Q3 2023 Summary by James R. Wigen, CAM® ChFM® CPM® CWM®, Sr. Wealth Manager, Independent Financial Management

Third Quarter of 2023 has now come to an end.

The past quarter has certainly been a tale of two stories.  On July 31st, the Stock Market reached a Top for the year, especially High-Quality Growth Technology stocks.

At the beginning of 2023, most investment accounts were still suffering from the broad-based market Decline of 2022.  At the end of July, 2023, the NASDAQ was up 35% for the year.  Since then, the market has Declined, and that includes the Stock Market & Bond Market.

What caused the market to Decline since the July, 31st Top?

One big item was the US Debt Rating being Downgraded.  We have seen this before; however, the Treasury Department has Flooded the market with Treasury Securities since Covid, recently has issued over $1 Trillion in new Treasury Securities, and that has caused Treasury Bond prices to Decline, and Treasury Yields to Rise.

High Treasury Yields are Not Good for the market, and several Rating Agencies have indicated they may not be done with more Downgrades.  With High Treasury Yields, causes High Debt Costs, which is why several House Republicans wanted to Shut Down the Government, fight to force Politicians to start focusing on the enormous US Debt, and Rapid Growth of that Debt into the future.

Without going into Politics any further, this issue of controlling the accelerating US Debt, is also shared by many professionals in the investment community.  President Clinton & Secretary of Treasury Janet Yellen have recently said, a US Deficit of $50 Trillion is Not a concern, and now currently is a little North of $33 Trillion.

Many large investors do Not Agree with their recent comments, which is one reason Treasury Bonds are Declining.  Some large investors are actually Shorting Treasury Bonds, benefiting from a Decline, causing further Declines, and Treasury Yields Rising.  This may continue for a while.

In 2022, Economic Data & Job Data was pretty strong, and the Stock Market Declined anyway.

Why does this happen?

The Stock Market was pricing in the Fed needing to Raise Rates to Slow the economy down, which is what they have been doing, at a Very Rapid Rate for over a year.

I have indicated previously, in the past two Stock Market Declines, the market started Declining 18 months after the Fed Funds Rate surpassed 5%, although, may have been enhanced by uncommon events like the Credit Crisis & Dot Com bubble bursting. Fed Funds Rate has passed 5% recently, and the Fed has indicated there may be one more Rate Hike ahead.

Since July 31st, the two largest Single Day Declines in the Stock Market have primarily been because Economic Data or Jobs Data has been too Good, Not too Bad.

Confusing right, well not really.

For the same reason in 2022, the Economic Data & Jobs Data was Strong, Stocks Declined, in anticipation for the Fed starting to Raise the Fed Funds Rate.  Currently, Strong Economic Data or Jobs Data indicates the Fed may still be in a position to Raise the Fed Funds Rate, and the market wants the Fed to indicate their next move is to Lower the Fed Funds Rate.

Since the Stock Market is pricing Stocks today, for their future performance, we eventually will see Mediocre Economic Data or Jobs Data be announced, and yet the Stock Market will Rise.  Medicare or Bad news, equals faster Fed Funds Rate Cuts ahead.  Investors are waiting for, Soft Landing & Fed Funds Rate Cuts.

This is what so many individual investors have trouble understanding, and find themselves constantly Selling Low & Buying High or Reducing their Retirement Contributions when markets Decline, and Raising their Retirement Contributions when markets are at or near all-time Highs.

With all of this being said, what do investors do?

Since the Stock Market may continue to be volatile for months, Max out your Retirement Contributions for the Tax Benefits you will enjoy now, and keep those Contributions in the Money Market Fund, which is currently paying over 5%.

Dollar Cost Averaging is always recommended, and try to remember, when markets Decline, prices of Great Companies get Cheaper, and you Buying will help reduce your Cost Basis, or allow you to establish an attractive Cost Basis in a new Stock or Mutual Fund.

If you have access to individual Stocks outside of your Retirement Accounts, look for Very Large Blue Chip type companies that generate great profits and can whether the volatility we will see for the coming months.  Look for Income Generating Stocks or Mutual Funds, Sell Covered Call Options to generate additional income, or have your advisor sell them for you.

It is never fun to watch your investments Decline, however, markets do go up and down, but if you have exposure to Income Generating investments, your portfolio can keep moving forward, even if very slowly.

As a reminder, the NASDAQ was Down over 33.1% in 2022.  From January, 1st to July, 31st of 2023, the NASDAQ was up over 35%, and several individuals Stocks were up 2x to 3x that amount.  This data shows why it is not always smart to Sell a losing position, if the underline company is doing well.

How well a company may currently be running their business, is not always reflected in their current stock price.  I will keep you updated, at a minimum every quarter, however, I may offer more updates based on market reactions to incoming data.

Please let me know if you have any questions, J.Wigen@IFManagers.com.


James CAM® ChFM® CPM® CWM® designations are issued through Global Academy of Finance and Management or GAFM®.

Investing involves serious risks and past performance is no guarantee of future performance or success.  This is not an offer to buy or sell securities and nothing contained herein should be interpreted as a recommendation regarding any investment or investment strategy.  Before making any decision to invest, first read the relevant disclosures and important information provided to you.

Please take the proper risk for your current situation and get the advice from a financial professional who clearly understands your current & future goals and objectives.


All opinions expressed by James R. Wigen on this website are solely his opinions and do not reflect the opinions of IFP Advisors, LLC, dba Independent Financial Partners, (IFP).  Investment Advice offered through IFP Advisors, LLC, dba Independent Financial Partners (IFP), a Registered Investment Adviser. IFP and Independent Financial Management, LLC (IFM), are separate entities.



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