Yahoo Finance 4 Types of Investments Looking Like They’ll Plummet in Value in 2024
The first quarter of 2024 is winding down and the remaining three are likely to make some investors very unhappy, whether they realize it now or not. Interest rates, a presidential election, cash-saturated markets and a highly anticipated cryptocurrency halving are poised to wreak havoc on a handful of investments, shrinking nest eggs and unraveling financial plans.
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No one can predict the future, but GOBankingRates spoke with experts in money and the markets who issued stark warnings about four investments in particular.
If you have cash in any of these investments, you might want to talk to a financial professional about hedging your bets and diversifying yourself out of harm’s way.
Overvalued Tech Stocks
The tech-heavy Nasdaq index is up more than 10% year to date and nearly 19% over the last six months. Many of the biggest corporations in the world are tech companies, and their stocks are standard features in the most common ETFs and 401(k) funds, where they’re flying high — for now.
But as Reuters points out, “Tech stocks are usually considered high-risk investments” and many insiders think they’re overvalued and due for a reckoning.
“At the moment, tech stocks are trading at inflated valuations, fueled by investor enthusiasm and low-interest rates,” said Becky Leighton, content head at Coin Insider.
Reuters backs that up, reporting that investors borrowed cheap money when interest rates were at historic lows during the pandemic and pumped their cheap cash into tech stocks.
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“But if market conditions change or growth projections fall short, these stocks could see corrections that lead to losses for investors,” said Leighton.
That outcome is looking more and more inevitable.
At the start of the year, Nasdaq wrote, “Currently, the tech sector trades at a high valuation of nearly 29 times its 2024 earnings. This elevated price-to-book level demands significant earnings expansion for these tech companies to sustain their market positions. Investors are now focusing on whether these firms can enhance earnings to justify their lofty valuations.”
InvestorPlace sees Tesla (TSLA), Paycom Software (PAYC) and Snap (SNAP) as especially overvalued and due for a fall.
Bitcoin
Bitcoin is currently trading above $71,000 after smashing its own records in the runup to its scheduled halving on April 19. It has gained 70% since January 1 alone. BTC was trading below $17,000 at the start of 2023.
“Cryptocurrencies, especially Bitcoin, have been performing extremely well recently,” said Chris Sheehan, founder of crypto payment platform Spritz Finance. “This is because there is a lot of retail and institutional flows into the asset, led by the ETFs launched by Blackrock and other firms.”
But like overvalued tech stocks, many analysts think investors are on an unsustainable profit path.
“Crypto investments, while offering high returns, carry significant risks amplified by regulatory uncertainties and market volatility,” said Philip Wentworth, Jr., entrepreneur and co-founder of Rockerbox Tax Solutions, which provides small business owners with financial management services. “Given the unpredictable regulatory landscape and the potential for drastic value fluctuations, crypto may be one of the riskier ventures for 2024.”
Fortune reported that JP Morgan predicts Bitcoin will plummet to $42,000 after the April halving. The crypto influencer Capo predicts the halving will drive the price down to $45,000.
Pharma Stocks if Biden Wins, Green Energy Stocks if Trump Wins
Some experts predict that the outcome of the November rematch between Donald Trump and Joe Biden will spook one group of investors or another into a selloff.
“Any time there is a presidential election, there is a bit more volatility in the market due to the panic and worry that surrounds the situation,” said David Kemmerer, CoinLedger CEO. “And this year, there is more panic and worry than ever before. Many experts are predicting that if Biden is reelected, pharmaceutical stocks could decrease in value, and if Trump is elected, green energy investments could decrease in value.”
Industry publication BioSpace recently wrote an article titled, “Biden, Big Pharma Increasingly at Loggerheads in Run-Up to 2024 Election.”
Also validating Kemmerer’s assessment is a Washington Post headline from shortly after Trump’s 2016 victory: “Trump victory batters solar and wind stocks, bolsters coal shares.”
Your Savings Account
While FDIC-insured savings accounts aren’t traditional investments, the best among them have delivered investment-level returns with APYs over 5%. The good times, however, might be rolling to a stop.
The Federal Reserve has raised interest rates 11 times since March 2022, and CBS News reports that although the central bank is proceeding with caution and needs more evidence that inflation is cooling, it does plan to start cutting rates in 2024. It probably won’t happen at the Fed’s March 20 meeting, but by year’s end, your savings balance likely won’t grow nearly as quickly as you’ve gotten used to over the last year.
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This article originally appeared on GOBankingRates.com: 4 Types of Investments Looking Like They’ll Plummet in Value in 2024
