Why 2022 was a Disappointing Year for Investors and What to Expect in 2023
Financial Advisor Tim Hayes
Securities Licensed in MA, RI, NH, NY, NJ, CT, ME, & FL
I am an Investment Adviser Representative at Cambridge Investment Research Advisors, Inc., a Registered Investment Adviser (RIA) based in Fairfield, IA. I am also registered with Cambridge Investment Research, Inc., an independent broker-dealer with over 3,000 registered representatives nationwide.
Most clients pay fee-only or an hourly rate. The size and complexity of the client’s wealth management and financial and retirement planning determine that fee.
Some clients pay a commission, mainly those with smaller accounts, i.e., Roth IRAs, some public-school teachers with 403b retirement accounts, or parents or grandparents who set up a 529 college savings plan.
The first introductory and fact-finding appointment can be in-person or by phone. The next meeting where I provide my recommendations should be in-person. (For the time being, telephone, Zoom, and email are replacing some in-person meetings.)
Subsequent meetings during which we monitor your progress and investments can be done in-person or by phone, email, Zoom, or Skype – or, more likely, a combination of these meeting types.
Looking for investment advice for 2023? Read on for an overview of the ups and downs of 2022 and a look at the current market trends. Contact Tim for more information.
Overview of 2022
2022 was a lousy year for investors. Both stocks and bonds went down, and bonds, supposedly the least risky of the two, went down almost as much as stocks. Diversification—the hope that if something went down, something else would go up—didn’t work.
Gold, whose proponents tout it as an inflation hedge, also declined precipitously. Moreover, both stocks and bonds fell victim to rising inflation. The winners were oil stocks and the dollar; however, most funds only own a few oil stocks, and individual investors mostly shy away from the currency markets for investments.
2023 Outlook
2023 has started with a bang. Just about all asset classes are rising. Some, like emerging markets stocks, have increased a lot already. Many hope China is finally reopening its economy and will offset any weakness brought about by the Federal Reserve’s continued rate hikes.
However, there is a risk that the Chinese reopening will increase oil demand, pushing prices higher and making the Fed’s inflation-fighting more complicated.
Recession Risk
So, 2023 is shaping to test whether China’s reopening provides enough stimulus to offset the recessionary risks of the Federal Reserve’s interest rate hikes. The bond market leans toward an economic slowdown as the yield curve remains severely inverted, a solid predictor of recessions (An inverted curve means short-term rates are higher than longer-term rates).
Summary of 2022 and 2023
My prediction is that I do not know, but I am confident that diversification will help this year, unlike last year. If the economy goes into recession, bonds should do okay; if economic growth picks up, stocks should do okay. And if we are lucky and end up in a goldilocks scenario with solid growth and low inflation, both could do okay.
Request for Testimonial
Finally, a favor, please. No obligation to do so. The Securities and Exchange Commission changed its marketing rule allowing financial advisors to market testimonials and endorsements. If you can provide me with one by sending it back in an email, I may put it on my website.
Also, because of the pandemic, we have yet to meet in person as much as I would like. So I hope we can meet in person this year.
These are the opinions of Financial Advisor Tim Hayes and not necessarily those of Cambridge Investment Research. They are for informational purposes only and should not be construed or acted upon as individualized investment advice.
