By Kyle Prevost on December 27, 2024 Estimated reading time: 8 minutes
Making sense of the markets: Looking back on 2024
By Kyle Prevost on December 27, 2024 Estimated reading time: 8 minutes
Looking back at 2024, we go through the Canadian and U.S. stock exchange predictions, as well as crypto, Tesla and election results. What a year.
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Kyle Prevost, creator of 4 Steps to a Worry-Free Retirement, Canada’s DIY retirement planning course, shares financial headlines and offers context for Canadian investors.
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Every year, around this time, financial gurus appear out of their ivory towers to make their predictions. They confidently sit down at their keyboards, or look into their cameras, to say whatever they think will get them the most attention. Then, most of the time, those predictions disappear into the ether, only heard about again on the off chance they were right. A year later, those same gurus trot out again with attention-grabbing forecasts, not referencing their prediction misses. The cycle continues.
In 2011, Kiyosaki said, “Guess what? The crashing is not over.”
In 2016, he predicted another market crash.
In 2017, he felt a real estate crash was imminent.
Then in 2018, “The next [crash] is going to be the biggest of all.”
In October of 2020—long after the initial COVID-19 crash—Kiyosaki confidently predicted, “The Everything Crash is coming.”
Then in 2021, when he said, “Giant stock market crash coming in October.”
And in 2022, Kiyosaki replayed his hits with, “Everything Bubble into Everything Crash.”
And, finally, the following two years saw numerous Kiyosaki crash predictions with May of 2024 being the decisive, “Bad news: Crash has begun. It will be a bad one.”
The U.S. stock market is up about 20% since May 2024. Since Kiyosaki made his first crash prediction back in 2011, the S&P 500 index has surged from about 1,300 to today’s 6,100. And for those keeping track, that’s a “crash” of about +370%. It also shelled out 2%-ish dividends that whole time. And yet, people keep clicking on those Kiyosaki predictions.
“We ain’t about that life,” as the kids say.
Before you read what we think the world may look like in 2025 (that’s coming next week), let’s look back at last year. This year didn’t turn out quite as we anticipated…
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Canada’s TSX 60 did not gain 15%
Let’s get this out of the way: Year to date, the TSX 60 is up about 22% at the time of writing this column, and the S&P 500 is up about 27%. Obviously, we were way off in terms of overall returns, when we predicted that “Canada’s TSX 60 will gain 15%, outperforming the 8% gain for the S&P 500.” That said, we were right way more than a lot of ivory tower folks.
We’re also proud to point out that the overall trend of predicting Canadian stocks to outperform U.S. stocks did actually happen. It just took a little longer than we thought. Since July 1, 2024, the S&P 500 has done well, posting an 11% gain. But the TSX 60 is up about 18%. And TSX investors enjoyed higher dividends as well.
In similar fashion to our Canada versus U.S.A. bet explained above, the TSX Composite did not beat tech stocks, if we define tech stocks as the Nasdaq 100 (the 100 largest stocks on the Nasdaq stock exchange). That said, since early July, the Nasdaq is up about 6.5%, while the TSX Composite is up 15% over the same period.
Canadian GDP per capita would continue to fall
Unfortunately, we hit this one on the head. Gross domestic product (GDP) per capita fell throughout 2024. We’ve now suffered six consecutive quarters of falling GDP per capita. Since 2014, Canada hold 27th out of 30 advanced economies when it comes to GDP per capita growth.
Once adjusting for immigration, the Canadian economy has essentially been stuck in neutral for 10 years now. Here’s a look at the divergence of our economy versus that of our largest trading partner.
Flatlining GDP numbers continued to generate more talk of “Is it a recession or not?”
Yup, we’re still talking about a recession. Just a couple of weeks ago, former Bank of Canada Governor Stephen Poloz said, “I would say we’re in a recession, I wouldn’t even call it a technical one. A technical one is a superficial definition that you have two quarters of negative growth in a row, and we haven’t had that, but the reason is because we’ve been swamped with new immigrants who buy the basics in life, and that boosts our consumption enough.”
