Marching Along [03/2024]

As the first quarter of 2024 wrapped up, the S&P 500 reached historic new heights. The returns in the major US indexes thus far this year have been:

• S&P 500 – 10.16%?
• S&P Mid-Cap 400 – 9.52%
• S&P Small-Cap 600 – 2.00%

The winners from the S&P 500 that have dominated the news are Super Micro Computer and NVIDIA (the impact of artificial intelligence on chipmakers). The losers have been Boeing and Tesla (the former makes doors that open when they shouldn’t, and the latter makes doors that don’t open when they should).?

All of this was despite the hotter-than-expected inflation data that kicked off January and February. The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3% in January and 0.4% in February to land at an inflation rate of 3.2%.[1] Days later, Federal Reserve Board Chairman Jerome Powell said, “We believe our policy rate is likely at its peak for this type of cycle, and that if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year.”[2]

It's a positive sign that the Fed plans three interest rate cuts in 2024 despite economic growth and slightly higher inflation.?

Now that we are well into 2024, performance data for 2023 has been released. As an owner of an index fund, you receive the index return (like the three listed above) less the small expense ratio you pay to own the fund. What if you owned a fund trying to beat the market? See below.

Last year, some active managers did well! But over a longer time horizon, ouch. Over 85% of these actively managed funds underperformed their benchmark indexes over the last 15 years. It’s hard to beat the market in perpetuity, which is why we index.?

---

[1] Consumer Price Index Summary – U.S. Bureau of Labor Statistics

[2] Transcript of Chair Powell’s Press Conference – Federal Reserve

[3] SPIVA Scorecard Results by Region – S&P Global