2022 came and went in what feels like a flash. With it came and went a year where we saw interest rate hikes quicker than any time in history, both stocks and bonds negative for the full calendar year for the first time in 40 years*, and inflation that proved tougher to digest than previously thought. 2023 kicked off with a quick start, as we are already closing out the month of January. With that, the investment committee has been meeting and having deep discussions around the markets, the economy, and specifically our investment strategies.
We do believe we are starting to see the light at the end of the tunnel. But that does not mean this year will be all sunshine and roses (but we would welcome that!). We do believe there are still things to keep a close watch on – specifically: the federal reserve and interest rates, earnings through the first half of the year, and inflation as it starts to come down but still remains at record highs.
With all of this in mind, this is where we currently see things moving:
- With the dollar coming off record highs and moving lower, we feel this can provide some tailwinds to international companies – which are also at multi-year low valuations. We felt a slight increase in exposure to international companies was warranted.
- We feel and our research is showing that interest rates are nearing the peaks. The big question is how long they will stay at these levels. But as we near the current rate hiking cycle, we felt adding some duration back into the portfolio can allow us to clip a nice coupon and see some appreciation in the same bonds as rates peak and start to come down later in the year.
- We continue to favor good quality blue chip stocks, but as we look towards growth companies, we really like many of the valuations we are seeing. A slight move back into these growth companies while holding a bias to the value stocks was warranted.
It’s important to remember that market volatility can happen both to the upside and the downside, and we believe that now more than ever, it is important to remain disciplined to the overall financial plan – controlling what we can control. As the key support levels that we watch continue to hold steady we do feel that now may be prudent to consider entering back into the market with excess cash that is on the sidelines. As we work through the first half of the year, we do expect some choppiness in the markets, but if corporate earnings can meet expectations, we believe that can provide some tailwinds as we head into year end.
Our changes in 2022 turned out to help our portfolios play defense and do a much better than the overall markets. We feel that the changes detailed above will help to better position our client portfolios given the current conditions.
As always, we are here for you and your families. If you have any questions or concerns – do not hesitate to reach out!
This is not a replacement for the official customer account statements or trade confirmations from Raymond James or other custodians. Activity details including time and price will be included in the official statements and confirmations. Investing involves risk and you may incur a profit or loss regardless of strategy selected.
The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of David Adams and Adams Wealth Partners and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Past performance does not guarantee future results.