Broker Check

2023 What Happened?

January 26, 2024

How quickly things change! As I write this update, we are within a hair of the all-time highs for the S&P 500. This is after recently attaining record breaking highs for both the Nasdaq and Dow Industrials a few weeks ago. Last year, when I wrote this letter, stocks and bonds were both at lows after the Fed had done the bulk of raising rates to fight inflation. 

Despite the Fed raising rates to a 22 year high, 2023 was characterized by a robust economy, and easing inflation.  While the general stock market performed well, the magnificent seven (all mega-cap stocks) roared back in 2023.  Most of the gains for the rest of the stock market and bond markets came late in the year as it became apparent that the Fed had finally paused in raising rates.  

2023 was certainly an example of the adage “The markets will do whatever it takes to prove the most people wrong”.  Many economists and prognosticators were predicting a Fed induced recession last year. Instead, as we predicted, the economy kept rolling along and both the stock and bond markets bounced back strongly.  

During the last four years we have seen a global pandemic, two shooting wars, and the highest inflation since the 70’s.  Despite these setbacks, the stock market has grown +45% (Dec 31, 2019 - Dec 31, 2023).  Corporate profits are also now at a record high, up an impressive +36% over the same time frame (and 2019 was a record year!). 

We have been through so many crises in my investment career, but it’s extremely clear that the global economy is resilient and powerful.  Why is this? There are always new technologies on the horizon that help boost the economy over time. Some examples below:

Ease of travel - According to The State Department In 1990, only 5% of Americans had a passport. Today, 48% do. The more than 160 million USpassports in circulation today are almost double the number from 2007. 

During the last decade, life has become much easier and, in many ways, cheaper because of some great new companies.

Uber - Do you remember what you used to pay for a ride to the airport? Now a ride home from airport or restaurant is at the tip of your fingers and half the price.

Airbnb - has opened a tremendous supply of vacation rentals.  I used their service all over Italy last year.  It makes finding great lodging very convenient and saved me significant money.

Travel is just one small part of the economy but it’s easy to see how technology has made travel easier and more attractive over time, leading to a huge uptick in demand.

As we move forward, AI (Artificial Intelligence) and weight loss drugs are other areas that many are counting on to increase profits and make our lives easier and healthier.


After the big run up into year-end, we are currently seeing some profit taking. This consolidation period is normal after this sort of market movement.  Any pullbacks in the market this year may not see as much downside as in the past due to the large amount of cash held on the sidelines. If you look at the chart above from Bloomberg, you will see there is a record $5.9 trillion dollars that potentially could be deployed if bonds, stocks, or real estate become more attractive. 

Most market experts are no longer projecting a drastic recession and surprisingly are calling for a return to normalcy.  What does normal look like? It looks like historic metrics.

  • Inflation trending towards 2% Fed Target
  • GDP growth of 2%
  • Corporate earnings growth of 11%
  • Stock returns of 8%
  • Bond returns of 5%

What could go wrong? We would say the biggest wild cards of 2024 are likely to be geopolitical. Our election in November and potential flareups with the usual suspects (Middle East, Russia, China) are certainly on everyone’s radar.

Where do we differ from the consensus forecast on the markets this year?

We expect rates to stay higher for longer. The market is currently predicting the Fed will cut rates as early as March and then again two more times this year. We believe it is unlikely that we see cuts in rates during the first half of this year due to inflation still running above the Fed’s 2% target.  

Administrative Issues

We would like to thank those clients who have referred business to us in the past year. Thank you!

Last year marked the long-awaited culmination of the merging of TD Ameritrade platform with the Charles Schwab platform.  While some things are better, others need improvement.  We expect that Schwab will continue to listen to clients and get this done quickly and efficiently.  

Each year the SEC requires us to offer you a copy of its Securities and Exchange Commission Form ADV, Part II.  This form offers standard information on our partnership.  If you would like a copy, please let us know.

Important change to 2023 Tax Documents- because of the mid-year merger you should expect to receive a 1099 from TD Ameritrade AND Charles Schwab. The 1099’s should arrive in the mail in early February. They now include all cost basis information and all management fees paid (if debited from your account). Your tax preparer will need the 1099 to properly prepare your tax return.

We are here to help answer any financial planning issues. Whether it’s a question about a loan, a mortgage, insurance, or retirement planning.

Should you have any administrative issues, you can always reach out to Christy or Kori, and be assured they will strive to help you in a timely and pleasant manner. Both can be reached using our toll-free phone number at (800) 472-8086.

In closing, we wish all our clients and friends a happy, healthy, and prosperous 2024.  We want you to know that we value and appreciate your business.  Thank you for trusting us to manage your financial well-being.

Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.