In 2024, investors should have their eyes fixed on inflation, interest rates, and the upcoming presidential election, but there are also four other intriguing trends to consider. These trends, both positive and negative, provide a comprehensive outlook for the year ahead.
1. The Need for Pricing Power in a Volatile Market
Predicting demand trends and their impact on sector and industry revenue growth is relatively straightforward. The real challenge lies in maintaining realistic and sustainable revenue growth, all while meeting the expectations of analysts and investors.
One way companies achieve this is through the strategic use of pricing power. This entails raising prices while sustaining or enhancing demand, thereby increasing revenue amidst moderating demand. Notable examples such as Netflix and Tesla have artfully executed this strategy to manage their market share and revenue growth in the face of market saturation.
Investors eyeing companies with strong pricing power in sectors like consumer staples and discretionary goods, such as Coca-Cola, Costco, Nike, and LVMH Moet Hennessy, could see promising prospects. This trend is supported by ETFs such as the Consumer Staples Select Sector SPDR Fund and the Tema Luxury ETF. Furthermore, the Invesco Bloomberg Pricing Power ETF captures companies that boast robust pricing power.
2. Navigating Labor Challenges within the ETF Landscape
The specter of labor-based disruptions looms large over 2024, as demonstrated by last year’s wave of strikes across various sectors. In the current climate, inflation has outpaced wage increases, leading to the potential for further labor unrest. This could have a detrimental impact on both supply chains and labor costs within industries with a strong union presence.
While these labor challenges may cause notable disruptions, the effect on ETFs is expected to be relatively modest. Industries with unionized labor forces, such as manufacturing and services, may be vulnerable to supply chain disruptions and increased labor costs. However, non-unionized companies like Honda Motor Co and Tesla are less likely to suffer significant impacts.
The Global X Autonomous & Electric Vehicles ETF, with its diversified exposure across the auto manufacturing value chain, is positioned to weather such storms and offer stability compared to individual stocks affected by labor disruptions.
3. Embracing Small-Cap Diversification
While large-cap equities hold an allure for many investors due to their perceived safety and brand presence, the robust performance of small-cap stocks cannot be overlooked. While stocks of tech giants like Apple, Microsoft, and Tesla have dominated the market landscape, small-cap stocks have quietly been regaining their strength and are currently undervalued.
ETFs such as the SPDR Portfolio S&P 600 Small Cap ETF present compelling opportunities for investors seeking diversification away from the concentrated exposure to mega-cap stocks. This approach offers a safeguard against potential risks associated with an overreliance on a handful of market heavyweights.
4. The Surging Potential of Crypto ETFs
The cryptocurrency market is poised for a prolific year in 2024, with Bitcoin capturing headlines for its impressive resurgence. The impending launch of spot Bitcoin ETFs is anticipated to usher in a new wave of legitimacy and accessibility for crypto assets, appealing to a broader spectrum of investors.
However, the ascendancy of crypto ETFs extends beyond the launch of spot Bitcoin ETFs, with sustained interest poised to drive valuation growth for crypto equity ETFs. The likes of Valkyrie Bitcoin Miners ETF, VanEck Digital Transformation ETF, and Invesco Alerian Galaxy Crypto Economy ETF, have already displayed substantial gains and stand to benefit further from soaring crypto interest.
VettaFi will be hosting its first Cryptocurrency Symposium webcast on January 12, 2024 at 11 a.m. ET. Click here to register.
For more news, information, and strategy, visit the Crypto Channel.
