Stock Market Expectations in 2023 by CIO, James R. Wigen, CAM® ChFM® CPM® CWM®, Sr. Portfolio Manager & Sr. Wealth Manager, Independent Financial Management (IFM)
The Stock & Bond Market decline in 2022 was similar to the decline in 2008, if you were invested back then, you remember it was not a fun time.
It is important to understand the Economy was pretty good in 2022, yet the markets declined quite a bit, and certain Sectors saw good quality Stocks beaten up SUBSTANTIALLY.
In 2023, we will see the markets decline a bit further, and even when the Economy is showing us some negative data, the Stock Market will start to go up. There are No Guarantees when it comes to investing, however, you can use Probability & Historical Data to your advantage.
The markets will start to price in the future, when, is always the question. Just as we saw the market decline while economic data was strong in 2022, we should also see Stocks go up win 2023 when economic data is declining. Why does this happen?
When I look back in my career, which started in 1996, I have been through tremendous market Increases & Decreases.
What I have learned:
The Fed stopped raising the Federal Funds Rate back in 1998, when rates were around 5.5%, we experienced a market decline starting in March, 2000, about 18 months after the Fed Funds Rate surpassed 5%. The market started to recover substantially in March, 2003, once the War started in Iraq.
The Fed started raising the Federal Funds Rate in 2004, continued to raise the Fed Funds Rate above 5% in 2006, once again, about 18 months after the Fed Funds Rate surpassed 5%, the market rapidly declined in October, 2007. Officially, a Recession announced by economists in December, 2007.
In both of those examples, while the Federal Reserve was Raising the Fed Funds Rate, the Stock Market went UP, however, in 2022 while the Fed started raising the Fed Funds Rate, the Stock Market Declined!
In the past three decades, the reasons the Stock Market hits new highs & falls to multi year lows is different, thus, making it very hard to make any predictions with a high degree of certainty. I always stay open minded when making portfolio management decisions, and do the best I can to manage the Corporate, Economic, Global & Political data which is released.
With all the data which is needed to be analyzed lately, earning around 4% annually to sit in a Money Market Fund with close to 0 risk, is very attractive & allows me to stay Conservative, while still SLOWLY Dollar Cost Averaging into some of the best Stocks in the World, and best Stock within specific Sectors. Liquidating positions during market lows is not an option, unless dealing with an Emergency.
Here is a thought; ask yourself why people always search for bargain prices when buying Airline Tickets, Cars, Clothing, Electronics, Hotel Rooms, Jewelry & Real Estate, however, when it comes to low prices on Stocks, most people Sell & don’t see the opportunity to Buy. Most people love to Buy when the Stock Market is High & Hope the Stock Market Goes Higher, then when the Stock Market declines, they want to Sell & don’t see the value in Buying when the Stock Market is Low.
Since No Financial Professional knows exactly when the Stock Market has peaked & when the Stock Market has bottomed, therefore, trim positions at new Stock Market Highs & Buy or Add to Stock Market positions as it declines, assuming you need Growth form your investment dollars to get into & through Retirement.
Keep investing in pre-tax accounts, 401Ks & Solo 401Ks, IRAs, Roth IRAs, Simple & SEP IRAs. It is ok to keep money in Cash / Money Market Funds & collect your 4%+ as the Federal Reserve Continues to Raise Fed Funds Rate, and Very Slowly Buy Stocks fitting your Risk Profile! Negative Markets create Opportunity, although, it can seem uncomfortable to Buy!
If you need help with your portfolio, please contact me at J.Wigen@IFManagers.com
James CPM® designation was earned through 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.
Investments are NOT FDIC INSURED * MAY LOSE VALUE * NO BANK GUARANTEE
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.