2023 was a year of volatility and uncertainty with higher interest rates, causing many investors to park their money in cash. As we head into 2024, inflation seems to be cooling, and the market is beginning to recover. With the Federal Reserve signaling they will maintain higher interest rates for longer, it seems that strategy may be outdated. BlackRock Americas iShares Investment Strategy Head Gargi Chaudhuri joins Yahoo Finance to break down the state of the market and what investors need to consider for 2024.

Chaudhuri explained her stance for the near term. "I think we're going to hear from [Fed] Chair Powell that it's too premature to start talking about a rate cut. What this means for investors, though, is historically when we look at the period, six months into the first cut or six months after the first cut, and then the period of the pause, we found that where investors do the best is actually in that rate pause period," Chaudhuri said. "So whether you're in the bond markets, in the equity markets, investing in this pause period is really important."

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Click here to watch the full interview on the Yahoo Finance YouTube page or you can watch this full episode of Yahoo Finance Live here.

Video Transcript

JULIE HYMAN: All right. Well, investors looking to sustain year-end momentum after the S&P 500 and NASDAQ have reached six consecutive weekly gains. It comes as Wall Street waits on the Federal Reserve's last policy decision of the year. Here with what all of this means for investors heading into 2024, we've got Gargi Chaudhuri, who is BlackRock's head of iShares Investment Strategy Americas.

Gargi, great to see you. Thanks so much for being here. I want to start with the once-- I don't know-- not so sexy area of asset allocation, right? Because we have seen money pouring into cash this year, because people wanted to take advantage of those high yields. You say now would be a good time to start thinking about pivoting because of where we are in the cycle. Can you lay that out for us?

GARGI CHAUDHURI: Sure thing. Hi, Julie and Josh. It's great to be back on the show. Hope you guys are doing well. So to your point, the framework that we lay out in the iShares year-ahead outlook is exactly to your point around why this might be a good time for investors to step out of cash. And, you know, what we're looking at is this period that we believe we're now in, which is the pause period, right?

We don't expect the Fed to go this week. We believe that the July hike was the last one, which means that they're now going to just leave rates on hold for some time and just see how the economy evolves. You know, I think we're going to hear from Chair Powell that it's too premature to start talking about a rate cut. What this means for investors, though, is historically, when we look at the period six months into the first cut or six months after the first cut and then the period of the pause, we found that where investors do the best is actually in that rate pause period. And thank you for bringing that chart up.