Winning stock predictions for 2024 + Merry Christmas

Hi everyone,

Merry Christmas from Libby, me and my crew to yours. Enjoy the break. 

I know many are deservedly switching off after a hectic year, so I’ll keep this last newsletter of the year short and to the point (which I hopefully do every week 😊). We have the family moving in as usual over the break (all eight grandchildren) which is chaotic but a lot of fun. 

The next newsletter will be in your inbox on Friday, 12 January.

Watch Your Money & Your Life

In early February, the new season of Your Money & Your Life – the TV show where I help everyday Aussies spend, invest and manage their money better – will launch. 

As I mentioned last week, we’re introducing Kochie’s Budget Challenge where I help everyday Aussies navigate the cost-of-living crisis. I’ll show them how to improve their money management by going through their biggest bills and financial leaks to get them a better deal and save them big dollars. 

We’re looking for singles, couples, retirees and families who’d be keen to have me pop over and go through your bills to see where we can make huge savings on things like mortgage, health insurance and more – you must live in Sydney. EMAIL NOW to express your interest: [email protected].

RBA worried about rising unemployment

Not a lot of new economic data out this week, except for the Reserve Bank board minutes from their December meeting which decided to keep interest rates on hold. 

What was interesting in the minutes was a growing awareness of a change in the jobs market and the prospect of it rapidly deteriorating. 

The RBA minutes noted “the case to hold the cash rate target constant reflected the view that the data over the prior month did not warrant a material revision to the outlook and that there is the possibility of a larger rise in the unemployment rate than anticipated.” 

The 0.3 per cent increase in the unemployment rate over the last three months to 3.9 per cent in November seems to be a concern. While we’ve had high inflation and rapidly rising interest rates, at least everyone has had a job – which means a steady income stream to fight the financial stresses. 

If that reverses and unemployment rises faster and more than forecast, the extra strain on consumers and their household budgets will be intense. It will likely push the economy into recession.

According to a Resolve poll for the Dye & Durham Australian Pulse Survey, nearly 60 per cent of Australians believe the economy is either already in recession or will tip into one in 2024.

Half of households believe they are financially worse off than a year earlier, a third predict their situation will deteriorate over the coming 12 months, while a quarter of respondents say they are optimistic their financial situation will improve in the coming year.

CommBank economic forecast for 2024

 CBA Chief Economist Stephen Halmarick is predicting a soft landing for the economy in 2024. He’s forecasting: 

• The RBA will lower the cash rate by 0.75 per cent in the second half of 2024, starting in September, and a further 0.75 per cent in the second half of 2025, as inflation comes back into the RBA’s 2-3 per cent target range slightly earlier than the RBA forecasts itself.

• Employment growth is expected to remain positive in 2024, but CBA see the unemployment rate moving up to 4.5 per cent by year-end 2024. Importantly, no one need lose their job for the unemployment rate to rise, all that is required is for job growth to be slower than the increase in the working age population.

• A slowdown in net migration, as well as consistent and coordinated measures to increase the supply of new dwellings, will be critical to restoring some balance to the Australian housing market.

• Dwelling prices to rise by a further 5 per cent in 2024, following 9.6 per cent growth since the trough in February 2023.

The Santa Rally brings plenty of Christmas cheer to investors

If you’re invested in shares, remember how gloomy you were in October? The market was looking terrible as share values tanked. 

Investors panicked and hit the “sell” button. And that was a mistake. 

The Australian sharemarket rose 4 per cent in November, over 5 per cent in December and now sits at close to record highs. The Santa Rally has delivered a great recovery, not only for individual investors but also for all our superannuation fund returns. 

It’s another great lesson in the fact that markets move in cycles. When they’re down don’t panic, if you’re in quality companies the cycle will turn. 

Have a look at this table on the performance of sectors on the market over 2021, 2022 and 2023.

What is obvious is that often the previous year’s worst performing sector on the market rebounds the year after. For example, the energy sector was terrible in 2021 and the top performer in 2022; this year it’s back toward the bottom. 

Consumer discretionary sector up 24 per cent in 2021, down 20 per cent in 2022 and up 15 per cent this year. 

Understanding where you are in the investment cycle is just critical.

Winning stock predictions for 2024

Over December the ausbiz business streaming network (www.ausbiz.com.au) has been running a sharemarket Advent calendar where each day a different analyst tips one stock they believe will be a winner in 2024.

Most the experts are regulars on my daily sharemarket program The Call. These are their picks.

The best of the best in property for 2023

The pressure of climbing interest rates, stretched affordability, and the 'fixed rate cliff' stress-tested the housing market through 2023, however resilience largely prevailed, CoreLogic's Best of the Best report reveals. 

CoreLogic Head of Residential Research Australia, Eliza Owen, said home values were broadly resilient under these conditions, however there were signs that high housing costs were biting and 2024 is expected to be far more subdued for capital growth. 

Housing activity rebounded through early 2023 as buyers took advantage of lower prices, however towards the end of the year affordability constraints have become more pressing, skewing demand towards the middle-to-lower end of the pricing spectrum. 

The national top 10 sales for the year featured Sydney's usual eastern suburbs set, Bellevue Hill and Vaucluse, along with Melbourne's Hawthorn and Toorak, plus Coopers Shoot in the Byron Shire of the Northern Rivers region. 

Nationally, Mosman in Sydney's Lower North Shore recorded the highest total value of house sales over the 12 months to September at $1.462 billion, with total unit sales in Surfers Paradise reaching $1.175 billion. 

Across the capital city markets, Perth claimed eight of the top 10 spots for strongest growth in house values, with Brookdale, Armadale and Hilbert all up more than 30 per cent annually and median house values sub-$550,000. 

For unit markets, Perth (5), Brisbane (4) and Adelaide (1) took out the top 10 for largest gains, with units in Brisbane's Slacks Creek surging 27.4 per cent over the year, with seven of the top 10 recording median values under $400,000. 

The weakest capital city house suburbs featured Hobart's upper end, with North Hobart and Taroona down 13.9 per cent and 13.8 per cent respectively, while the top 10 worst performing unit markets were more diverse, spanning Hobart, Darwin, Melbourne and Canberra. 

Across regional Australia, NSW's Tralee was the top performing house market with 34.2 per cent capital growth, while QLD's Emerald saw the highest value growth for units at 20.9 per cent. Rochester (VIC) was the worst performing house market, with values down 26 per cent, while Mudgee (NSW) units recorded value falls of 11.4 per cent over the past year.   

Nationally, Kensington in Sydney’s eastern suburbs had the highest house rent growth in the year to November, up 24.9 per cent. In the unit segment, Lakemba in Sydney’s inner south west saw rents soar 28.1 per cent, closely followed by Wiley Park up 28 per cent. 

WA's Kambalda East (15.5 per cent) and Boulder (12 per cent) recorded the highest gross rental yields nationally for houses and units respectively.