Is 2024 Giving ETF Investors a "Do-Over" Year?

Next year may be the simplest investing year ever.

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Reviewed by: etf.com Staff
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Edited by: etf.com Staff

If, like me, you have childhood memories of playing sports and other games in your neighborhood, you can probably remember a time when two teams bickered over a key play. And you agreed to a “do-over.”  

Perhaps 2024 will be that kind of year in the stock market. If so, ETF investors will have a virtually unlimited number of ways to make it one of their best investing years ever, regardless of how that plays out. Indeed, 2022 and 2023 were very different; respectively, the stock market dropped a lot then rose a lot. But even when it recovered this year, it left behind a big market segment. That leaves us with the following summary, using a set of ETFs that serve as helpful stock market indicators:  

Here’s how each did in 2022 and 2023 (through Dec. 21) and the cumulative total return for each since the start of 2022. 

2022 and 2023: Wins, Losses and Flat in the End 

SPY: -19% in 2022, +23% in 2023, cumulative total since start of 2022 -1% 

RSP: -12% in 2022, +10% in 2023, cumulative since start of 2022: -5% 

QQQ: -33% in 2022, +52% in 2023, cumulative since start of 2022: +2% 

IWM: -22% in 2022, +14% in 2023, cumulative since start of 2022: -11% 

EFA: -17% in 2022, +13% in 2023, cumulative since start of 2022: -6% 

EEM: -22.1% in 2022, +4% in 2023, cumulative since start of 2022: -19% 

Thus, 2024 is the “do-over” year for bulls and bears alike. Bulls were burned in 2022 and bears this year, as the economy didn’t roll over into recession as many predicted, and the U.S. consumer stayed stronger for longer. The net result for four of those six ETF market measures was nearly 24 months of roughly flat returns, between 6% losses and 2% gains.  

IWM and EEM indicate that more aggressive parts of global markets remain underwater, despite the furious recent rallies. Small caps are getting lots of attention as comeback candidates and 2024 will tell us whether malaise in the small cap space (many distressed companies) will yield relief or fester and trash that sector further.  

For the rest of the market, key issues include whether the market rally of 2023 can broaden. SPY spiked this year but a very small number of stocks accounted for all the gains. More than 95% of that index mixed wins and losses that evened each other out.  

Looming Issues: Elections, Interest Rates and More 

Maybe this resembles the end of 1999 and early 2000, and QQQ will rocket higher then crash slowly for three years. Or perhaps the last two years marked a terrific reset that serves as a foundation for a new secular bull market. 

We can’t predict the future, but we can strive to stay as wise as possible regarding the past. Much should be resolved in 2024: Fed policy with rate hikes seemingly finished; inflation either staying put, re-inflating or converting into the dangerous deflation scenario; and more.  

Oh, and I hear there’s a U.S. election in November.  

Thus 2024 is where investors get to break the tie of the past two years. Win or lose, that is a simple perspective to carry into the new year.  

Rob Isbitts was an investment advisor for 27 years before selling his practice to focus on ETF research and education. He is based in Weston, Florida. Contact him at  [email protected] and follow him on LinkedIn.