2024 Playbook
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By Monish Chhabra ǀ February 6, 2024
The following is the graph of smaller stocks and sectors compared to the larger ones. The former look as cheap as they get, over the last two decades.
The dotted line shows the average trend line, while the orange solid line connects the bottoms.
Statistically, the highest probability scenario as of now is as following:
Over the next 2-3 months:
the larger stocks could correct through 10% to 15% fall in the large-cap, market-weighted indices.
the smaller stocks could correct through 5% to 10% fall in the equal-weighted indices.
Thereafter, over the rest of this year:
the larger stocks could rally back up by 15% to 20%, thus resulting in single-digit rise for the year 2024 for the large-cap, market-weighted indices.
the smaller stocks could rally back up by at least 30%, thus resulting in solid double-digit gains for the year 2024 for the equal-weighted indices.
As the year unfolds, the distribution of data may change, and so will the probabilities of scenarios. We would then issue a revised update of our playbook.
Watch the shape, keenly.
Play it, strongly.
Hold it, humbly.
This write-up is for informational purpose only. It may contain inputs from other sources, but represents only the author’s views and opinions. It is not an offer or solicitation for any service or product. It should not be relied upon, used or construed as recommendation or advice. This report has been prepared in good faith. No representation is made as to the accuracy of the information it contains, nor any commitment to update it.