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  • Writer's pictureStephen Boatman

Q1 2024 Market Overview

Updated: 10 hours ago

A lot has happened this quarter and I've captured some of the highpoints below surrounding commercial and private real estate, high level market returns, Abercrombie outperforming Nvidia, and which cars are least satisfying to own. It's a bit of hop skotch but I thought you may appreciate the items that stuck out to me this month.


The Market From 10,000 Feet


Global stocks had an impressive start to the year, returning 8% in the first quarter. The prospect of an AI-driven productivity boom drove stocks higher, especially in the US, outweighing areas of uncertainty such as higher-for-longer interest rates and upcoming US elections. Japan made headlines as the Nikkei reached new record highs for the first time since 1989. And major US indices, including the Russell 3000 and S&P 500 Index, ended the quarter at all-time highs.


IT and Communication Services stocks led the stock market gains but it wasn’t concentrated in the “Magnificent 7” names that led the US market last year. While Nvidia, Microsoft, Meta and Amazon all contributed to market returns, both Apple and Tesla detracted. REITs were the only sector to post negative returns for the quarter, falling after a strong fourth quarter last year.


Globally, small caps trailed large caps. However, value and profitability offered a ballast against the negative size premium, as value stocks and stocks with higher profitability generally outperformed their counterparts.



Abercrombie & Fitch Outperformed Nvidia?


I do not promote single stock picking and think it's a great way to underperform the stock market. That being said, I do enjoy bringing up the below statistic, mainly due to the shocking look that quickly follows.



Below you can see a one year return comparison of Abercrombie in green and Nvidia in Blue pulled from Yahoo finance.




Commercial Real Estate and Your Bank


With commercial real estate loans turning over, forcing them to refinance at a likely higher interest rate, some people wonder what exposure their bank has to these loans. People want to know this information because as office rentals and their underlying values decrease the bank may be forced to foreclose on the loan and take ownership of the depreciated property. I wouldn't worry about this with banks who have less than 20% exposure to these loans but if my money was at New York Community Bank I may consider moving it to a different option.



Private Real Estate


It is no surprise that housing is expensive. Below are a few charts that put into perspective how affordability has changed over the past few years. Sadly, I don't know what will happen here in the future but I do know that high prices can solve high prices and humans have been good at finding solutions to painful problems. What that solution looks like is still up in the air but I hope we can stay away from government hand outs and lean more into ingenuity within this market.







Unsatisfying Cars


Cars are unsatisfying when they feel cheap, lack power, are expensive to maintain or depreciate faster than expected. Below we can see a list of cars that may be worth avoiding based on the recent consumer reports study.



Closing


This blog structure is out of the ordinary for me but I hope you enjoyed the quick market update and visual's that I found enlightening over the past month. Have a great week and don't forget to do something nice for yourself, and if you can manage it, someone else as well.

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