The financial market is vast and ever-changing. Amid this capricious landscape, investors need to adjust their expectations, whether due to the possibility of inflation, disinflation, deflation, or the likelihood of recession.
Our team at Moonshot surveyed investors in our network to explore their next year’s outlook on popular industries, assets, and portfolio allocations. Let’s dive into the findings.
Nearly 78% of Moonshot investors express confidence that geopolitical tensions will impact economies and investments globally. Russia's invasion of Ukraine, escalating tension in the Middle East, and strained relations between the US and China are delicate situations. These, as well as other global events, pose significant threats to macro-financial stability.
Distribution of investors’ answers to the question “Given the current economic conditions, which of the following events do you think are likely to happen next year?”
Consequently, investors are evenly split on their views regarding potential occurrences in 2024: a recession (53.52%), rising interest rates (50.70%), and inflation (49.30%).
Concerns about a recession are not baseless. A Q4 2023 Economic Experts Survey indicates a considerable likelihood of a recession in numerous countries, particularly in Europe, by the end of 2024. This outlook is linked to geopolitical conflicts and escalating energy costs. Furthermore, 2024 marks an election year in many nations, potentially signaling a shift in the global order.
Despite the turbulent global environment, the situation regarding rising interest rates and inflation may not be as dire as perceived. To provide context for any optimism, the SNB reduced interest rates by 0.25 percentage points to 1.5% in March 2024, citing the likelihood of national inflation remaining below 2% in the foreseeable future. However, no one can see the future, and the even split in expectations is understandable.
Investors within our network have portfolios with diverse assets, yet real estate emerges as the asset class with the most steadfast allocation. Nearly half (49.30%) allocate 11-50% of their portfolio to this asset class, and over 7% allocate between 51-75% to real estate.
Distribution of investors’ answers to the question “What is your current investment portfolio allocation?”
Real estate, however, is just one among many favored assets. Investors allocating between 11-50% of their portfolio often choose public stocks (45.07%), cash and cash equivalents (32.40%), and private equity (31%).
While public stocks remain a popular choice across the board, recent research conducted by Moonshot analysts indicates that private market asset classes have consistently outperformed their corresponding public market indexes over the last two decades. Based on this data, further diversification with private equity and real estate can potentially yield higher returns and reduce portfolio volatility.
Another crucial point is that allocating 10-50% of a portfolio in cash and cash equivalents might not be a wise idea. Ray Dalio, co-chief investment officer of the world’s largest hedge fund, Bridgewater Associates, thinks investors should dump cash for a diversified portfolio.
Cash is trash [...] Get out of cash. There’s still a lot of money in cash.
– Ray Dalio said on CNBC’s “Squawk Box” at the World Economic Forum in Davos, Switzerland
Nearly every second investor in the Moonshot community intends to acquire additional shares of public stocks (59.15%), private equity (45.07%), and real estate (38.03%). Concurrently, over 75% of investors plan to maintain their current allocation across most assets, as illustrated in the chart below.
Distribution of investors’ answers to the question “Do you intend to change your exposure to specific assets in the next 12 months?”
Public stocks will continue to be one of the most common assets in investors’ portfolios. On the other hand, the increasing popularity of real estate and private equity among investors in our community comes as no surprise for several key reasons. Chief among them is the superior performance of these asset classes.
Another reason lies in the tendency of private markets to be significantly less volatile than assets of public companies due to the lower impact of day-to-day market noise. Private market assets, such as private equity and real estate, have a low, and in some cases negative, correlation with other major asset classes, such as stocks and bonds. The weak correlation with other asset classes is what makes private market assets an essential part of many portfolios.
Nearly 60% of the surveyed investors hold a positive outlook on gold, private equity, and commodities.
Distribution of investors’ answers to the question “In your opinion, what is the outlook for the following assets in the next year?”
Investors commonly view gold as a safe haven during economic uncertainty, particularly considering it reached a record price of USD 2’413.94 per ounce on May 17, 2024, marking a 16% increase from the previous year. This precious metal, however, offers no investment yield, rendering it less appealing when interest rates rise and higher yields can be obtained from bonds and other assets.
The compiled responses revealed cryptocurrency and NFTs to be outliers: 52.11% of investors express a negative outlook and are convinced of their unreliability. This contrasts with the news of Bitcoin reaching a record price in March 2024, yet like other cryptocurrencies, it remains a high-risk asset susceptible to erratic price fluctuations.
More than 83% of Moonshot investors have singled out AI as the top industry to invest in this year. The promise of large language models like GPT-4 has shaken both industries and financial markets, helping to cement AI as the most appealing opportunity from those listed.
Distribution of investors’ answers to the question “Which of the following emerging industries do you believe will be the most attractive for investment in 2024 and beyond?”
Furthermore, nearly 62% of investors are convinced that sustainability trends will expand this year. Investors’ opinions coincide with the results of a study by Bloomberg New Energy Finance (BNEF) which predicted that, by 2050, 77% of investments in new power generation will be in renewables.
With 39% of the vote, cybersecurity is the third most attractive industry this year. Ransomware, denial of service, and similar attacks have become all-too common as both individual and state-sponsored cyberattacks continue to rise. Governments and companies are responding by ramping up investment to fortify cybersecurity and ward off attacks.
Although short-term fluctuations happen daily in the financial market landscape, the long-term vision is positive for most assets that hold real financial value. The most effective investment portfolio has a strong mix of value-added assets. If one asset experiences losses, the potential gains across your portfolio make taking the hit easier.
Given the promise of artificial intelligence and other up-and-coming technologies, combined with the historically strong performance of real estate, portfolios that combine some ratio of these assets may realize strong growth even in turbulent economic times.
If you'd like to learn more about how these assets might affect your portfolio, join us for our online presentations at the most suitable date.
Invite your network to discover our exclusive private market investments, such as Synhelion or SpaceX, and earn lucrative rewards. If you share Moonshot as a logged-in user, you automatically make 2% (and up to 5% with our ambassador program) on your referral's first investment.
