Weekly Update: February 13th

By Debra Taylor, CPA/PFS, JD, CDFA™

Dear Friends,

The first month of 2023 is now behind us and it felt very different than 2022. In 2022, the S&P 500 and the Bloomberg U.S. Aggregate Bond Index (“Agg”) both fell, and there was much talk of the demise of the “60/40” portfolio (a portfolio of 60% stocks and 40% bonds). But the S&P 500 and the Agg were not only both higher in January, but they were also both in the top 10% of all monthly returns going back to 1980.

The bullish slingshot is here. Thanks to a strong last day of the month, the S&P 500 gained more than 5% in January. That’s the third time in the last four months it was up more than 5%. Remember, a >5% gain in Jan, on the heels of a red year the year before, tends to be bullish. The full year has finished higher 5 of 5 times, up close to 30% on avg.

The S&P 500 entered a bear market in June and has been stuck since, notes Jeffrey Buchbinder, chief equity strategist for LPL Financial, who says at one year old, the current bear phase is longer than the average post-WWII of 11 months.

The good news? “Looking at just the last seven bear markets since the 1987 crash, we have seen the market bounce back an average of 43.6% aIer dropping 33.1%,” said Buchbinder who says they expect double-digit gains for the S&P in 2023.

It’s been an encouraging start to the year after the challenges of 2022. Undoubtedly, 2023 will provide its share of market ups and downs and there are plenty of risks to monitor closely, including a possible recession, continued tightening by the Federal Reserve, still high inflation (despite strong signs that it’s settling down), and the conflict in Ukraine. But after 2022, it’s good to have a solid month in the books to start the year.

As always, please reach out with any questions.

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