Market update: Third quarter 2024

The third quarter of 2024 was mostly positive. Despite sharp swings in August, all of Vive's asset classes ended in the plus.

Looking back on third quarter 2024: Strong quarter for financial markets after much turbulence.

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

Still, equity markets recovered in September. This was mainly due to several stimulus measures, including a 0.5% interest rate cut by the U.S. Federal Reserve Bank and a 0.25% cut by the European Central Bank. In addition, the Chinese government announced hefty new stimulus measures, which further supported equity markets. The interest rate reductions created nice returns in 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 tend to use external financing more 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, bond markets also did 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 the quarter ending on a positive note.

Central bank policy adjustments, what does it mean for my portfolio?

The third quarter was heavily influenced by the policies of central banks worldwide. Although positive news came from the U.S. and the EU, less favorable policies in other places, such as Japan, created uncertainty. These policy changes led to significant market fluctuations. Nonetheless, it again proved that investors should not be swayed by this volatility. Despite the fluctuations, the quarter ultimately delivered good returns.

Our advice remains unchanged. Don't adjust your portfolio to short-term fluctuations in the market. The Vive investment model ensures that your portfolio is optimally diversified for your risk level. In the long run, such fluctuations have little effect on your portfolio.

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

Keep following your goals and adjust your portfolio only when 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, puts it, "Outstanding long-term results are produced primarily by avoiding dumb decisions, rather than by making brilliant ones."