For investors who spent a lot of time last year stressing over the volatile capital markets, it is our hope that your list of personal goals for 2023 begins with “avoid portfolio worries going forward”. Yes, this may be easier said than done. But remember, for long-term investors, market conditions are often dynamic and unexpected.
Please reassure yourself by taking a quick look at our Entrust Financial LLC® Market Commentary: Fourth Quarter, 2022—
Better Dull Than Down
Despite a volatile December, the fourth quarter of 2022 was overwhelmingly positive for the capital markets around the globe. For many investors, results from the quarter helped to mitigate some of the damage done to portfolios earlier in the year as most sectors posted strong gains. The major stories of the year were largely unchanged, with focus remaining on two key issues impacting economies around the globe: Russia’s continuing war in Ukraine, and inflation. While the future of the situation in Ukraine remains unknown, recent economic reports indicate that inflation has been decelerating in the U.S. Though not with the speed many would prefer, this progress is an indication that the Federal Reserve’s continued commitment to fighting inflation is having a positive impact.
Other highlights from the fourth quarter include:
- U.S. equities strengthened across most sectors, with the S&P 500 index gaining 8% overall
- Inflation decelerated for the sixth straight month, down from 7.1% in November to 6.5% in December as measured by the Consumer Price Index
- The Federal Reserve raised interest rates by a total of 125 basis points in the quarter, for a total of seven increases in 2022
- Energy was the best performing sector, climbing 23% in the quarter led by ExxonMobil and Chevron
- S. bond markets recovered following a difficult year, bringing much-anticipated relief to more conservative investors
At the risk of sounding pedantic, as we turn our attention to 2023, Entrust is focused on the possibility of a rather dull year ahead. While in our everyday lives the term “dull” is typically not enticing, it is important to remember that in the world of investing, dull may be a synonym for stability. And isn’t a bit of respite from the wild ride that was 2022 what we have been longing for? With slow, but steady, progress being made on economic matters, we believe the year ahead will be primarily a period of the capital markets adjusting to these improved conditions.
As always, our Entrust advisors—Joslyn G Ewart, Mckenzie Frankel and Jen Bravo—look forward to our next conversation together.