What Went Right in 2023?

What went right in 2023?

This was the recent title of a WSJ article that posed the question to its readers.

As we’re all aware, news and social media is biased towards the negative.

A banking crisis, renewed war in the Middle East, and many other tragic events dominated headlines throughout 2023.

Fear-mongering on CNBC and Twitter about persistent inflation, recession, and layoffs left many worried about the future.

For example, on January 2nd, 2023, the Wall Street Journal reported “More than two-thirds of economists at 23 major financial institutions expect the U.S. to have a downturn this year.”1

This was the headspace of many Americans—anxious and scared for the future.

At the same time, banks who were recently paying us nothing on our savings were now proudly advertising rates of 4%+ interest.

With economic warning signs flashing all around us and the comfort of a guaranteed rate from the bank, I heard many asking, “Why invest in stocks and bonds now with all of this uncertainty? Shouldn’t we just wait this one out?”

This seems a perfectly sane decision, given the above description of the state of the world.

Now we have the ability to look back at 2023 and see what actually happened.

The Morningstar U.S. Moderate Allocation Index returned 16.75% on the year. (That index represents a portfolio made up of around 60% stocks and 40% bonds.)2

How could that be?

Despite all of the negative headlines, there were plenty of positive stories hiding in plain sight.

    • The early stages of artificial intelligence entered our lives promising to make work easier, discover cures for diseases, and things yet unimagined.
    • The much-anticipated recession never came and unemployment stayed near record lows.
    • India has seen 415 million people lifted out of poverty in the last 15 years. It’s estimated that another 283 million will be lifted into the middle class in this decade alone.4
    • Inflation began descending towards its long-term average.
    • GLP-1 drugs like Ozempic showed real promise at treating the second leading cause of preventable death in the U.S.: obesity.
    • Crime across the U.S. was down.3

This isn’t to say every year is going to be rosy—it won’t. Bad things are happening in the world and will continue to happen. A recession will come. Unemployment will rise. The market will tank.

The point is that we need to stop trying to predict what’s going to happen in the economy and market over the short run, because it’s impossible. Even the “experts” routinely get this wrong. As the saying goes, “Economists have predicted 12 of the last 11 recessions.”

We need to be aware of the negativity bias in the news and on social media and acknowledge that it can cause poor long-term investment decisions.

Instead, we should build a diverse portfolio of investments that gives us the best possible chance for success to achieve our goals in a given time frame, no matter what we think is going to happen in the next year.

Calvin McKenney

Author: Calvin McKenney

Cal is a financial advisor at Fortune Financial in Minnetonka, Minn. When you work with Cal, you receive a lifelong ally who is committed to listening to you, researching your options, weighing tried and true methods with the latest strategies, and finally, empowering you to make a decision that supports your overall wellbeing.

Calvin is a registered representative and investment advisor representative of Cetera Advisor Networks, LLC.

1Rabouin, Dion. “Big Banks Predict Recession, Fed Pivot in 2023 – WSJ.” WSJ, 2 Jan. 2023, www.wsj.com/articles/big-banks-predict-recession-fed-pivot-in-2023-11672618563.

2“Morningstar US Moderate Target Allocation Nr.” Morningstar US Moderate Target Allocation NR | Morningstar Indexes, indexes.morningstar.com/indexes/details/morningstar-us-moderate-target-allocation-nr-FS0000G3KE?tab=overview. Accessed 31 Jan. 2024.

3Karabell, Zachary. “What Went Right in 2023 – WSJ – The Wall Street Journal.” WSJ, 28 Dec. 2023, www.wsj.com/us-news/what-went-right-in-2023-343dad56.

4“India Lifted 415 Million out of Poverty in 15 Years, Says UN.” The Economic Times, 18 Oct. 2022, economictimes.indiatimes.com/news/india/india-lifted-415-million-out-of-poverty-in-15-years-says-un/articleshow/94926338.cms?from=mdr.

Investment advisor representative of Cetera Advisor Networks, LLC. Securities offered through Cetera Advisor Networks LLC, member FINRA/SIPC. Advisory Services offered through Cetera Investment Advisers LLC, a registered investment adviser. Cetera is under separate ownership from any other named entity.