● Bloodbath Warning for US Stocks

2024 Global Economic Outlook: Uncertainty, Market Volatility, and Investment Strategies

Key Highlights Covered in This Article

– Explanation of the global economic order undergoing a complete transformation for the first time in 70 years.
– Strategies to break free from “study obsession” in stock/asset investment amidst recent market volatility.
– Detailed analysis of tariff wars, stagflation controversies, and the U.S. economic, interest rate, and inflation outlook.
– Considerations for U.S. stock valuations, investment timing, and choosing between big tech vs. dividend stocks/cheap stocks.
– Economic keywords for the second half of 2024: global uncertainty, interest rate cuts, and strategies for different investment assets.

Historical Shift in the Global Market: 70-Year Patterns Are Changing

– The order of ‘free trade’ has been taken for granted since World War II.
– However, due to tariff wars and geopolitical tensions, we are rapidly moving to a different order than in the past.
– Recent market experiences are highly exceptional compared to the past, and we are in a phase where investment ‘experience’ itself has not accumulated.
– Existing pattern imitation does not work well in investment decision-making, and we are in a period of transition that no generation has experienced.

Investment Strategy in a Volatile Market: Keep Only “What You Know + Can Endure”

– The current market is “a battlefield where bullets are being fired indiscriminately.”
– It is not about being smarter than others to make profits, but about managing risk with funds you can withstand.
– Recommend maximizing time diversification effects with market ETFs rather than individual stock investments.
– It is wise to abandon short-term trading or the obsession that “you must study.”
– Do not try to time the market, and be cautious about long-term ‘buy and hold’ within the range of bearable losses.

Concerns About U.S. Stock Correction and Valuation

– U.S. stocks have been in a bull market for over 15 years since 2008.
– However, S&P 500, Nasdaq, etc., are already under significant valuation pressure.
– In the past, there have been several instances of sideways or bearish markets lasting over 10 years.
– It is difficult to know clearly whether we are in a ‘short correction’ or the beginning of a ‘structural bear market.’
– Along with the structural causes of the bull market (Fed’s liquidity, technological innovation, U.S.-China conflict and capital inflows), it is necessary to consider a cyclical/trading-oriented strategy in the future.

Analysis of Tariff Wars, Stagflation, and Upward/Downward Pressure on Prices

– Tariff wars may have short-term upward pressure on prices, but in the long term, the downward pressure from consumption/investment slowdown will be stronger.
– U.S. GDP accounts for 26% of the world’s GDP, and the supply shock from tariffs stimulates inflation within the U.S., while causing oversupply and deflation in the rest of the global economy.
– During the U.S.-China trade war from 2018 to 2020, the lowest inflation rates were recorded in various countries around the world.
– Prices fall during recessions, and stagflation (recession + high inflation) is actually rarely realized.
– Recommend switching investment styles to undervalued/dividend stocks instead of U.S. big tech/glamour stocks.

2024 Outlook: Interest Rates, Monetary Policy, and Responses by Investment Asset

– Central banks, including the Fed, are maintaining a cautious “wait & see” policy strategy under economic uncertainty.
– There is a possibility of advancing the timing of interest rate cuts if economic indicators such as the unemployment rate exceed critical levels.
– The role of central banks (central bank Put) is still strong in the midst of global economic turmoil.
– Bonds (especially U.S. Treasury bonds) are becoming more attractive as an investment with interest rates in the 4% range, reflecting downside risks.
– Flexible rebalancing and sector/asset allocation strategies are more important than ‘blind buy and hold’ for stocks.

Investment Mindset: The Strong Survive in Uncertainty

– The idea that “only those who study and are smart make profits” does not work these days.
– It is important to have funds you can withstand, long-term risk management, and your own investment principles.
– Focus on overall market ETFs + undervalued/dividend stocks, and avoid biased investments in theme stocks/growth stocks.
– Pay attention to improvements in industrial structure and governance structure (especially in the Korean market), and keep in mind the long-term global uncertainty.

2024 is a period of transition in which the global order is being reorganized for the first time in 70 years. The market is not responding well to existing data/patterns. Volatility in the capital market has reached its peak, and excessive responses to individual stocks should be avoided. U.S. stock valuation burdens continue, and changes in tariffs/prices/investment sentiment intersect amid economic slowdown. There is short-term upward pressure on prices, but deflationary trends are more dominant in the medium to long term. Investment strategies should focus on market ETFs, undervalued/dividend stocks, and liquid asset allocation. Defensive measures such as considering central bank policy risks and strengthening interest rate/bond rebalancing are advantageous. It is time to focus on risk management and managing funds you can withstand instead of study obsession.

[Related Articles…]

• U.S. Stocks, Should You Enter Now? – Investment Strategies in an Age of Uncertainty
• Tariff Wars and the Global Economy: A Comprehensive Summary of Key Variables for 2024

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