Where to invest?: Thee investment considerations for 2024

As we conclude the last weeks of 2023, our focus shifts towards potential market influencers in the coming year. In this context, we present three investment considerations that we deem essential for navigating the nuances of the changing economic terrain as we approach 2024.

1. You should probably be in AI

This year The Big Story in the markets has been artificial intelligence. In 2024, the trajectory of AI-oriented stocks appears poised for sustained growth, driven by a combination of tech advancements and increasing integration of AI across various industries.

The transformative impact of AI on efficiency, productivity, and innovation has created an environment where companies specialising in this domain are experiencing unprecedented demand.

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As it continues to permeate sectors such as healthcare, finance, manufacturing, and beyond, the potential for these companies to capitalise on emerging opportunities becomes increasingly evident.

Investors keen on optimising their portfolios for the future should consider the compelling reasons to incorporate AI-oriented stocks.

Firstly, the scalability of AI applications ensures a broad market reach, transcending industry boundaries and offering diverse revenue streams. Secondly, the continuous refinement of AI algorithms and machine learning models contributes to ongoing improvements in product offerings, reinforcing the competitive advantage of companies within the sector.

Thirdly, the global push towards digital transformation and automation further underscores the significance of AI in driving business growth.

Diversifying an investment portfolio with AI-oriented stocks not only aligns with the technological zeitgeist but also hedges against the risk of missing out on substantial returns.

As AI continues to redefine the business landscape, having exposure to these innovative companies positions investors to capitalise on the unfolding opportunities, making it a strategic move for almost every investor looking to build wealth for the long-term.

2. Inflation will remain an issue – but less so

In 2024, inflation is anticipated to find a settling point, albeit potentially at a rate higher than central banks’ targets. Investors should remain vigilant and consider hedging strategies to safeguard their portfolios against the potential long-term impact.

Given the likelihood of inflation remaining sticky (despite falling from its multi-decade highs), diversifying investments becomes paramount. Allocating assets into inflation-resistant vehicles, such as real estate and commodities, can act as a hedge.

3. Will the US dollar dive?

In the coming year, the US dollar is likely to experience a consistent weakening trend, influenced by the potential culmination of the Federal Reserve’s aggressive interest rate hiking agenda.

As the Fed signals a shift away from tightening policies, global investors should brace for the repercussions of a depreciating dollar. This currency devaluation may present challenges but also opportunities for strategic positioning.

To navigate the impact of a weakening dollar, investors should consider diversifying their portfolios by allocating resources to assets denominated in stronger currencies.

Investing in international equities, commodities, or hedging strategies can provide a buffer against currency risk. Additionally, monitoring geopolitical developments and central bank policies globally becomes crucial for making informed decisions.

We’re likely to see a new financial era in 2024 as central banks around the world move away from rate hikes. This means there will be new risks to be mitigated and new opportunities to be seized. Savvy investors will be reviewing their portfolios sooner rather than later.