Top investments to watch in 2024

Going into 2024, investors may be hoping for less instability and calmer growth. Whether stocks, bonds or commodities, virtually every asset class has seen significant volatility, driven by geopolitical instability alongside uncertainty over both inflation and the monetary policy sufficient to rein it under control.

Fortunately, the consensus seems to be forming that inflation will continue to fall, that interest rates have peaked, and that they will also start to slide downwards in 2024.

However, if the past few years have taught UK investors anything, it’s that predictions are based on known criteria. And after Brexit, the Johnson landslide, the covid-19 pandemic, the Ukraine War, Silicon Valley Bank, and the Truss mini-budget, it’s fair to say that investors will be on guard for the next ‘black swan.’

But while there may have been volatility, many investments have done very well in 2023, and may continue to do so in 2024. Five are listed below — but always remember that past performance is not an indicator of future returns.

Top investments to watch

Gold

Gold has historically served as the reliable ‘safe haven’ asset and inflationary hedge during times of severe economic stress, and this trend continued reliably in 2023.

For perspective, central banks purchased 1,136 tonnes of gold worth $70 billion in 2022, the highest amount since records began in 1950. This marks a notable departure from the trend of selling gold in previous decades, and the buying has continued in 2023.

The appeal of gold lies in its characteristic as an asset that is not tied to any specific issuer or government, providing diversification for central banks away from other traditionally safe assets such as the US Dollar or US treasuries — and this is especially pertinent as the US debt ceiling crisis rumbles on.

Gold has rocketed above $2,000/oz in 2023 and may continue to climb in 2024.

Dow Jones

The Dow Jones is well-known as the ‘blue chip’ US index, hosting 30 of the most prominent US stocks including Apple, Walmart and McDonalds. The index hit a record high today, rising above 37,100 points as investors cheered the more dovish tones set out by the Federal Reserve.

While inflation scarring may take some time to heal — and with the caveat that even blue chips carry some risk — there’s a reason why Warren Buffett argued in 2021 that ‘I have yet to see a time when it made sense to make a long-term bet against America.’

For context, the Dow has risen by 54% over the past five years, including the pandemic mini-crash and all the increased geopolitical tensions since. Of course, this flight to quality may reverse should risk appetite return.

Nvidia

Nvidia shares have been on a dizzying rally this year to a $1.2 trillion valuation. The semiconductor champion is clearly one of the most popular stocks of 2023 — though of course, popularity does not mean it is the best investment available.

The rally is a result of AI demand, spurred on by the release of the revolutionary ChatGPT. In Q3 results, Nvidia saw record revenue of $18.12 billion, up by 34% quarter-on-quarter, and by a whopping 206% compared to a year ago. A highlight was data centre revenue, which increased by 279% over the past year to $14.51 billion.

Founder and CEO Jensen Huang enthuses that ‘NVIDIA GPUs, CPUs, networking, AI foundry services and NVIDIA AI Enterprise software are all growth engines in full throttle. The era of generative AI is taking off.’

Of course, with a price-to-earnings ratio of 63 and the US government imposed export bans on certain chips to China, there are some risk factors to consider.

Rolls-Royce

Up 205% year-to-date to over 300p, Rolls-Royce shares have been the star performer of the FTSE 100, after CEO Tufan Erginbilgic delivered a stunning turnaround in his first year in charge.

For fairness, he came on board at a fortuitous time; soaring post-pandemic travel demand has increased flying hours, the Russia-Ukraine war has seen defence spending rise, and the rising political importance of energy independence — consider the modular nuclear reactors — are all macroeconomic catalysts for the business that were out of his hands.

But the growth could be set to continue. With a slew of banking giants upgrading their targets in recent days, Fitch Ratings has upgraded Rolls to BB+, a step towards regaining its all-important BBB investment grade status, lost during the pandemic.

For context, the FTSE 100 stalwart plans to deliver operating profit of as much as £2.8 billion and free cash flow of up to £3.1 billion by 2027.

Coinbase

Coinbase shares have risen by nearly 350% year-to-date after a disastrous 2022 saw much of the company’s value wiped out. For investors looking for exposure to the cryptocurrency asset class, but without taking ownership directly, the exchange could be attractive.

Coinbase is the largest crypto exchange in the US and may be viewed as the ‘picks and shovels’ crypto stock.

For context, Bitcoin — inarguably the most well-known cryptoasset — has risen by over 150% year-to-date, and BlackRock — the world’s largest asset manager — is revising its spot Bitcoin exchange traded fund to enable major banks such as Goldman Sachs and JP Morgan to participate in the market more easily despite regulatory restrictions preventing them from keeping direct holdings.

Naturally, Bitcoin is an unregulated asset that is viewed by many as both volatile and extremely high risk.

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