While we were right on this one, it might appear to be obvious in hindsight. It can be easy to forget just how bullish some investors were about oil 12 months ago. In late December 2023, Barclays predicted the WTI price would average USD$93, and Bank of America predicted USD$90. We’re available if either of those two institutions would like to us lead their fossil fuels analyst teams.
Crypto might be volatile, but finished 2024 up 50% (plus)
Bullseye! As you’re going to learn as you continue to read, we didn’t get everything right this year. We certainly couldn’t have forecasted a presidential candidate would buy a major stake in a cryptocurrency firm, then go from saying bitcoin was a “scam” to taking about a quarter-billion dollars from the crypto industry and becoming its biggest promoter.
Bitcoin did fall more than 25% from March to August in 2024, before the current rally fuelled by president-elect Donald Trump. That event now has bitcoin up 125% year-to-date. Despite predicting the BTC rally, we remain just as skeptical as we were a year ago. To make it into my portfolio an investment must have profits and/or cash flow, and BTC has neither.
While prices on most items aren’t going down any time soon, the large price increases of 2022 appear to be done for the time being. Shelter costs continue to be the outlier, as we’ve written about in this column all year long.
It’s worth noting that the average inflation-adjusted price of gasoline is significantly lower today than it was in 2022, 2012 or 1918 for that matter. Most people don’t recognize that. The chart below is the best I could find to show that. But it only goes up to 2022. Since 2022, the price of gasoline in the States has fallen to USD$3.15, and if we use inflation-adjusted 2022 dollars, it’s more like $3-flat.
Of course, there was election chaos, but what about everything else?
We’ll lump the final three predictions (election chaos, Tesla purge and split U.S. government) we had for 2024 together because they were all connected. And all three were dead wrong.
We thought the election would be chaotic, that Biden would win a close race, and that a deadlocked government would lead to a market surge at the end of the year.
While the lead-up to the U.S. presidential election was pretty chaotic (assassination attempts, candidate substitutions, and so on), the actual election result was quite calming for the markets. Having Republicans control all three branches of the federal government took away any threat of civil unrest. And that gave the markets hope of tax cuts.
At the same time, with such a slim margin in the House of Representatives, one could argue that some small amount of “split-government deadlock” could apply—given that only three or four votes would be enough to block any legislation.
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Perhaps it’s currently providing a somewhat calming influence in regard to large tariff threats?
In any case, while the end of 2024 did in fact see a spike in the stock market as we predicted, it definitely had nothing to do with foreseeing the “Trump Trade.”
In a move that appears to be dictated purely by CEO Elon Musk’s proximity to the incoming president, Tesla shares have skyrocketed since the votes came in. Despite the company getting soundly beaten by the Chinese/Warren Buffett competitor over at BYD, investors continue to give Tesla the benefit of the doubt.
When you look at the increased competition in EVs (electronic vehicles), as well as Tesla’s compressed margins, and the possible elimination of EV tariffs in the States, this stock price could be troubled over the long term.
That said, we felt Tesla shares would be down—by 30%. While share prices were down 42% in April 2024, at the time of writing, they are at a 57% gain year to date. The stock was down more than 14% for the year as recently as late October—before the election results sent the stock to the moon.
What a year you were 2024
Overall, we thought 2024 would show a better-than-average year for stock markets.
We were wrong.
It was a fantastic year for stock markets!
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In baseball, batters who can safely get on base in three out of every 10 at-bats are considered “excellent.” For stock market predictions, getting on base by writing a book several decades ago, striking out with predictions ever since, is also apparently considered excellent. That’s if we’re judging by Kiyosaki’s fame.
If we compare those benchmarks, then, you know what. We didn’t do too badly for 2024. Tune in next week to see what our crystal ball has in store for 2025.
Kyle Prevost is a financial educator, author and speaker. He is also the creator of 4 Steps to a Worry-Free Retirement, Canada’s DIY retirement planning course.
