2023 Financial Markets Outlook
2022 has nearly come and gone, and we have had quite the year in the United States markets. In this piece, we will reflect on 2022, which has been a very rocky and volatile year for investors, as well as touch on what to expect in 2023.
2022 has been a tough year for many Americans. Inflation reached a 40-year high, the U.S. markets have been beaten up, and most of us are likely seeing red in our investment accounts (meaning they have declined in value year-to-date). With inflation at such a high level, the Federal Reserve has raised its benchmark-interest rate to the highest level that we have seen in 15 years to combat inflation – and the Fed is not done. Expect to see further rate hikes in 2023, but at a slower pace than the dramatic 75 basis-point increases that we saw earlier this year. I do not expect to see rate cuts until 2024. Despite all of this, I believe that we are closer to the bottom of the U.S. markets than we are the top. I do not have a crystal ball, but I am cautiously optimistic about 2023. I believe that we will see continued volatility in the markets during 2023, but I am hopeful that the markets will stabilize. Additionally, I believe that we will end 2023 higher in the markets than where we start the year off. However, my outlook for 2023 hinges strongly on how the Federal Reserve chooses to operate with respect to interest rates, and whether the Fed can rein in inflation during the new year.
In conclusion, this has been a volatile year in the markets. However, as the great Warren Buffett once said, it is wise for investors to be “fearful when others are greedy, and greedy when others are fearful.” You might ask, what exactly does that mean? Here is a quick translation. When others are greedy, stock prices typically rise dramatically and may boil over. When others are fearful, there are great buying opportunities out there.
If you have been waiting for the right time to invest, now is as great a time as ever. There is more volatility ahead in the markets during 2023, but that doesn’t mean you should wait around to invest. Time in the market generally beats timing the market, so don’t wait another day. Start investing today.
I hope that you’ve enjoyed this piece and that it has provided you with some value. Maybe it has gotten your gears turning, and you have some questions related to your personal financial situation. If you have questions about your investments or financial planning in general, please don’t hesitate to drop me a note via email. I’d love to hear your thoughts or answer any questions that you may have. Thanks for reading!
