Happy New Year!

The new year provides a perfect time to reflect on where the market and economy may be headed, and to review the past 12 months. 2023 was full of surprises, as each year tends to be. Coming off the first true Market Correction since December of 2018, the main topic of conversation was not even when a recession might occur but only how deep and strong it would be. Combining this with the highest inflation in decades, there were not many (if any) predicting double-digit returns. Once again Markets reminded us of how futile it is to attempt to predict the short-term direction of stock prices. This is why the only solid investment strategy continues to be staying invested over a longer time period within a diversified portfolio.

The numbers in ’23 were a bit deceiving. Some economists have noted “rolling recessions” - downturns in different economic sectors like real estate and energy, experienced at different times (download attachment here). The incredible growth and return numbers of the of the so-called Magnificent Seven – Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta and Tesla – also played a large role in skewing returns by accounting for nearly two-thirds of the benchmark index's 24% gain! These numbers overshadowed the fact that 72% of the S&P 500's stocks underperformed the index this year, which is a record. The index climbed to a high of 4770 on December 26^th, bringing it all the way back from the former all-time high of 4766 reached almost exactly 2 years ago in late 2021.

Looking ahead there are more positives heading into the year than there were last January. Inflation seems to have peaked, and the Federal Reserve is even talking about future rate cuts. With unemployment still at historic lows, these factors usually favor strong returns in both fixed income and equities. Election years have also historically been very strong (download attachment here).

But, of course, the Market will be full of surprises again, and the uncertainty leading up to the election may cause quite a bit of volatility requiring careful positioning of portfolios. We will continue to attempt to manage risks while incorporating strategies aimed at participating in the growth we hope will occur.

As always, please don’t hesitate to contact us with any questions or concerns you may have regarding this information, your accounts, or anything else that’s on your mind!

Here’s to a happy and healthy 2024!

Jack