What I Got Right—and Didn't-in 2024

I started out the year arguing that there is no bubble in artificial-intelligence stocks. I've ended it concerned about froth after anything AI-related soared in price and the market as a whole reached dizzying heights.

- James Mackintosh

The easiest excuse for a columnist is that yesterday's articles are, as Brits say, today's fish-and-chip wrappers.

But smart investors keep a diary of why they bought or sold so they can avoid rationalizing the outcome later.

And writers, too, should learn from their mistakes.

This year markets cared about three things: the booming economy and inflation, artificial intelligence and Donald Trump's re-election. Streetwise had a fairly simple take on each.

The economy was too strong, which meant the Federal Reserve was likely to have to keep rates higher than expected. As the year went on, the economy stayed far stronger than expected; thirdquarter growth was raised to 3.1% at an annual rate.

Then the Fed at its December meeting finally acknowledged that the strong economy meant core inflation-excluding volatile food and energy-would be higher next year than it started out forecasting for this year. Stocks plummeted.

As it turned out, I was wrong. True, 2024 core inflation came in higher than the median Fed policymaker predicted at the end of 2023. True, the economy grew almost twice as fast as predicted. Yet, contrary to what I expected, the Fed cut rates more than it predicted at the outset of the year. My excuse: If the Fed itself doesn't understand what economists call its "reaction function," what chance is there for the rest of us?