It is that time of year when pundits feel compelled to make forecasts. The overwhelming majority of forecasts each year are either (1) more-of-the same or steady-state or (2) the sky-is-falling. Of course, both are theoretically reasonable.

The current U.S. economic data is almost uniformly positive. That optimism seems to be contagious, as more foreign countries seem to be improving as well. Even more positive, the U.S. stock market data is almost uniformly positive as well. While it remains too concentrated in seven large-tech stocks in the artificial-intelligence race, it is spreading to other asset-classes as well, such as small-cap value stocks. Things are good!

A “black-swan” event is something that is unexpected but should have been expected. They are easily foreseeable without being foreseen. They are often described in conjunction with the Great Recession or the 2007/8 global financial crisis, when the huge amount of subprime mortgages were securitized or sold to investors as “bond substitutes”. What could go wrong? Most everything – at least temporarily?

I don’t foresee our economic “soft-landing” becoming a “hard-landing” but do see black-swan events as now the greatest risk to 2024. Think geopolitical. There is an unusually long laundry-list of potential black-swan events for this year. On that long list, there are:
1. Another Jan-6 insurrection, threatening our democracy.
2. A prolonged government shutdown in February.
3. Ukraine falls, with televised Russian brutality
4. The Israeli – Palestinian war suddenly expands to include more Arab nations.
5. The Treasury market is attacked by the bond vigilantes from China.
6. China makes a massive invasion of Taiwan.
7. Another pandemic from a strange new virus.
8. Unknown . . . yet

How does the investor prepare for this? You cannot control the world! But, you can expect a sudden violent plunge. Today, you can (1) determine how you can keep yourself from panic-selling and (2) how to take advantage of stocks going “on-sale”.