Tom Nash
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What Have We Learned From 2024? | ROIC Academy
🕑 Added 2024-12-22 17:17:39 +0000 UTC2024 has been one for the books.
The S&P 500 is up 27%.
While everyone’s busy debating rate cuts, economic cycles, and what the Fed might do next, the numbers tell a different story: U.S. stocks don’t just lead the pack; they are the freaking pack.
Lesson Number 1: The Rate Rollercoaster is Meaningless
Here’s the thing about the Fed's interest rates in 2024: the stocks don’t seem to care. Rates go up? Stocks go up. Rates stay high? Stocks stay high. Rates drop? Stocks party harder. T
he S&P 500 is like that friend who has a good mood and a smile, no matter the chaos around them.
Lesson Number 2: Don't Bet Against U.S. Stocks
Let’s get something straight: this isn’t a fluke. Over the past decade, the U.S. market has gained 14 percentage points in global equity market share. That means U.S. stocks now make up two-thirds of the global equity market. Meanwhile, every other country—from Japan to Switzerland—has lost ground.
Why? Because global investors vote with their wallets, and they’re saying the U.S. is the best place to park capital. Sure, some of it is the dollar’s reserve currency status, but 80% of this dominance is cultural. American companies have a relentless focus on shareholder returns, unmatched innovation, and a “hustle harder” mentality. Compare that to Europe’s museum-like stagnation or China’s regulatory chaos. Where would you invest?
Lesson number 3: It’s Not Just Tech
Now, you might think, “Okay, but it’s all about tech stocks, right?” Wrong. While the MAG7 (you know them: Apple, Microsoft, Nvidia, Tesla, Amazon, Meta, Alphabet) did a lot of heavy lifting, 2024 showed us a broader rally. Financials led the way with a 33% return, driven by deregulation, rate adjustments, and, let’s face it, years of being undervalued. Industrials, discretionary, and even stodgy old staples posted solid gains. No sector ended the year in the red.
In fact, financial stocks like KKR (+87%) and Goldman Sachs (+51%) absolutely crushed it. These aren’t your Reddit darlings or flashy tech names—just good old-fashioned moneymakers getting their due.
Lesson number 4: International Markets Can’t Compete
For years, global asset allocators have clung to the hope that international stocks will catch up. Spoiler alert: they WILL NEVER CATCH UP.
The U.S. doesn’t just outperform; it obliterates the competition. Over the past five years, every single U.S. sector has outperformed international benchmarks.
Here’s the kicker: this dominance isn’t just about valuations. It’s about fundamentals. The top five U.S. companies such as Apple, Nvidia, Microsoft, Amazon, Tesla, Palantir and Google, offer a return on equity (ROE) of 50% to 60%.
Europe’s top companie? 40%.
Emerging markets? A paltry 15% to 20%.
American companies simply make better use of shareholder capital. SIMPLE.
Lesson number 5: This is not 2000 All Over Again
Every time the NASDAQ hits a new milestone, the bubble talk starts. But let’s pump the brakes on the doom and gloom.
The current rally is nothing like the dot com bubble. Back then, the NASDAQ doubled in a year before crashing spectacularly. Today’s growth is steady, driven by real earnings and innovation, not just hype.
Even with names like Nvidia and Palantir, the rally isn’t a one trick pony.
Financials, industrials, and even small caps are pulling their weight. This isn’t froth, it’s fundamentals.
Looking Ahead to 2025
So, what does 2025 have in store?
U.S. stocks aren’t slowing down. With deregulation, a strong economic base, and unmatched corporate performance, the U.S. remains the best game in town. Sure, rates might drop, and international markets might get a short lived boost. But unless Europe and Asia suddenly reinvent their business cultures, the U.S. will keep winning.
The bottom line?
If you’re not investing in the U.S., you’re doing it wrong. Forget mean reversion. Forget nostalgia for “global diversification.” The U.S. market is where the action is, and that’s not changing anytime soon.
-Tom
Comments
Generico Fakero
David, you’ve cracked the code. Fundamentals over hype, patience over FOMO—that’s how the real winners play the game. The market’s a marathon, not a sprint, and it rewards those who stay the course. Keep making those rational, data-driven decisions, and you’ll crush it. Let the hype chasers burn out; you’re here for the long haul.
David Hensey
Excellent commentary and great reminder to stay the course. After all these years, I am learning to make decisions without emotions. Of course I get excited about the growth, I have learned to step back and make decisions based on the fundamentals instead of the hype or FOMO.
