#Slice of Pie
#Slice of Pie
12/30/2023 11:00:00 PM
#slice of pie

A Message from Mike: Our predictions for 2024

Founder and Chief Investment Officer Mike Taylor covers the December markets.

Despite some dire predictions 12 months ago, 2023 turned out stronger in the end for most investors, despite several scares, including the collapse of several US Regional Banks, higher interest rates, a war in the Middle East and of course, ongoing inflation. On that last point, by November 2023, we had some encouraging signs that inflation will be back below 2% in most developed countries this year. And that set the market alight with a strong rally to finish the year.

Some notable callouts for our funds performance in 2023 were the Pie KiwiSaver Growth Fund up +17.1% pre fees. The Pie Australasian Growth Fund up +25.2%, and the Pie Conservative Fund up +8.8%, which had a record year, being the highest return of the fund (both after fees).

At the end of 2022, investors thought a recession was definite. The year before (2021), they thought big tech would be immune to rate increases. And a year before that (2020), they were convinced that paying high prices for stocks popular during COVID would make them rich. These were the consensus calls and they all failed.

So where is consensus now?

To start 2024 investors believe, again with absolute conviction, that the economy is heading for a soft landing with lower interest rates finally on the horizon. Maybe this time they will be right. In theory, this environment should be positive for markets, although it’s no surprise that after a multi-year bear market, nobody is that bullish or willing to stick their neck out.  The average forecast gain for 2024 by Wall Street strategists was essentially zero (the usual average is around 8-10%).

What do we think at Pie?

Here goes with the crystal ball………

  • Healthcare – has underperformed due to the GLP-1 (weight loss drug) movement which we believe will fade.  It’s also a defensive sector, so handy to own if economic growth slows down more than expected.
  • Small Caps – the herd is only just moving back into small caps, so we believe this trend has a long way to go. 
  • Real Estate – despite a year end bounce, many listed property trusts are still trading at a steep discount to their Net Assets.
  • Rates  - we expect all major Central Banks, including the RBNZ to cut rates this year. The question is just by how much. With a soft economic landing, it should be around 1%, but if there is a recession, rates could be cut by 2.5-3%. Either way, rates are coming down. 

Faster trends – stocks, themes, sectors, regions are all coming in and going out of favour very quickly. That means explosive moves and things will get overvalued and undervalued quite quickly. Don’t expect the trend to last forever, let alone a long time.

Get in early, make your money, then get out.

Risks to watch out for?

  • Oil price spike from Middle East war expanding.
  • Disruption/tension around the US election and the results.
  • Weather events such as droughts impact food prices and growth.
  • Cyber attacks.
  • And on that note. Happy New Year everyone! A new lap begins…. Good luck ahead.

Thank you again for your support. If you have any questions, please don’t hesitate to email me on
[email protected]

Founder and Chief 
Investment Officer

Information is current as at 31 December 2023. Pie Funds Management Limited is the manager of the funds in the Pie Funds Management Scheme and Pie KiwiSaver Scheme. Any advice is given by Pie Funds Management Limited and is general only. Our advice relates only to the specific financial products mentioned and does not account for personal circumstances or financial goals. Please see a financial adviser for tailored advice. You may have to pay product or other fees, like brokerage, if you act on any advice. As manager of the Pie Funds Management Scheme investment funds, we receive fees determined by your balance and we benefit financially if you invest in our products. We manage this conflict of interest via an internal compliance framework designed to help us meet our duties to you. For information about how we can help you, our duties and complaint process and how disputes can be resolved, or to see our product disclosure statement, please visit www.piefunds.co.nz. Please let us know if you would like a hard copy of this disclosure information. Past performance is not a guarantee of future returns. Returns can be negative as well as positive and returns over different periods may vary.
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