Peak Valuations - Maybe?

December 2024 Market Update

Merry Christmas Everyone,

With the election out of the way, we are in the last month of the year after a historic rally in the market. We continue to see the price of the S&P 500 hit all-time highs and returning 28% YTD, Bitcoin finally surpassed $100,000, and bond yields falling into the low 4% while returning 3% YTD.

Our focus over the next few weeks and into 2025, is the Santa Claus rally, a period at the end of the year that stocks can rise. We will see what, if any, impacts it will have on the overall market.

It will also be time to focus on the bond market and see how the Fed’s rate decision could send yields higher or lower.

Even though we stay on top of current market swings to give you updates, it is something that does not make sense to use as trading indicators for our portfolios. The small points above can be used for market timing, think day trading, to profit in the bond and stock market on a short-term basis.

We prefer longer-term horizons that consider valuations of the market, think one to three years. This is why our current portfolios are allocated the way they are because of multiple valuation indicators that are at all-time highs or near them!

See Our Portfolios for Current Allocations.

Here are the four valuation indicators that we are using to understand the market and what we take into consideration for our portfolios.

The Buffet Indicator

Adopted by Warren Buffett and labeled as an indicator in the late 90s early 2000s. It is not a market timing tool, it is a relative value tool. It is currently at levels seen in 1969, 2000, 2021 and now at an all-time high as of December 2024.

The next three are bit more interesting and have some particular importance: