The Markets in 2023
The first business day of the new year must be the most typo-ridden day of the year. In the days when we wrote checks, our brains would default the date to the last year, so we’d save the check using the ol’ scratch-out and initial technique. After all, most of us had to pay for them. A few weeks in, we were okay again and dating things properly.
It seems our collective brains finally relegated the past to the past. For us, that’s the sweet spot for reviewing stuff. Brains in the now, objectivity somewhat restored, a little distance between us and the season’s festivities, and we’re ready to discuss the recently ended calendar year.
Certainly, among our top priorities is analyzing what the markets did and didn’t do in 2023, a task made entertaining by comparing the now-foregone reality against the predictions of financial mystics in late 2022/early 2023.
Expectations were, as usual, different from reality. There was no recession despite so much emphatic doomsaying when the Federal Reserve raised interest rates to fight high inflation. US Stocks rose overall with tech sector performers making their mark; causing several well-known and influential companies to be given the collective moniker, The Magnificent Seven, no relation to the 1960s Western flick.
And on the international front, Japan made headlines as its stocks neared all-time highs despite decades of low performance. These all appear to be good points as the market continues the bullish run that started in 2022.
Certainly, there are lows, obstacles, and sad stories mixed into any retrospective, but generally, good sentiments seem to be carrying into 2024. More details on these highlights can be found in this article from Dimensional Fund Advisors.
Yet, we must ever be wary of the Groundhog Day effect, this reference is more to the movie and underlying syndrome than tomorrow’s holiday, wherein one feels as though they are living the same day on repeat.
In this vein, every new year is bedraggled with market prophecies. Depending on the nature (or other motivations?) of the oracle, we hear the same mixed warnings of a year of doom or cheerful growth. These have been a hallmark of the market since its inception, and we don’t expect them to diminish any time soon. We like the way DFA puts it:
Economic resilience in the US and elsewhere is helping boost the global outlook for 2024, but as investors learned last year, the only thing certain is that there will be plenty of uncertainties. Many variables are in play for markets this year, from wars in Ukraine and the Middle East to questions around interest rates.
Investors are also likely to be closely following the upcoming presidential election in the US. But it’s worth noting that the political party that wins the White House is just one of many factors investors consider when pricing assets and stocks have generally trended upward regardless of which party holds the presidency.
This may be reassuring when one considers the difficulty, or perhaps futility, of trying to guess what is going to happen in 2024—or any year.
We don’t envy the crawfishing failed prophets need to do to keep their flocks invested in their outlooks. And it appears, given the endless game of whack-a-mole one has to play to keep their speculations at bay, that failure is not a hindrance to them at all.
We don’t recommend following advisors or commentators who think they are clairvoyant. Rather, we suggest planning for a variety of outcomes, controlling what you can, and putting the rest to bed. Who’s with us?