2023 Year in Review

Mike Mulcahy
Written By Mike Mulcahy, CFA® CPWA® CTFA

A Year of Bounce Backs…

Once again we borrow from our friends at Avantis Investors for the 1-year overview chart. This chart focuses on the S&P 500 and highlights major news events. As far as “historical events,” every year is full unpredictable news that shakes the market. We always need to be cautious not to overweight recent events.

What a year 2023 was, especially relative to 2022. The S&P 500 was up +26.3% on the year. 2023 was marked with an unusually large amount of the upside focused on what has become known as the “Magnificent 7 stocks” - Alphabet, Apple, Amazon, Microsoft, Nvidia, Berkshire Hathaway, and ExxonMobil – which collectively contributed to 47% of the overall gain.

Broader US markets (Russell 3000 Index) were up +26.0%. International markets (MSCI ACWI ex USA) were up +16.2%. While these numbers sound great, only the US has recovered from 2022 losses.

The bond markets also saw a bounce back after record down turns in 2022. The Bloomberg Aggregate Bond Total Return index finished up +5.7%. Traditionally, equities and fixed income have a low correlation. Last year we saw they both moved down. Fortunately for investors, they both moved upward in 2023.

As you can read in our other blog, “Forecasting Follies”, it is very hard to forecast what the market is going to do. There are just too many unknowns. Take a look at these highlights from 2023. How many of these could anyone have predicted?

Month Events
January Think of this month as the “return to office” month with Disney leading the way. Job reports were strong and Fed was still in “tightening mode” to control inflation. AI started to become a mainstream conversation topic. An US and Germany sent tanks to Ukraine.
February US Treasury 10-year yields topped 4%! 2-year treasuries were at 5%. Cash investing becomes popular again. The China balloon floated across the US….
March Turmoil in the banking industry! Silicon Valley Bank, Signature Bank and Silvergate bank fall victim to lending risk and fast moving capital. International bank, Credit Suisse almost collapses but UBS saves the day.
April CPI is down to 5%! Fed eases up on rate increases! Bed Bath & Beyond files for bankruptcy.
May Nvidia hits $1T in AI mania. Weight loss drug headlines send drug company stocks up 50%.
June We get through debt ceiling scare… at least until January 2025. We have peace in the world of golf with PGA/LIV merger. S&P500 longest bear market since 1940’s comes to an end mostly from the Magnificent 7.
July Hollywood strike! FedNow becomes new banking funds movement option. Supreme Court overturns Biden’s student loan forgiveness plan.
August Home sales fall as mortgage rates go up to 7.22% to hit a 22 year high! US Government debt is downgraded by Fitch to AA+ from AAA. Oil price gush upward. Fires hit Maui.
September UAW on strike! We had an IPO! (ARM Holdings) as markets became more receptive. US debt hits $33 trillion!
October Students have to start making loan payments again. Hamas and Israel are at war. Kevin McCarthy is ousted from Speaker position.
November WeWork files bankruptcy. Commercial real estate worries continue. FTX founder Sam Banman-Fried is found guilty. Fed holds rate steady.
December Investors bet on rate decreases in the future by Fed. Markets finish the year strong. Mergers picking up: Nippon taking out US Steel.

Operating within the Unknown

Well, that is 2023 in a nutshell. News and global events caused the markets to go up and down over those 12 months. Markets will probably go up and down in 2024 as well. Is inflation over? Will Fed’s lower rates? Will we have a recession? Opinions by “experts” vary. We will let you know which ones got it right next year.

Sources:

https://seekingalpha.com/article/4659661-wall-street-breakfast-what-year

https://seekingalpha.com/article/4659878-wall-street-breakfast-year-in-review

https://seekingalpha.com/article/4660110-wall-street-breakfast-looking-back-2023?mailingid=33825844&messageid=wall_street_breakfast&serial=33825844.518617&utm_source=seeking_alpha

Mike Mulcahy, CFA® CPWA® CTFA

With the founding of Kings Path Partners, Mike brings a diverse set of professional and personal experiences into the wealth services business. His professional roles and community experiences give him a unique and real perspective into the needs of families, entrepreneurs, and business executives. Previous roles include president of a $6B investment management firm; management consultant with McKinsey & Company; VP of corporate finance & strategy with Compaq/HP; and managing director of an entrepreneurial web-based business. He is also an active venture investor with a focus on impact investing and social enterprises.

Mike earned an MBA from the Harvard Graduate School of Business and completed an Executive Program in Portfolio Management at the University of Chicago. He graduated summa cum laude with a Bachelor of Science in Economics with a minor in Chemistry from Texas A&M University. He holds designations as a Certified Private Wealth Adviser®, Chartered Financial Analyst®, and Certified Trust and Fiduciary Advisor (CTFA). He is a member of the Investments & Wealth Institute® and the CFA Society of Houston.

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