Market update: Third quarter 2024

The third quarter of 2024 was mainly positive. Despite significant fluctuations in August, all of Vive's investment categories ended in positive territory.

Review of the third quarter of 2024: Strong quarter for financial markets after much turbulence.

In the third quarter of 2024, global financial markets predominantly showed a positive trend, although there were some periods of increased volatility. In August, a disappointing jobs report in America caused uncertainty. Doubts also arose about the returns on large investments in technology such as artificial intelligence. Countries with tech-focused stock markets such as Taiwan and South Korea were particularly hard hit. In addition, the central bank of Japan decided to adjust interest rates upwards. All of this led to a downward movement of stock prices in August.

However, stock markets recovered in September. This was mainly due to several stimulus measures, including an interest rate cut by the US Federal Reserve Bank of 0.5% and by the European Central Bank of 0.25%. The Chinese government also announced significant new stimulus measures, which further supported the stock markets. The interest rate cuts led to good returns on shares of small companies (also called "small caps"). These relatively smaller companies are more affected by high interest rates because high interest rates make external financing more expensive. Small companies often make more use of external financing than their larger competitors. As a result, a reduction in interest rates has a relatively greater positive effect on the shares of small cap companies.

In addition to equities, the bond markets also performed well, thanks in part to interest rate cuts. Investment categories such as corporate bonds and government bonds performed well.

In short, confidence returned in September. This recovery led to a positive end to the quarter.

Policy adjustments by central banks, what does that mean for my portfolio?

The third quarter was strongly influenced by the policies of central banks worldwide. Although there was positive news from the US and the EU, less favorable policies in other places, such as Japan, caused uncertainty. These policy changes led to significant market fluctuations. Nevertheless, it has once again become clear that investors should not be guided by this volatility. Despite the fluctuations, the quarter ultimately delivered good returns.

Our advice remains unchanged. Do not adjust your portfolio based on short-term market fluctuations. The Vive investment model ensures that your portfolio is optimally diversified for your risk level. In the long term, these types of fluctuations have little effect on your portfolio.

Don't let the market disrupt your long-term goals.

Continue to follow your goals and only adjust your portfolio if your personal situation changes, not based on market fluctuations. Sticking to your investment strategy with well-diversified portfolios remains the key to long-term success. As Warren Buffet, one of the most successful investors ever, says: “Outstanding long-term results are produced primarily by avoiding dumb decisions, rather than by making brilliant ones”.