Oops, They Did it Again

‘Don’t believe the hype’ is one of the big lessons learned so far in 2023. Recall how nearly every major market index around the globe was solidly in the red last year, and the all-knowing talking heads on the TV were more than happy to pile on with negative outlooks as far as the eye could see.

Yet, here we are at the beginning of the 2nd quarter and all of the US stock indexes are positive – Dow +2.6%, S&P 500 +8.1% and NASDAQ +16.2%. Not a bad Q1, right? These types of returns would be very good in a year, let alone over three months. Given the so-called “smart investors” are highly susceptible to recency bias, we implore you to take all of those attention-grabbing headlines with a fine grain of salt.

Opposite Time

One of the most dangerous and self-destructive actions an investor can take is to get overly concerned with the news flow of the day. We see this all of the time. Often, this comes in the form of a client sending a text or a link to an article where the ‘expert’ is predicting a -40%, -50% or even -60% loss in the markets and investors had better heed his/her advice! For the record, we see these articles, too, and if anything they are probably better indicators of what not to do than what to do.

But let’s not get ahead of ourselves. Let’s wind the clocks back to the peak of the markets most recently – November of 2021. How have the US markets done since then? Three months just isn’t a very long time, and it hides the bigger picture, if nothing else. Since 11/2021, here is the performance of those same indexes: Dow -5%, S&P 500 -12%, and NASDAQ -25%! Clearly, investors have largely lost money in stocks for the better part of the past 18 months. It’s nice to see green on the screen over a quarter, but we have quite a ways to go before we reclaim the old highs, at least in the S&P and NAZ.

Now What?

Which brings us to the current state of the markets. Let’s zoom into bonds for a moment, because they too took hard losses last year, and overall are up modestly in 2023. The standard index for returns in bonds is up about +2.5%, a far cry from the -16% this same index lost in 2022. Here again, the experts had it wrong as the vast majority of them foresaw more losses in bonds on the belief that interest rates would continue to climb.

In the Alternative space, the shining star so far has been the outperformance of precious metals, and gold in particular. Say what you will about the reasons for or against gold, but I am in the camp of making money, and if something is going up, I want to own it. Not as concerned as to why it is gaining, to be quite frank, although the fundamental case for precious metals appears quite strong, and growing in acceptance everyday. So far in 2023, gold has recently breached the $2,000 per ounce mark, something it hasn’t done since the fall of 2020. YTD gold is up nearly +10%, while the gold mining stocks are up double that – almost +20%. For many of our clients, we own a fund backed by physical gold and we also own a collection of precious metals mining stocks, so we have seen the benefits of this trend very positively affecting our performance this year.

One for the Road

A few closing thoughts – as I mentioned above, we are less concerned as to why the markets are moving in any given direction over getting that move right. By this I mean, having less stocks (risk) in our portfolios when things look bad, and being fully allocated to our mix when the markets are in an uptrend. This is the idea; much harder in practice! For now, the markets have an upward bias, although it seems to be running out of steam just in the past week. For now, we would not be surprised to see things drift higher as we get into summer, and a good opportunity to lighten up risk before mid-year. As always, we reserve the right to change our opinion faster than a politician, as conditions warrant.

The finish to the year is even murkier, due to the fact that the direction of stocks and bonds will be determined, sadly, by what Jerome Powell and his friends running the Fed decide to do. For now, we will leave the guesswork to the parlor rooms and cocktail party attendees, and keep our eyes focused on the next turn in the road.

Have a great spring!


  • Mark Starosciak, CFP®

    Mark is a +24 year financial advisor veteran and Certified Financial Planner™. He founded Infinium in 2009 to bring a more personal, and truly client-centric offering to investors.