2023: The Year in Review

2023 was a year that kept us on our toes, to say the least. The stock market delivered a wild ride, with soaring peaks and nerve-wracking dips.

It was quite the rollercoaster and we navigated headlines that felt like chapters straight out of a thriller.

• The war in Ukraine continued for second year
• Multiple major banks collapsed triggering a brief panic, and reminding us of the dangers of keeping too much money in any one bank account
• 86% of economists and 100% of talking heads on TV spent a 2nd year predicting a recession (Why? Because fear sells)
• The yield curve remained inverted all year, an ominous sign of recession
• Despite weakness in some sectors such as technology and real estate, there was no recession, mainly due to strong consumer spending and low unemployment
• War broke out in the Middle East
• The US government nearly shut down over the debt-ceiling crisis, and the US speaker crisis
• The US government didn’t shut down after all
• US housing market refused to crash despite 8% mortgage rates
• The US office market is actually in deep recession, and office buildings in major metros sold at 30-50% discounts to prior sales
• Federal Reserve Chairman, Jay Powell, spent most of the year claiming rates would remain elevated for a long, long time as he was fighting stubborn inflation
• Inflation declined from the peak of 9% and core inflation numbers are now around 3%
• Last month, Jay Powell suddenly claimed victory over inflation and suggested there may be three interest rate cuts next year
• Long term interest rates declined in the second half of the year
• In the past two months every major asset class saw a huge rally

It was a year that tested our resilience, and also highlighted the importance of strategic planning and a calm head amidst the frenzy.

Amidst all this panic and excitement a lot of investors fled the volatility of stock market and instead basked in the comfort of 5% money market funds.

However, money market funds and CDs were one of the year’s worst performers, eclipsed only by long-term bonds.

Cash: 4%
90-day Treasuries : 5.2%
Aggregate Bonds : 5.1%
Intermediate Treasuries: 3.2%
Long-term Treasuries: 1.4%

Gold: 13%
Global REITs: 9.6%

US Large-cap stocks: 25%
US small cap stocks: 17.9%
US Tech stocks: 54%
International Stocks: 17.6%
Emerging Market stocks: 8%

As is often the case, risk assets provided much better returns than CDs.

Looking ahead, 2024 promises to be just as exciting and dynamic. While predicting the future is always a fool’s errand, I remain optimistic about the opportunities that lie ahead. We’ll keep a close eye on the markets, analyze the evolving economic landscape, and work diligently to ensure our financial plans stay on track.

As we raise a glass to the New Year, let’s take a moment to acknowledge the hard work we’ve all put into our financial goals. Whether it was saving for a dream home, planning for retirement, or simply building a more secure future, every step we took, big or small, mattered. Remember, financial progress is a marathon, not a sprint, and every milestone deserves a moment of celebration.

As always, my inbox is always open. If you have any questions, concerns, or simply want to talk about your financial goals, please don’t hesitate to reach out. I’m here to support you on your journey to financial success.

In the meantime, I wish you and your loved ones a joyous and prosperous New Year filled with health, happiness, and continued achievements. Let’s raise a toast to the year that was and embrace the adventures that await in the year to come.