2024 has truly zipped by — it feels like the year just started, and here we are at the end! For us at InCred Money, this year has been nothing short of an exhilarating ride!
We proudly launched the InCred Money app, along with exciting new products like Fixed Deposits and Unlisted Equities, which received an incredible response.
One of the things I’ve really looked forward to this year is – to share interesting and thought – provoking ideas through my newsletter with all of you. Many of you have written to me, saying that you’ve enjoyed reading them and even suggested some great topics.
At the beginning of 2024, we unveiled our Top Risks for 2024 – a comprehensive risk matrix, highlighting potential risks that could impact our portfolios. Looking back, it’s fascinating to see how some of these risks played out — many as we predicted, and others with some surprising twists.
As the year winds down, let’s take a journey down memory lane and relive some of the most intriguing and defining moments of 2024.
Get ready for a quick, action-packed flashback — it’s worth the ride!
Conflicts, Wars & some Natural (man-made) Disasters
The Russia-Ukraine tug-of-war entered its third year with both Zelensky and Putin unwilling to relent. North Korea has stepped in to support its ally, Russia, while Ukraine continues to rely on the West for military aid. With Biden bidding farewell, could Trump emerge as the peacemaker?
The Middle East, too, remained a cauldron of chaos. The conflict escalated following Hamas’ attack in October 2023. Israel hit back and kept the Triple H (Hamas, Hezbollah and Houthis) at bay. What began as an Israel-Palestine conflict has now morphed into a larger Israel-Iran faceoff. In Syria, the long-standing dictatorship of Bashar Al-Assad came to an end and hopes are high for a new regime focused on peace and stability.
Bangladesh burned. Quota reforms and rising unemployment led to bloody protests which culminated in Prime Minister Sheikh Haseena escaping the country. With a tense political situation, can some businesses shift to India?
On the climate front, 2024 scorched its way into the record books as the hottest year in history. The global temperature surpassed the 1.5°C mark above pre-industrial levels, a fiery warning that’s impossible to ignore. Natural disasters, though not directly linked to climate change, painted a grim picture: Kerala’s landslides, Hurricane Helene in the US, a drought in South America, and flooding across Spain, Afghanistan, and Pakistan. Can we really afford to ignore the climate crisis?
Welcome to the era of ‘man made natural disasters’.
Politics
2024 earned its title as the “Super Year of Elections,” with 72 countries and more than 50% of the world’s population heading to polls. The marquee ones? India and the US.
It was a tough year for incumbent governments, with economic pessimism driving dissatisfaction among voters worldwide.
In India, the Modi-led BJP-NDA secured another term but with a reduced majority, raising some concerns. However, a sweeping victory in Maharashtra’s state elections helped restore faith in the ruling coalition.
Immigration policies, rising inflation, and sluggish economic growth have paved the way for Right-Wing parties to gain traction among voters in Continental Europe, challenging the decades-long dominance of Left-Wing Socialism. The UK, however, bucked the trend, swinging Left as the Labour Party, the nation’s socialist force, decisively ousted Rishi Sunak’s Conservatives (a.k.a. the Tories).
However, the blockbuster movie that everyone had eyes on was the US Election. A year back, few would have given chances to Donald Trump with age & criminal convictions against him. Trump dodged many bullets, including one literally at his Pennsylvania rally, which turned out to be a pivotal point. Elon Musk(eteer) & his X–Men put all their weight behind Trump leading to a Red Republic sweep in the US.
Whether the next four years under Trump promise to be either MAGAnificient or a descent into MAGAlomania— only time will tell.
But what did we learn?
Populism is the reigning trend. Voters are rejecting elitist parties with out-of-touch ideologies and demanding strong leaders who can deliver economic improvement. Woke policies, diversity mandates, and endless funding for wars? The people’s verdict is clear: enough of that.
State of the Economy
We had predicted a slowdown in consumer spending and economic growth, and the numbers now show it. India’s Q2FY25 GDP growth rate was a lackluster 5.4%, with businesses raising alarms about decreasing demand.
Urban consumption, auto sales, and credit offtake have shown signs of slowing down. Higher taxes and convoluted tax rates have left the common man frustrated. Meanwhile, recent headlines are full of why sugary popcorn faces a much steeper tax bite than its salty counterpart.
Inflation in India hasn’t materially come down to warrant a rate cut. The RBI has also been flagging concerns over personal lending and microfinance, with Q2FY25 results showing a rise in NPAs (Non-Performing Assets) and a slowdown in lending. We bid adieu to Mr. Shaktikanta Das, whose remarkable balancing act boosted the economy without letting it overheat.
China’s economy is also facing structural headwinds – ageing population, real estate slowdown and threats of tariffs looming under the Trump administration. In response, China’s government unveiled stimulus packages, including interest rate cuts by China’s central bank, PBOC, to boost the economy.
On a positive note, it seems that there would be a soft landing in the US economy with inflation and unemployment remaining under control. The Federal Reserve (i.e. the central bank of the US), started with their rate cuts in September and has cut a total of 100 basis points.
Financial Markets
The great economist JM Keynes once said,
“The market can remain irrational longer than you can remain solvent”
And 2024 proved this to be true! Despite warnings about high valuations in the small- and mid-cap segments, these stocks continued to reach new highs, driven by ever-expanding valuations.
Even with a slowdown in the economy and earnings, the stock market’s valuation seems… well, lofty. India, with its high valuations, faced a wave of FII (Foreign Institutional Investor) selling who sold over 1.2 Lakh Crore worth of stocks in 2024. While the FIIs moved their money to China, where valuations were favourable, their selling was offset by strong flows from domestic mutual fund SIPs.
Even the hike in equity taxation couldn’t stall the stock market rally. The year also saw one of the busiest IPO markets in history. IPO fundraising reached ₹1.8 lakh crore—2.6 times the funds raised in 2023.
But India wasn’t the only market where stocks looked inflated. The US markets, led by the “Magnificent 7” tech stocks, kept hitting new highs. With a likely tax cut in the pipeline, there’s consensus that the rally could continue.
In a landmark move, the US SEC (Securities and Exchange Commission) approved Bitcoin ETFs in January, giving crypto enthusiasts a major victory.
Gold glimmered & Silver shined with both giving returns of 20%+ in 2024.
The term of the year probably goes to ‘The Yen Carry Trade’. The Bank of Japan’s decision to raise interest rates led to a panic in the investing community. They had borrowed at near zero interest rates in Japanese Yen and invested in other economies to earn better returns. With borrowing now expensive, investors started unwinding this Yen carry trade which led to a market crash in August.
The lesson from 2024 was simple – DIVERSIFY! You won’t always know the flavour of the season.
Entering 2025
As 2024 wraps up, I can’t help but feel excited about what 2025 has in store. It’s shaping up to be another thrilling year, full of unexpected twists and turns. We’ll kick things off in January with the second edition of our Top Risks report — your go-to guide for navigating the year ahead.
My mantra for investments stays the same: Diversify, Diversify, Diversify. After launching two fantastic products at opposite ends of the risk spectrum, we’re working hard to bring you even more avenues to spread your investments and grow your wealth.
A big thank you to all the investors on our platform—you’ve made 2024 an incredible year for us at InCred Money. I’m sure 2025 will be just as exciting and rewarding, for both you and us.
Till the next year,
Vijay
CEO – InCred Money
P.S. I share my thoughts on Investing and the Economy regularly. You can follow me here.
