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A Further Look | Jan 18, 2024

Nothing to See Here? I’m Not So Sure… My ‘What If’ Scenarios for 2024

David B. Root, Jr.


As another year begins, hope springs eternal for the stock market. But as you’ve heard me say before, hope is not an investment strategy. That’s why I always pause before a new year begins to explore some of the topics that could become important factors in our thinking—or at least interesting thought experiments—and pose them as what-if scenarios. I hope you enjoy reading.

1. What if the 2024 election creates stronger economic growth to pull us out of a recession? (Yes, I believe that’s where we are!)

The Wall Street narrative at the end of 2023 suggested we will see a minimum of three rate cuts from the Fed in 2024. Logic suggests that this doesn’t happen unless we are in a recession. And that’s where my thinking is as I write this. I’m not confident that the data is as reliable as many are stating. There is ample evidence that the economy is not growing at a rate that is being reported. For example, for the 15th month in a row, the ISM Manufacturing survey signaled no expansion in December.1 Its key indicators suggest manufacturing is shrinking. Shrinking means recession, and the TRUE economy that makes things appears to be in recession.

In addition, the government quietly erased 439,000 jobs through November 2023, a closer look at the numbers from the Bureau of Labor Statistics shows.2 That means its initial jobs results were inflated by 439,000 positions, and the job market is not as healthy as the government suggests. Private sector job creation also was adjusted lower by 358,000 in that period, while government payrolls were revised by an increase of 52,000. Today, U.S. labor force participation is at a historically low 62.5%.

From my perch, this doesn’t necessarily bring bad news for investors in 2024. As the Presidential election dominates the news cycle, don’t bet against a rising stock market in what will certainly be a political business cycle. History has shown us that the Fed and the incumbent administration will do everything possible to stimulate the economy, all in an effort to improve the prospect of the administration getting reelected. Heading into 2024, it is important to note that the S&P 500 has not declined during a presidential re-election year since 1952 and has averaged a 12.2% annual gain in re-election years.3

We have already seen signals from the Federal Reserve that they will cut interest rates. The effect could loosen lending standards to smaller businesses and consumers, and pockets of capital may be found that will be directed toward the economy and induce a boom (real or artificial) before the election. It could lead to expansionary policies such as tax cuts or increased spending leading up to the election.

It is not a stretch that the current administration may also introduce or repeal regulations that impact businesses and industries with the aim of gaining political support or appeasing certain interest groups. Infrastructure spending with the promise to create jobs and stimulate economic activity could also reemerge as a centerpiece of 2024 policy.

2. What if the stock market continues to broaden beyond ‘The Magnificent Seven’?

The dominant market theme in 2023—and likely heading into 2024—has been the supremacy of the "Magnificent 7" group of mega-cap stocks: Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA, and Tesla. Together, they have swelled to represent about 30% of the S&P 500’s market value, according to Goldman Sachs Global Investment Research. All have been involved in the innovation of or have benefitted from the emergence of Artificial Intelligence (A.I.). Our participation has been focused on passively owning the index at-large. Even so, we understand these companies are not immune to the business cycle and can even be a drag on cap-weighted indexes. This underscores our emphasis on diversification when it comes to the mega caps as well as the rest of the market. Our focus heading into 2024 remains on dividends/quality investing in companies with strong free cash flow, plentiful cash on the balance sheet, and healthy real revenue growth as debt servicing costs remain important.

While equity markets broadened at the end of the year—with nearly all styles, capitalizations, and geographies generating positive returns in November and December—certain parts of the market remain undervalued, especially in comparison to the Magnificent Seven. This basket of undervalued assets could include smaller-capitalization value stocks. Sectors may include banks, healthcare, biotech, utilities, and communication services as well as more cyclical sectors affected by changes in the overall economic cycle, such as consumer discretionary, industrials, and materials. We have seen a rush to spend money on services such as tourism and restaurants, while manufacturers and sellers of goods and ‘things’ have become undervalued.

3. What if runaway debt leads to a return to the gold standard?

As I write this on my birthday, it may appear that I have been celebrating a little too hard, but the return to gold may not be such a far-fetched idea. Particularly since gold is trading at an all-time high today. For a nation that can be swiftly impacted by executive orders from Presidents, it is important to keep in mind that when President Richard Nixon ended the previous gold standard era in 1971, he did so under executive order. He eliminated the fixed convertibility between the US dollar and gold and made the dollar a fiat currency. Nixon directed Treasury Secretary Connally to suspend, with certain exceptions, the convertibility of the dollar into gold or other reserve assets, ordering the gold window to be closed so foreign governments could no longer exchange their dollars for gold.

If the United States fails to control its deficits, the US dollar may lose its status as the world’s reserve currency. Looming debt restructuring and potential defaults may soon lead to a global monetary reset. Some nations are already trying to reduce their dependence on the dollar. Reserve currencies rise and fall as part of long-term cycles, and every reserve currency runs the risk of being replaced. It begs the question: Can the United States just grow its way out of its current deficit levels? Our predominance in growth industries like technology might suggest we can. Otherwise, the only tools that may be left for policymakers in government are higher taxes and budget cuts. While higher taxes could raise federal income in the short term, it would likely reduce economic growth in the long term. It may take a change in leadership, but don’t entirely count out a return to a gold standard by the U.S.

4. What if Travis Kelce launches a country music singing career after the Chiefs are eliminated from the NFL playoffs?

A fan of country music, Kelce performed a duet with Kelsea Ballerini at the 2023 CMT Music Awards. When girlfriend Taylor Swift began incorporating more pop influences into her music, some fans accused her of abandoning her country roots and becoming too commercial. Kelce’s popularity may be just what Swift needs to salvage her struggling career.


Ok, maybe not all of my scenarios will come true, but I have come to learn that the greatest successes start with a plan and some critical thinking. Sometimes it means stepping outside the popular narrative. That’s how opportunities are found. Maybe my vision for Travis is a little off the charts. But sticking to what I have been doing for decades—building comprehensive financial plans and investing for the long-term—I see a lot of scenarios that might foster opportunities for investors in 2024. Let’s enjoy the ride together.

Thanks for reading.


1 Institute of Supply Management,
2 Bureau of Labor Statistics, Employment Situation Summary,
3 U.S. News & World Report,

This material has been provided for general, informational purposes only, represents only a summary of the topics discussed, and is not suitable for everyone. The information contained herein should not be construed as personalized investment advice or recommendations. Rather, they simply reflect the opinions and views of the author. D. B. Root & Company, LLC. does not provide legal, tax, or accounting advice. Before making decisions with legal, tax, or accounting ramifications, you should consult appropriate professionals for advice that is specific to your situation. There can be no assurance that any particular strategy or investment will prove profitable. This document contains information derived from third party sources. Although we believe these third-party sources to be reliable, we make no representations as to the accuracy or completeness of any information derived from such sources, and take no responsibility therefore. This document contains certain forward-looking statements signaled by words such as "anticipate," "expect", or "believe" that indicate future possibilities. Due to known and unknown risks, other uncertainties and factors, actual results may differ materially from the expectations portrayed in such forward-looking statements. As such, there is no guarantee that the expectations, beliefs, views and opinions expressed in this document will come to pass. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security. All investment strategies have the potential for profit or loss. Asset allocation and diversification do not ensure or guarantee better performance and cannot eliminate the risk of investment losses. The impact of the outbreak of COVID-19 on the economy is highly uncertain. Valuations and economic data may change more rapidly and significantly than under standard market conditions. COVID-19 has and will continue based on economic forecasts to have a material impact on the US and global economy for an unknown period.

David B. Root, Jr.


Founder & Chief Executive Officer

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