Last year was a doozy. We had global disruption with the war in Ukraine, social and political unrest, record inflation, many interests rate hikes, continued supply chain issues and of course, lots of market volatility. Last year’s market volatility started in the second week of January and we barely got any relief all year. We had double digit losses in the US stock market for just the 12th time in last 95 years. We are all aware that 2022 was a rough year in many different ways so let’s take a look at some of the good news.
First off, back-to-back years of losses are really rare and actually happen only 9% of the time. Also, 2023 is the third year of Biden’s term and on average, the third year of a president’s term typically sees the highest investment returns. 2022 felt really bad, and it was, but if we go back to 2020, the S&P 500 is actually up 13% since early 2020.
So, what will happen in 2023? We don’t have a crystal ball, so who knows! But what we do know is that interest rates may continue increasing, it is expected that the Fed will raise rates by an additional .50 during the first part of the year and then hold off on anymore increases for 2023. The Fed continues to try to curb inflation and there are many signs that inflation is coming back to earth. As of December, the unemployment rate is at 3.5%, tying the lowest level since 1969. Overall, the consumer remains healthy and we still think it is possible to avoid a recession in 2023.
As always, remember, we are long term investors. Although market downturns and double-digit losses do not feel good, they are actually normal parts of investing. One of the best things you can do is to take your emotions out of investing and ride the waves of the market. We will continue monitoring the market and make moves as we see new trends emerging. If you have questions or concerns, we ALWAYS want to hear from you.
Alana Macy, CFP©
S&P 500 – A capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
The views stated are not necessarily the opinion of Cetera and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results. Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.