What is the future of the stock market in 2024?:Stock market outlook

What is the future of the stock market in 2024?
What is the prediction for the economy in 2024?

This is a little complex to explain via a post, but I will still try my best.
The stock market rises when there are:
(a) liquidity in the market rises (QE) OR
(b) when the FED spends from its reverse repo facility

While these are complicated finance terms to explain, I will still try:-

[1] QE means injecting more money into the market through actions like money printing.

[2] Reverse repo facility means: that the money that US FED tells the banks that they can deposit money with the FED and get a certain return.

Now technically, this allows the governments/Central Bank to use this money & inject more liquidity

[3] Now, if you look at the chart: you will observe that post-2008, 2020 there was QE done. And, the markets went crazy high.

[4] The red line is the total liquidity in the system: post 2022, the liquidity has been withdrawn from the system– this is called QT– but the markets still went up

[5] Why? this is because of the fact that the fed used the Reverse Repo facility. Basically, the FED told the commercial banks that: since you can deposit money with me, and I will pay you some interest on it. And, then used that money to accelerate the economy.

[6] Now, we still have around 500Bn$ in that facility. In simple words: there is at least 1 round of rally left.

[7] In other words: in case there is a crash, this pool of money would be used to balance the market.

[8] Now, there is a lot of concern regarding inflation: that the government can’t print money because inflation in the economy is very high. What will people do?

[9] Well, they can. And, they will. The reason is: that starting this year, 1Tr$ of debt from the US needs to be paid out

This is reflected in something called raising/suspending the debt ceiling. This has been happening very fast since 2013.

In simple words: the 2008 economic crisis actually broke our current monetary system. And, the world has not really recovered after that. (How?, next point)
The 2008 financial crisis, where did it originate?
Originated in the US economics. The Trump 2008 onwards US has been on a printing spree.

[10] The only way the US can repay this debt is by issuing fresh debt. This is a never-ending problem now (Up until the point: the world de-pegs from the US dollar. This in itself will create a lot of issues)

[11] To pay the debt, new debt is issued. And, the moment new debt is issued, the price of assets go up. And, people pay the price in the form of higher inflation.

[12] The government is just hoping that: they can increase the supply of “critical assets” fast enough to offset the effect of inflation. And, this is unlikely to happen. The new supply of houses, businesses etc is not increasing fast enough.

[13] So going forward: stocks, real estate, gold, BTC — all will rise.

[14] It is only a question of: at what rate? and with how much volatility? If you take a 5-year viewpoint on stocks that have a higher ROE than inflation. And, if that continues, then you will preserve your wealth. Or you will lose it.

[15] Now, why 2024: might be a good year? 500Bn$ of repo facility will be used to propel the market. US election results will be announced in Jan 2025.

So till then (the next 7 months) look fine.
Top 10 best stocks for SIP long-term 2024

I don’t think any massive correction on NIFTY is likely to be there in the next 6-10 months.

(Massive means more than 10%)

Most likely we are going to move sideways with a positive bias (due to the US elections)
And, FII readjusting their portfolios in India (chances of them buying in India is higher)

What is likely going to happen is that a lot of overvalued things are going to be corrected.
So 3 things.

[1] If you think that stock X in your portfolio is overvalued, sell MOST of it.
[2] If you think that stock Y in your portfolio is undervalued, hold with confidence.
[3] If you are not sure about the under/overvaluation of stock Z, book 20-30% profit (I will be doing this on SW Solar, and will release a list too)

If you have spare money (a lot of it)
Start looking at good real estate.

The interest rates are likely to be cut in the next 2-3 years, this will further increase the demand for RE.

Please note: buying from big builders, and overpriced real estate is stupidity, not an investment 🙂
You have to learn how to buy GOOD RE.
When you overstudy a stock: you will find 10 problems with it.
Don’t trust me? name any stock (like any stock in the world), I can tell you 10 problems it has.

When you see problems, you will NOT buy it.
And, if you don’t BUY it, you will not make money on it.

Investing is the art of analyzing your risk rewards.
No one becomes perfect at this.
Therefore, no matter what I say/do, I WILL make mistakes.

My goal through this community is to share info: that will help you better understand risk-rewards.
I can’t tell you a perfect system. Because none exists.

I am writing this in context: for Guys, who keep saying — your HDFC “Khushal your recommendation” is not working.

Question to them: is this the only stock am I holding in my portfolio?
The goal is to build a portfolio that wins.

PS: This is not a recommendation that you HAVE TO/MUST adopt this. I have presented a complete picture, now it’s your call what you wish to do with it 🙂