically has resulted in many investors selling and staying out of the market for long periods of time. They miss the potential of a recovering stock market.

The issue is not if the business-friendly Republicans or the more socially oriented Democrats win the White House. History has shown economic prosperity and stock market appreciation continue regardless of which party is in power.

At this stage we do not know if this will be a volatile year for stock market prices. That could depend on the wars and political stability of the US.

Everyone’s circumstances are different. I would encourage investors to anticipate the potential of stock market volatility and interpret that in the context of their long-term investing goals.

Peter Watson, of Watson Investments MBA, CFP®, R.F.P., CIM®, FCSI offers a weekly financial planning column, Dollars & Sense. He can be contacted through www.watsoninvestments.com