With 2024 only a few days away, investors are gearing up to adjust their portfolio for potential Federal Reserve rate cuts.

NewEdge Wealth Senior Portfolio Manager Ben Emons joins Yahoo Finance Live to explain why investors won't want to be in cash once the Fed starts cutting rates.

Emons points out that there is a lot of money sitting in money market accounts in a bid to take advantage of higher interest rates, saying "there is something about cash that still adds income to your portfolio, but then it does get different once the Fed does start lowering rates," adding that the cash can be used to take advantage of different opportunities.

When it comes to risks in 2024, Emons warns of “challenges” in the US House and Senate, including concerns about international aid, spending cuts, and the 2024 election. Internationally, Emons notes the geopolitical tensions in the Middle East.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

BRAD SMITH: Ben, I love in your note, you say cash is in the trash here. Walk us through why cash in the trash in 2024.

Related Videos

BEN EMONS: And it feels like that anthem, right, of, like, you have this pivot party. So you throw your cash in the trash and you, you know, take your plates out for stocks and bonds. And I think the idea here, Brad, is that we still have very high rates on T-bills as an example, right, and that will not change until the Fed actually cuts rates, so there's something about cash that still adds income to your portfolio. But then it does get different once the Fed does start lowering rates and to an extent follows what the market has priced in.

So it I'd say the word trash is maybe somewhat like exaggerated, but the idea is that we did put a lot of money into cash this year as those money market funds indicate. Part is uncertainty, part is the higher rates, part is the belief that rates will stay much higher, and it seems that story has changed. So, yeah, putting it in the, quote unquote, "trash" and using it for different opportunities, I think that's the story next year.

SEANA SMITH: Ben, what do you think is the biggest risk as we look ahead to the markets in 2024? Yes, there's a lot to be excited and optimistic about, especially when we talk about rate cuts and maybe even getting multiple ones of those here in 2024, but in terms of what investors should keep an eye on when it comes to maybe what they are not watching right now, some of those challenges, what would you say is the biggest risk in 2024?