With only 9 trading sessions left (as I write this), 2023 appears to be ending on a financial high note. The Dow-Jones Industrial Average (DJIA) closed last week with three consecutive new all-time highs. Meanwhile, the S&P500 Index also reached a new high, this one on a total-return basis, which includes dividends throughout the year. The NASDAQ Composite is up over 40% so far this year. Quite a performance, all in all.
So why did it feel so negative?
This time of year, at least when the equity markets have performed well, investors are generally upbeat and confident. Yet this year, based on many client meetings we have conducted in recent weeks, people are not feeling positive. Most are surprised by their outstanding Year-to-Date and full-year portfolio performance. We have been in dozens of conversations regarding the incongruity of perception vs. reality. Here’s a short list:
- For people living on a relatively modest income, inflation has hit them in two of the most sensitive areas, food and energy. These items have increased far above the government-reported rate of inflation.
- Wage increases have not kept up with price increases, and more people than ever are working multiple jobs to stay afloat economically.
- For three years, the bond market has been falling, causing low-risk tolerance investors to take a beating on their “safe” investments.
- Interest rates have been rising at a record pace, as the Federal Reserve (FED) has acted to curtail inflation. Many people have been aced out of the car and home markets, due to high payments on secured loans.
- Credit card debt, which has been growing for many years, featured relatively low-interest rates for some time. That is now ancient history, with absurdly high rates making balance reductions challenging.
- Political bickering, coupled with slanted media reporting, has divided us more than ever, and people with convictions are labeled as enemies. This negative attitude is reflected in almost every aspect of daily life.
- Formerly radical concepts, such as gender reassignment among children, are being forced into our lives, along with admonishments to accept what is intolerable to most Americans.
We could go on, but we’d rather point out the positive aspects of the Season. The market is forward-looking, suggesting that investors are forecasting good things to come. Rather than offer an opinion on that concept, we’d rather just wish everyone a safe, happy, and prosperous Holiday Season.
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