Graham Stephan: How To Get Rich During the 2024 Market Reversal

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Financial personality Graham Stephan is extremely popular with over 4.6 million subscribers to his YouTube channel. In an early January video, Stephan outlined how he expects the investing markets in 2024 to differ from those in 2023. In addition to describing how he views the markets, he outlines what history suggests will happen, what warning signs to look out for and what his personal investing plan is for the new year. Here are the highlights. 

2024 Will Definitely Be Different Than 2023

While Stephan emphasizes that no one can predict the future, there are signs that 2024 will be very different from 2023. For starters, in 2024, the Federal Reserve has been rumored to be cutting rates this year (although it appears that won’t happen right away). Should this happen, it will create very different investing conditions than in 2022 and 2023, when rates were still rising.

Several other variables make the outlook for 2024 confusing and perhaps even more volatile. In addition to being a presidential election year, 2024 may face another showdown over a government shutdown. Meanwhile, most asset classes are at or near all-time highs. Put it all together and Stephan expects to see some bumps in the road during this interesting year. 

Stock Market

In no uncertain terms, Stephan noted that the average investor is simply not very good at investing. Based on numerous studies, Stephan said that most investors end up barely beating inflation. He cited a 2014 Business Insider article that shows how investors tend to sell out during market declines, which leaves them out of the market during the inevitable bouncebacks.

This is tragic — and accounts for investors’ collective poor performance — because missing the market’s biggest days is essential for long-term success. According to the 2014 article, over the 20-year period from 1993 to 2013, just 40 days were responsible for all of the market’s gains. As the market’s best days tend to occur shortly after its worst, many investors are missing those big days and not allowing their portfolios to benefit from the compounding that can turn those gains into significant money over the long term.

To avoid this type of underperformance, Stephan recommended approaching the market as a long-term investment, using money you won’t touch for 20 to 30 years. This way, not only will you capture the market’s big up days, you’ll also avoid the emotional stress of worrying about its day-to-day fluctuations. Your reward will be winning over the long term, as Stephan cited a study showing how the market has never lost money over a rolling 20-year period. The longer you remain in the market, the higher the percentage that you’ll be a winner. 

Regarding 2024 specifically, Stephan noted that while September and October are typically weak in election years, the subsequent November and December months more than make up for the average selloff. Overall, election years aren’t that bad, with the market rising 19 out of the past 23 election years.

But there’s even more encouraging news for investors. According to other data cited by Stephan, the S&P 500 has always been positive when a 10% drop has been followed by a 10% rise. Additionally, the market tends to gain even more in the year after it rises by 20% or more, so 2024 could be another great year for stock market investors. 

Housing Market

As any potential investor can tell you, it’s been hard to buy a home the past few years. For starters, homeowners who may traditionally be interested in selling their homes have been “locked-in” by low mortgage rates. Now that rates are higher, few homeowners are willing to give up their low-rate mortgages in exchange for those with rates closer to 7%. 

But this may all start to change in 2024, according to Stephan. If the Fed follows through with cutting interest rates in 2024, some of that “lockup” will dissipate as the interest rate gap shrinks.

However, Stephan noted that any additional inventory that is released will likely be snapped up by pent-up buyers, so prices are likely to increase by about 1.5% over 2023. This will still make homes unaffordable for large numbers of buyers, but it’s important to note that real estate is highly localized. While some markets will see price gains, others will see price declines, making homes more affordable. 

Alternative Investments

Stephan said that he keeps a percentage of his assets in more speculative investments, notably collectibles, cars and Bitcoin. While the price of Bitcoin raced significantly higher in 2023, Stephan said that some of the gains may have been from a pricing-in of a potential Bitcoin ETF. If that’s the case, there may be some declines in 2024.

However, he maintains that dollar-cost-averaging into Bitcoin has proven profitable for many, and he continues to advocate such a strategy with money you can afford to lose and keep invested for the long term.

Stephan’s Investment Strategy

So what does Stephan do with his own money when it comes to savings and investments? He broke down the following six-step process in his video:

1. Reduce expenses.
2. Invest on a regular basis.
3. Buy and hold for 30 years.
4. Invest in index funds.
5. Keep cash on the sidelines for potential real estate opportunities.
6. Allocate about 5% to riskier investments.

While Stephan doesn’t say that every investor should follow his blueprint, this is the strategy that works for him.

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